In February 2012, the New York State Department of Financial Services (DFS) announced that it is launching a “wide-ranging probe into the accuracy of the data used by insurers and health maintenance organizations (HMOs) to request health insurance rate increases.”
Benjamin M. Lawsky, Superintendent of DFS stated, that “[t]hese in-depth audits will allow us to drill down underneath the numbers to make sure they are accurate. For example, we can look at whether insurers are accurately allocating administrative costs and broker commissions. The audits also will help ensure that insurers have proper controls and oversight in place to make certain that data are reliable and accurate.”
In September 2011, the DFS won a $4.4 million grant from the U.S. Department of Health and Human Services which it intends to use to fund the audits. The grant was among several grants issued to various states to fund, among other things, enhanced premium rate review.
The audits will involve reviewing selected rate requests that have already been filed. The DFS will hire a private accounting firm to assist DFS personnel in conducting the audits.