Aetna Fined $750,000 For Healthy NY Violations

NEW YORK, NY (02/04/2010)(readMedia)-- Aetna Health Inc., a health maintenance organization (HMO), paid a fine of $750,000 as part of a settlement with the New York State Insurance Department, Insurance Superintendent James J. Wrynn announced today. The settlement resolved infractions relating to the administration of the Healthy NY program from April 2007 through January 2009.

Healthy NY is a state-subsidized program designed to assist small business owners in providing their employees and their employees' families with an affordable health insurance alternative. In addition, uninsured sole proprietors and workers whose employers do not provide health insurance may also purchase coverage directly through Healthy NY.

"Healthy NY is a vital program that has provided affordable health insurance to more than 500,000 working individuals, sole proprietors and small business employees since its creation in 2001. This program provides access to health insurance for a vulnerable population of working New Yorkers who would likely be uninsured without it. As such, we monitor the program very closely and treat violations very seriously," Wrynn said.

Aetna's violations included failure to provide adequate written notice of premium increases, failure to provide terminated members with notice of conversion rights, failure to report important enrollment data, and failure to timely and adequately respond to an Insurance Department request for enrollment data.

Aetna has implemented changes in management and oversight of the HMO's participation in the Healthy New York program and agreed to take all additional steps necessary to remediate past problems and prevent the recurrence of similar violations in the future.

"While the monetary penalty is reflective of the serious and systemic nature of Aetna's practices, I am encouraged by the company's level of commitment to addressing the Department's findings and improving the company's performance going forward," said Wrynn.

The Department found that the insurer failed to provide adequate notice of rate increases to individual members. Under the "file and use" provisions of the Insurance Law, insurers may increase premium rates without the prior approval of the Superintendent of Insurance, but must give members a full 30 days notice.

"Under the deregulated file and use system, notices of rate increases become critically important. We are trying to reinstate the Department's prior approval authority to give us better tools to oversee rate increases," said Wrynn. Aetna failed to provide 30-day advance notice to approximately 946 members in 2007.

Other violations include failure to provide notice to approximately 1,406 terminated individuals of their rights to convert to another policy, failure to report periodic enrollment data from May 2007 through August 2008 and failure to respond to a Department request for enrollment data in March 2008. Enrollment data is critical to determining proper funding of the program.

Aetna Health, Inc. serves the Healthy New York program in thirteen counties comprising the Greater New York City metropolitan area and in Broome, Cayuga, Onondaga, Oswego, and Tioga counties. The Insurance Department discovered these violations through numerous consumer complaints received by the Insurance Department's Consumer Services Bureau and by monitoring of the program by the Health Bureau staff. This settlement was a combined effort of the Insurance Department's Health Bureau, Consumer Services Bureau and the Office of General Counsel.

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