New Mexico Report Surprises Health Insurance Executives
A headline-grabbing report released by the State Auditor’s Office this week said that the five largest health insurance companies in New Mexico owe the state at least $193 million in taxes on premiums paid by customers.
However, it is not clear whether any of the top five companies — Presbyterian Health Plan, Molina Healthcare Inc., UnitedHealthcare, Blue Cross Blue Shield of New Mexico and Amerigroup — have been told they owe money.
The report seemed to catch health insurance executives by surprise.
Todd Pilger, Molina Healthcare of New Mexico vice president, said in a statement that the company had not been notified by the state insurance office. If it does receive notice, it “will work closely with (the state) to resolve this matter,” he said.
Todd Sandman, senior vice president of Presbyterian Healthcare Services, said the company does not believe it owes the state premium taxes.
“We are confident that Presbyterian Health Plan has appropriately paid all premium taxes due to the Office of the Superintendent of Insurance,” Sandman said in a written statement. “We take our financial responsibility to the state and to the New Mexicans we serve extremely seriously.”
The report, done by an outside firm and released by State Auditor Tim Keller, was based on a sampling of payments made by the top five health insurers between 2010-2015.
Therefore, “the total amount due to the state for all transactions is likely to be more,” Keller said in a news release.
A spokeswoman for United-Healthcare said the company was reviewing the report, while a Blue Cross representative noted that the document does not identify companies by name and said it was “too early to comment.”
Amerigroup did not respond to requests for comment Friday.
John Franchini, state Superintendent of Insurance, said his office has been investigating insurance underpayments since last December.
The probe is not limited to health insurers but is also looking at all kinds of insurance overseen by the office, which includes car, homeowners’ and medical malpractice insurance along with other kinds of products, he said.
Keller urged the insurance office to collect the $193 million in underpayments, to provide a monthly timetable for “amounts recovered and outstanding” and to keep the same thing from happening in the future.
Such premium tax collections go into the general fund.
“Given New Mexico’s budget shortfalls, it is critical for the state to competently collect the taxes it’s owed,” Keller said in a news release.
The state faces a potential budget shortfall of up to $600 million, in both the current and just-finished budget years.
The insurance office last year collected more than $300 million in premium taxes, up $30 million over the year before, Franchini said. The state levies a tax of about 3 percent on an insurer’s gross premiums and membership and policy fees for policies that are subject to them.
The review was launched after Franchini asked the Legislature to fund it in 2015. He said his office has had difficulty ensuring tax filings are accurate because of a computer system that is antiquated and partly based on a “by-hand” system used more than 30 years ago.
The office plans to join an interstate computer tax system that will be transparent and will make it much easier to track premium taxes, he said.
“I know this doesn’t sound like much to you, but to me, it’s like taking the chains off my hands,” Franchini said.
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