PROVIDENCE – R.I. Health Insurance Commissioner Christopher F. Koller issued an order Friday that found Blue Cross & Blue Shield of Rhode Island had engaged in unfair and discriminatory practices in large group markets during the period of 2007 to 2009 and assessed the heath insurer a penalty of $250,000.
The order was the result of complaints that led to a examination which found that Blue Cross did not fully fund administrative costs and improperly discounted rates, violating the insurer’s own underwriting standards.
“Blue Cross underwriters deviated from the filed and approved rating formula and rating manual, underfunded large group operating expenses, and made discretionary underwriting decisions, resulting in rate discounts offered to some customers, but not to others,” the order said. “Such discounts were offered for competitive business reasons.”
These practices constituted unfair discrimination, in violation of Rhode Island law, according to Koller. As a result, some subscribers received arbitrarily lower rates.
“When you price business below your costs, you are shifting those costs, but you’re not eliminating those costs,” Koller told The Providence Business News. “You are passing on those costs to others.” Particularly in the insurance business, he continued, such practices “threaten how the market operates.”
Blue Cross cooperated fully with the examination, and revised many of its relevant policies and procedures before the examination was completed, according to Koller. But a significant penalty was imposed because of the serious and unlawful nature of the violations.
Join PBN and two panels of successful female executives, business owners and entrepreneurs as we delve into what women should do to advance their careers, and become leaders in the corporate world and their own enterprises.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.