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Lawmakers ask for stricter review of Medigap rates

NEWS IN BRIEF — Posted Oct. 18, 2010

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Three Democratic senators are requesting that states create better insurance rate reviews to protect seniors with Medigap supplemental coverage from what they deem as unnecessary rate increases.

In the letter to Health and Human Services Secretary Kathleen Sebelius on Oct. 6, Sens. Harry Reid (D, Nev.), Max Baucus (D, Mont.) and John Kerry (D, Mass.) cited a situation where United of Omaha Life Insurance Co. increased Medigap premiums for some seniors by about 40%. "An increase of this magnitude raises serious concerns about premium-setting practices and rate review procedures in place for Medigap policies," the senators wrote. They asked Sebelius to work with states to help them gain authority to conduct annual reviews of Medigap premium increases.

United of Omaha said this level of premium increase is rare and affects 1% of its Medicare supplement policies.

It occurred when individuals were quoted rates and applied for coverage while premium increases were pending regulatory approval, the company said in a Oct. 8 statement. Lower quotes were honored initially, but the rates later were raised to bring them in line with premiums that similar policy holders pay. "This, combined with a small age-based adjustment, would account for the premium increase referenced in the senators' letter," the company said.

America's Health Insurance Plans said premium increases are driven by the "soaring cost of underlying medical care" and that state insurance commissioners already review and approve Medigap rates adequately.

Note: This item originally appeared at http://www.ama-assn.org/amednews/2010/10/18/gvbf1018.htm.

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