WellPoint to employ third-party rate-hike reviews as Sebelius urges state scrutiny

WellPoint Inc. in Indianapolis will undergo third-party reviews of its 2010 rate request filings, as well as probe why its actuaries didn't catch the mistakes found in its Anthem Blue Cross subsidiary's California rate increase application by an outside actuary working for the California Department of Insurance, reports the Wall Street Journal.

WellPoint's decision to address these issues came the day after U.S. Department of Health and Human Services Secretary Kathleen Sebelius wrote governors and state insurance commissioners urging them to "re-examine any WellPoint rate increases in your state to determine whether any mistaken assumptions similar to those made in California were made in your state." Sebelius also advised state officials to "review the authority you have under your state law to determine whether you have all of the regulatory tools needed to approve health insurance rates before they take effect."

WellPoint President and CEO Angela Braly told presidents of WellPoint state plans to be proactive in addressing any questions that state regulators have about rate filings, according to a company memo obtained by the Wall Street Journal. Braly also vowed to cooperate with California regulators and outside actuary Axene Health Partners LLC, as well as indicating that WellPoint will modify its internal review process so that actuaries outside the specific business unit are included.

California state Insurance Commissioner Steve Poizner revealed that he is investigating Anthem's claims payment systems and data controls to ensure that WellPoint's pending re-filing of a revised rate application is based on accurate data. "I will not allow insurers to inflate their rates based on faulty systems or inaccurate data," Poizner tells the San Francisco Chronicle.

Health Access California, a consumer health advocacy group based in Sacramento, has requested that state regulators expand the Anthem investigation and conduct similar independent analyses of all insurers seeking premium increases in the California individual and small-group markets, reports the Los Angeles Times.

UPDATE: On May 8, President Barack Obama upped the ante in the federal government's ongoing criticisms of WellPoint and health insurers at large, saying in his weekly radio address that America is being "held hostage to an insurance industry that jacks up premiums and drops coverage as they please," reports The Hill. WellPoint's Braly sent a letter to the president urging him to put an end to attacks against the industry, relates the Los Angeles Times.

To learn more:
- read this Wall Street Journal article
- read Sebelius' letter
- read this Washington Post article
- read this San Francisco Chronicle article
- read this Los Angeles Times article

- read this article from The Hill on Obama's radio address

- read this Los Angeles Times article on WellPoint's letter to President Obama

- view President Obama's address