If you run a small business in NY of less than 50 lives and have your group health insurance covered through Empire Blue Cross Blue Shield (www.empireblue.com), you probably received a communication from them recently regarding significant changes they are making on their product portfolio in 2012.
And the news is not good.
Empire’s decision to withdraw their most popular plan – the Prism EPO – and other plans effective April 1, 2012, came on the heels of negotiations with state regulators earlier in the fall that resulted in Empire not being allowed to adjust their rates based on company-based actuarial calculations and the anticipation of higher medical claims in the region.
In NYS, insurance regulations require a higher Medical Loss Ration (MLR) than the national one. The Federal level is 80% for small groups and in NYS it is 82%. In addition, there are regulatory factors used to prohibit carriers from increasing their rates over and beyond certain percentage levels. According to blogger Alex Miller (http://alexmillers.wordpress.com), the tipping point for Empire was rate increase denials of 5 consecutive quarters and that “Empire quite frankly got caught with great pricing and products just when healthcare reform came around.”
As a result, many small business owners in the Hudson Valley region will be forced to find other carriers as the plans that Empire is offering in 2012 are inferior, price- and plan-wise, to other products on the open market.
To add insult to injury, current Prism groups who have renewed their plan within the 12 months prior to April 1, 2012, will not be “grandfathered” and will therefore be forced to switch to another plan or change carriers all together. In the past, groups that have renewed their plans got a 12-month rate and plan guarantee. Hence, if you received a notice for you Jan. 1 renewal, it is highly suggested that you have your broker shop it around and lock in a 1st quarter premium someplace else.
Empire BCBS, a subsidiary of Wellpoint, has said that they will continue to focus on the mid- and large-group markets (over 50 lives), which is experience rated and does not fall under the “community ratings” pricing guidelines enacted in 1993 for small groups in NY.