Rhode Island to Hire Consultants to Audit Insurers

Rhode Island lawmakers have appropriated $100,000 to hire auditors to monitor health insurance companies in an effort to understand how a new law aimed at reducing the cost of coverage for small employers is affecting premiums, the Providence Journal reports. The state Legislature's Joint Commission on Healthcare Oversight asked legislative leaders to earmark the funding for these "sample audits" after learning that the state Department of Business Regulation does not have the staff to conduct such inspections and thus does not have a full understanding of insurers' rate-setting process. Last year, the Legislature passed a health care reform measure designed to "narrow the huge gaps" in premiums for employers with fewer than 50 workers, and the commission wants to ensure that "gouging" by insurers is not a reason for the discrepancy (Fitzpatrick, Providence Journal, 9/20). To stabilize costs, the reform law limits the highest insurance premium to no more than four times higher than the lowest. Until the law passed last year, insurers had the option of setting rates on the basis of how frequently people used their benefits. Groups with more claims paid higher premiums, while groups with a younger, healthier enrollment -- therefore fewer claims -- paid lower premiums (Kaiser Daily Health Policy Report, 1/16). "If you don't do an audit, you don't know how accountable and responsible the figures are," Rep. Suzanne Henseler (D), commission co-chair, said, adding, "I understand [insurers] have to make a profit, but I want to make sure it's done in a rational, reasonable way and consumers are protected." She added that insurers will reimburse the state for the cost of the audits. Marilyn McConaghy, director of the Department of Business Regulation, said that the department will complete a report on the audit findings by next June 30 (Fitzpatrick, Providence Journal, 9/20).