Wellpoint on the firing line

The trend error in its California filing is likely to create headaches nationwide for Wellpoint, according to The Wall Street Journal:

In a memo sent Wednesday to its 40,000 employees .  .  . [WellPoint Inc. Chief Executive Angel] Braly said the Indianapolis health insurer will implement third-party reviews of its 2010 rate filings and investigate why its actuaries did not find miscalculations uncovered last week by the California Department of Insurance.

“We have to be sure that the processes we use and the work we produce are reliable and accurate, so they do not in any way distract from the real challenges facing us—the unrelenting increase in the cost of health care in America,” Ms. Braly wrote.

The move comes a day after Health and Human Services Secretary Kathleen Sebelius asked governors and regulators in 50 states to investigate whether WellPoint’s rate filings included similar errors to those found in California. Last week, the WellPoint unit in California withdrew its request to increase rates for individual plans by up to 39% after actuaries hired by the state found several mistakes, such as double counting the price effect of policyholders as they age.

Problems for WellPoint continued to mount on Wednesday. California Insurance Commissioner Steve Poizner, a Republican candidate for governor, said he is investigating the validity of claims data used by WellPoint’s Anthem Blue Cross unit. The probe includes a review of claims, premiums databases and information-system processes and controls, the department said.

Other health insurers seeking large-ish increases could probably expect scrutiny, too.


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