Insurers operating in New York likely will face scrutiny after the state announced new audits that will question the underlying data and actuarial assumptions used to justify rate hikes.
The audits, which Financial Services Superintendent Benjamin Lawsky announced Wednesday, will include on-site visits of health plans and will examine data about claims, administrative costs, premiums and claims reserves, reported the Buffalo News.
Lawsky said the audits will determine whether insurance companies have sufficient controls and oversight in place to ensure their data is reliable and accurate, as well as identify cost-savings opportunities. The audits will be unannounced and conducted in addition to the department's regular rate reviews it performs within 60 days before approving or rejecting increases, according to the Associated Press.
Any errors found during the audits could result in refunds to customers, fraud enforcement or requirements that insurers change their finance reporting process.
"We want to do a careful and full examination of how [insurers] are setting these rates," Lawsky told the New York Daily News. "If they have nothing to hide, they should welcome that."
But insurers didn't take too kindly to these new audits, claiming they're redundant and could potentially add to rising premiums by forcing more insurer spending. "This new level of audits announced today seems duplicative, unnecessary and wasteful of taxpayer dollars," said Leslie Moran, spokeswoman for the New York Health Plan Association.
Lawsky was disappointed by Moran's statement, suggesting it was a "red flag" that insurers have something to hide. "It really is surprising and frankly appalling to me," he told the Daily News.