By TRACEY DRURY
tdrury@bizjournals.com | 716-541-1609

Two of the region's health insurers will refund more than $25 million in health insurance overcharges to consumers and businesses.

Excellus Health Care, the parent company of Univera Healthcare, and HealthNow New York, parent of BlueCross BlueShield of WNY, are among 11 insurers that will collectively issue refunds of $114.5 million statewide.

According to the state Department of Financial Services, 573,748 policyholders in New York were overcharged for health insurance premiums in 2010. State law requires insurers to spend at least 82 cents of every dollar collected in premiums on providing medical care. If the amount spent - known as the medical loss ratio - is less than 82 percent, insurers are required to refund the difference to policyholders.

Excellus will make refunds totaling $21.4 million - the second highest among the 11 insurers cited. HealthNow refunds will total $4.5 million. The insurer making the largest refund is Empire, which must make refunds of $61 million.

According to the Department of Financial Services, most of the refunds - a total of $44.7 million - will be made to policies covering 141,829 members in the large-group market where plans are used to cover groups of 51 members or more; while $25 million will go to small groups covering 290,520 with 50 or fewer people covered.

Another $27.2 million is being refunded to 16,773 people who purchased insurance coverage as individuals.

Refunds have already been made in some cases, with the balance expected to be made by Dec. 15.

HealthNow said in a statement the state is unfairly applying the 2010 Prior Approval law requirements to rates and contracts agreed to in fall 2009. Applying the law retroactively, it says, violates due process and the company has asked the New York State Supreme Court in Albany for a declaratory judgment.

Julie Snyder, director of corporate relations, said in the statement the company has been compliant and does not object to any aspects of the law for 2011 and thereafter, including requiring prior approval for all rate changes.

"We believe a change in the law that increased the minimum loss ratio (MLR) retroactively to our company's 2009 filing for 2010 rates will cause a significant reduction of HealthNow's financial reserves and prudent fiduciary plan, ultimately impacting current and future customers' rates," she said. Meanwhile, Leslie Moran, senior vice president of the New York Health Plan Association, said the refunds announced by the state represent reimbursements on 2010 rates, which were filed in 2009 before the prior approval law and the new higher 82 percent MLR standard was put in place.

"In applying the higher MLR standard retrospectively, the Department of Financial Services changed the rules in the middle of the game," she said. "DFS wrongly characterizes this as overcharging. DFS also continues to overlook the real factors of New York's higher premiums, which are higher than national costs, as well as the taxes imposed on health insurance."

A complete list of refund amounts is available at http://www.governor.ny.gov/press/110911health.