LANSING – Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross issued his final decision Tuesday (December 8th) in Blue Cross Blue Shield of Michigan’s (BCBSM) proposed rate changes for its Medigap category of business.

The commissioner’s decision disapproves BCBSM’s rate increase request of 31.2% and orders BCBSM to recalculate final rates for its Medigap products. BCBSM’s recalculated rates will result in an overall increase of no more than approximately 3.8 percent for its Medigap health plans.

“A rate increase of 3.8 percent is certainly better news for Michigan’s seniors than the 31.2 percent hike originally proposed,” said Ross.

The commissioner found that BCBSM’s Medigap policies should be subsidized by the full 1 percent cost transfer authorized by the state legislature. He also found that the trends used by BCBSM to calculate its original Medigap rate increase request were too high.

In January, 2009, BCBSM filed proposed rate changes for its Medigap lines of business. In May and June, 2009, the attorney general and OFIR staff filed timely requests for a hearing and on June 3, 2009, Commissioner Ross issued an order for a hearing and the appointment of an Independent Hearing Officer (IHO). The IHO issued a proposal for decision (PFD), a recommendation to the commissioner, on November 6, 2009.

In order to protect consumers, Commissioner Ross set and enforced an expeditious hearing schedule for this matter. In years past, similar hearings have taken up to 18 months to complete. The completion of this matter took only six months from the start of the hearing until today’s final decision.

In his decision, the commissioner noted that the rates resulting from this ruling will be lower than the 4.7% interim rate increase approved on August 12, 2009.  In implementing the new Medigap rates, BCBSM shall determine the difference in billed rate increases under the interim rates and what the billed rate increases would have been under the final rate determination contained in today’s final decision. Within 12 months following the implementation of the final rates, BCBSM shall make adjustments to reflect payments made in excess of the approved rate.

BCBSM and its subscribers may appeal Tuesday’s decision in circuit court.

Source:  News release from Office of Financial and Insurance Regulation