Anthem Blues Must Pay $20 Million in Premium Credits to Policyholders in Colorado

Anthem Blue Cross and Blue Shield in Colorado will pay about 90,000 policyholders a total of $20 million in premium credits under an agreement reached with state insurance regulators.

The Colorado Division of Insurance said the settlement with Rocky Mountain Hospital and Medical Service, commonly known as Anthem, covers people who were insured by some of Anthem's individual health insurance plans from Jan. 1 through Sept. 30 of this year.

The settlement also ends the division's market conduct examination and rate inquiry of three individual health plan rate filings by Anthem with effective dates between Jan. 1, 2009, and Jan. 1, 2010.

The credit will be issued either as reduced premium to affected policyholders or sent as a check to those who are no longer insured by Anthem but who were in the impacted group, the division said.

In October 2009 the division approved the 2010 individual rates for the policies that are the subject of the agreement, said Anthem Blue Cross and Blue Shield, in a statement. But earlier this year, the DOI told the company it was initiating the market conduct exam of these rates.

The division said it launched the exam in February after people complained about premium rate hikes, mostly about Anthem's individual health plans. From July 2009 to November 2009, the division said, it received about two complaints a month, and from December 2009 through March 2010, it received 210 complaints.

Joyzelle Davis, a spokeswoman for Anthem, a unit of WellPoint Inc. (NYSE: WLP), said health insurers across the United States are "under a great deal of scrutiny" over their premium rates. However, premium increases are a direct result of underlying medical care costs, such as hospitals, medical technology and prescription drugs, she said.

"As the cost of care increases, premiums rise accordingly," Davis said. "The fact that the DOI accepted our 2010 individual rate filings affirms out belief that these rates are actuarially sound."

All rate filings for health plans in Colorado must be reviewed by the insurance division. Many health insurers submit new rate filings in the fall for the upcoming year, the regulator said.

"Getting $20 million back into the pockets of Colorado consumers" is a positive outcome, Colorado Insurance Commissioner Marcy Morrison said in a statement.

In its statement, Anthem said it's confident its rates "are appropriate, consistent with state law and in line with those of its competitors."

Rocky Mountain Hospital and Medical Service currently has a Best's Financial Strength Rating of A (Excellent).

(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)