Mich. AG halts Medigap rate increase

Keith Loria Nov. 18, 2010, 1:19pm


LANSING, Mich. (Legal Newsline) - Michigan Attorney General Mike Cox has announced that his office has won a lawsuit that will stop previously approved rate increases of up to 66 percent for 8,600 seniors who purchase Medicare supplemental insurance.

Cox said that the increase to the insurance, known as Medigap from Blue Cross Blue Shield of Michigan, would have caused many seniors to drop their coverage.

A motion was also won for the state of Michigan Office of Financial and Insurance Regulation to schedule a rate hearing to discuss the proposed increase. The preliminary injunction will allow Cox and other subscribers to challenge the Medigap rate increase.

"Today's decision is a great victory for Michigan seniors who were facing Medigap rate hikes by Blue Cross," Cox said. "Now my office will have the opportunity to defend seniors through the rate relief process defined in Michigan law."

Cox originally filed the lawsuit on Sept. 16, alleging that OFIR violated the Nonprofit Health Care Corporation Reform Act by approving a Medigap rate increase without first providing notice.

BCBSM filed a new Medigap rate plan with OFIR on August 6 that proposed rate increases for subscribers who receive any subsidy from their former employers to purchase Medigap insurance and on out-of-state subscribers by about $70.84 per month. It also proposed raising rates on other Medigap subscribers by 12.5 percent.

OFIR issued a letter on Sept. 7 approving the increases but never published notice of the proposed rate increase. Under state law, Cox's office is afforded 60 days after notice by OFIR to request such a hearing, and OFIR may not issue a final order until a hearing takes place.

Cox is also looking into Blue Cross' plan to deny equal application of the statutorily-required subsidy to all subscribers. This would deny Medigap subsidies to seniors with terminal renal disease or cancer who receive premium assistance from an advocacy support group.

Neither the Insurance Commissioner or Blue Cross have any authority under state law to implement a conditional and ultimately unequal distribution of Medigap subsidies to subscribers of their choosing, Cox asserts.

When BCBSM proposed a 37 percent increase for Medigap last year, a hearing resulted in only a 3.8 percent increase being approved.

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