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New York, January 29, 1999

The Insurance Department today announced the decisions on rate increase applications for eight of the State's Health Maintenance Organizations (HMOs) and Blue Shield of Northeastern New York. HMOs and health service corporations are required by law to get approval from the Department if they want to increase rates more than 10%. The rate changes will be retroactive to January 1, 1999.

The Insurance Department's decisions are the result of careful examinations of the companies' current financial conditions and their projected revenues and expenses for the upcoming year. Testimony received from public hearings throughout the State was also a factor in the decision making process.

Many of the rate requests were for prescription drug riders, which are only one part of the overall premium. Prescription drugs are an optional coverage in a group health plan and, as a result, not all groups buy this rider.

The decisions are as follows:

Blue Shield of Northeastern New York and HealthNow HMO (Both entities have members in Albany, Clinton, Columbia, Essex, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Warren and Washington counties. Blue Shield also has members in these counties: Dutchess, Orange, Putnam, Schoharie, Sullivan, Ulster and Washington.)

Blue Shield of Northeastern New York received its requested increase of 16.4% on its Support Service Alliance Group Contract. The Department reduced the proposed increase for prescription drug riders from 44.5% to 30.1%. The 30.1% increase only applies to the company's drug riders and not to the overall rates. The Department also reduced the proposed increase HealthNow HMO was seeking for drug riders from 35% to 21.5%.

Health Care Plan (Members in Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Orleans, Niagara, and Wyoming counties.)

The HMO had requested a 35% average increase for its prescription drug riders for its group and medicare subscribers. The Department approved the request for large group business but modified the request to a 25% increase for small groups and a 10.6% increase for Medicare subscribers.

Health Services Medical Corporation of Central New York (Members in Broome, Chemung, Cortland, Herkimer, Madison, Oneida, Onondaga, Schuyler, Tioga, Tompkins, Cayuga, Oswego, Steuben, Jefferson, St. Lawrence, and Seneca counties.)

The HMO requested an average 48% increase for group drug riders. The Department approved a 26% increase.

HUM Healthcare Systems (Members in Clinton, Essex, Franklin, Hamilton, Saratoga, Warren, Washington, Albany, Rensselaer, Schenectady, Columbia, Dutchess, Greene, and Ulster counties.)

The Department reduced the HMO's proposed increase for its direct pay members from an average 27.4% to 13.7%. HUM was granted its requested 14.1% average increase for its base group contracts and a 31.4% increase for drug riders. The Department also approved a 49.4% decrease for the HMO's substance abuse riders and a 42.2% decrease for its in network portion of its point-of-service product.

MVP Health Plan and MVP Health Service Corporation (Members in Broome, Chenango, Delaware, Herkimer, Lewis, Madison, Oneida, Onondaga, Orange, Otsego, Tioga, Ulster and Putnam (Central Region); Albany, Columbia, Fulton, Greene, Hamilton, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington (East Region); and Dutchess (Mid-Hudson Region).

MVP Health Plan was seeking average increases of 36.6% to 44.5%, depending upon territory, for its direct pay members. The Department cut that increase to 10% for all territories. The Department did approve MVP's requested increases of 7.1% to 15.1%, depending upon territory, for its group HMO business and approved a requested 17.4% increase for group indemnity business.

Preferred Care/Rochester Area Health Maintenance Organization (Members in Monroe, Wayne, Livingston, Yates, Ontario, Seneca, Genesee Orleans, and Wyoming counties.)

Preferred Care received its requested 13.3% increase for prescription drug riders for Medicare members and 24.9% for drug riders for its group business.

United Healthcare of New York (Members in Bronx, Dutchess, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Suffolk, Ulster and Westchester counties.)

United Healthcare requested an overall average 53.4% increase for its direct pay contracts and its group prescription drug riders. The Department approved an overall weighted average increase of 25.3%.

Vytra Healthcare Long Island (Members in Queens, Nassau, and Suffolk counties.)

The HMO requested a 19.5% average increase for small group contracts and a 31.2% increase for sole proprietors. The Department approved a 19.5% the small group request but reduced the increase to sole proprietors also to 19.5%.

Department of Financial Services


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