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Insurance rate feud between North Dakota insurance regulator and Blue Cross Blue Shield leads to bill

The ongoing feud between North Dakota's insurance regulator and Blue Cross Blue Shield has spurred legislation to streamline premium rate cases and require an actuarial basis for decisions.

The legislation, which has passed the North Dakota Senate and faces its first hearing Wednesday in the House, tightens the administrative appeal timeline and makes final an administrative law judge's decision, which could be appealed in court by the state or health insurer.

"I think the context was in large part the issue that had come up with the Blues and the insurance commissioner," said Sen. Tom Fiebiger, D-Fargo, one of the bill's co-sponsors.

Senate Bill 2306 was sought by Blue Cross Blue Shield of North Dakota but applies to any health insurance company in the state.

Adam Hamm, North Dakota's insurance commissioner, opposes the bill, which he says will strip his department of its authority.

"The Blues bill protects the company at the expense of the consumer," he said. "It rewrites and removes the authority of the insurance commissioner to regulate health insurance" and maintain a competitive marketplace.

Rod St. Aubyn, a lobbyist for the Blues, said the ongoing dispute between the company and Hamm has revealed shortcomings in the appeals process.

"It's never been tested before," he said, noting that previous rate disagreements with the Insurance Department were resolved through negotiation, without triggering an administrative appeal.

But time is money. Three premium increases sought by Blue Cross Blue Shield in filings last year are resulting in lost revenues of almost $4 million a month, St. Aubyn said.

That amount reflects the gap between premiums collected under old rates still in effect and those sought in rate increase requests.

In one of the disputed rate cases, involving individual subscribers, an administrative law judge ruled last week that Hamm's decision to deny a 14.8-percent rate increase was not based on actuarial reasons.

Yet the case remains undecided, St. Aubyn said, and it is possible the case finally will conclude a year after the rate request was filed last May. In the past, he added, most premium disagreements were resolved in 20 days, with the longest in recent years taking 48 days.

But shortening the review period for premium increase reviews reduces the thoroughness of reviews and hampers effective oversight, Hamm said. Also, he said, disputed premium increases would automatically take effect until the next rate filing.

The intent of the bill, Fiebiger said, was to strike the proper balance between health insurance companies and regulators.

"At the end of the day this seemed like something that was fair to both sides and fair to the public," he said.

Rep. Duane DeKrey, R-Pettibone, one of the bill's House sponsors, agreed that the bill is meant to prod both sides in a disputed rate case to more quickly resolve their differences, to avoid costly delays that benefit neither party.

Hamm, who couldn't be reached Friday for comment on the bill, has expressed concerns with the measure. Fiebiger noted that the two sides clashed last week, as Hamm criticized a $250,000 sales reward trip for Blue Cross Blue Shield sales representatives as an administrative law judge faulted his rate decision.

"These people are going to have to find a way to work this out," Fiebiger said. "The public depends on them."