par Astrid Fiano
, DOTmed News Writer | September 20, 2010
Michigan state Attorney General Mike Cox said his office filed a lawsuit this week against Blue Cross Blue Shield of Michigan and the State of Michigan Office of Financial and Insurance Regulation. The suit charges BCBSM and OFIR with illegally raising rates up to 66 percent on seniors purchasing Medicare supplemental insurance known as Medigap.
In the suit, Cox is requesting a temporary restraining order to stop the rate increase from being implemented until either a hearing or a preliminary injunction can take place.
According to the AG's press release on the suit, OFIR is accused of violating law through approving the rate increase without providing notice, which prevented opportunities for interested parties to request a hearing, as allowed by state law. Cox said the immediate implementation of the proposed 66 percent increase will "cause seniors to drop their coverage, putting their physical and financial health at risk."
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Cox said that in August BCBSM filed a new Medigap rate plan with OFIR to raise rates on subscribers receiving a subsidy from their former employers to purchase Medigap insurance and on out-of-state subscribers by 66 percent, equaling $70.84 per month. The group is also proposing raising rates on other Medigap subscribers by 12.5 percent, Cox said. In September, OFIR approved the 66 percent rate increases but did not publish notice of the proposed rate increase; the Attorney General's office is allowed 60 days after such notice to request a hearing, and OFIR is prohibited from issuing a final order until the hearing has been held.
However, BCBSM strongly disagrees with Cox's actions. BCBSM says it is the only Michigan insurance plan to discount the premiums of its Medigap plans and that in effect, Cox is suing OFIR on behalf of persons not having primary residency in the state, and those who receive payments from their employers to purchase Medigap coverage.
"Blue Cross is committed to providing discounted Medigap premiums to every Michigan senior who buys coverage on their own. We have a proposal before the Insurance Commissioner right now that would actually reduce premiums for thousands of Michigan seniors by providing the deepest discounts to seniors at the lowest income levels," Andrew Hetzel, BCBSM vice president of corporate communications, said in a statement. "We believe Michigan's Attorney General should stand with us in support of Michigan seniors in need - and not use our courts to help seniors who have the financial resources to leave our state and establish residency elsewhere, or who get help from their employers to pay the bill."