A Buffalo-based health insurance company is on the hook for $750,000 after regulators found it has been improperly denying coverage to small groups of fewer than five members, the Buffalo News reports.
The New York Department of Financial Services said Wednesday that HealthNow New York, which does business as BlueCross BlueShield of Western New York and BlueShield of Northeastern New York, has been violating this particular tenant of insurance law from 2007 to 2013.
The company allegedly limited renewals of small-group policies to those with at least five members, despite the fact that state law requires insurers participating in the small-group market to offer coverage to any group of between two and 50 members.
HealthNow had apparently been denying coverage to the smaller groups in order to avoid high loss ratios. The department did not release the number of groups affected by the carrier’s actions.
In consequence, HealthNow has agreed to pay a $750,000 fine and end the unlawful underwriting practice for policies that took effect in January 2014.
It is not the first fine for HealthNow. According to a BizJournals report, the company was fined $700,000 in 2013 by DFS for failing to explain coverage and benefit rights to health plan members, and for failing to tell those members how to appeal claim denials.
HealthNow’s Julie Snyder said in a statement that the company cooperated fully in the investigation and will not pay the fine through premium increases passed onto members.
HealthNow is the largest local insurer with more than 800,000 members and operates on revenue of more than $2.4 billion. The company had operating losses of $69.4 million in 2014 due to fewer members, increased medical claims and higher administrative expenses.
