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Thousands in New York’s HMO market to see refunds or rate credits

Superintendent of Insurance Howard Mills today announced that the New York State Insurance Department has ordered the distribution of $71 million in surplus market stabilization pool funds to New Yorkers in the individual direct-pay health maintenance organization (HMO) market.

"The average premium refund or rate credit will be about $1,000 for individuals and nearly $2,500 for those covered under family contracts for policyholders covered under a standard HMO or point of service (POS) contract," Superintendent Mills stated.

Superintendent Mills has directed HMOs to make direct refunds or apply premium credits to HMO policyholders beginning Oct. 1, 2006. More than 67,000 people are covered by the policies in question. HMOs will provide written notification to policyholders who are eligible for the premium refund or credit.

The $71 million represents surplus monies that have accumulated in two Insurance Department-administered market stabilization pools, and does not involve taxpayer dollars. These pools, one dealing with Specified Medical Conditions (SMC) and the other created to assist companies that insure a higher-risk, higher-cost population, were created in the early 1990s. The pools were aimed at promoting stability in the marketplace while also allowing insurers and HMOs to share the risk of paying for costly treatments, such as for those who are diagnosed with HIV or in need of an organ transplant.

The surplus funds from these pools will be distributed in proportion to each carrier’s percentage of the total number of standardized direct payment HMO and POS contracts as reported to the Insurance Department.

The Department has phased out the two pools and is creating a new mechanism to provide market stabilization.


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