New York State
Insurance Department 

INSURANCE DEPT. DENIES PREFERRED CARE’S RATE INCREASE

New York, December 31, 1997  

The Insurance Department today announced that the Department has denied Rochester Area Health Maintenance Organization’s, known as Preferred Care, proposed 21.3% average rate increase on its group prescription drug riders. The rate increase would have affected 48,000 of the HMO’s members in Monroe, Wayne, Livingston, Yates, Ontario, Seneca, Genesee, Orleans and Wyoming counties on January 1, 1998. 

This decision by the Insurance Department comes after a careful examination of Preferred Care’s current financial condition and its projections of revenue and expenses for next year. Testimony submitted at a public hearing November 18 in Rochester was also considered. 

Preferred Care projected that its pharmacy expenses would increase 12% in 1997 and 10% in 1998. However, the Department disagreed with the methodology the HMO used. The Department determined that the HMO used an experience-rating methodology for each particular drug rider rather than a community-rating methodology that HMOs in New York are required to use. Therefore, the proposed rate increase was denied and the HMO’s current drug rider rates will continue.