Health insurers will return more than $15 million to Massachusetts consumers through a provision of the federal health care law.
The refunds are required of companies that don’t spend enough of the premiums they collect on patient care and quality improvement. This year’s refunds are less than half of the $34 million Massachusetts insurers had to pay last year.
Ten insurers will return money to nearly 209,000 consumers, about $133 per family. Neighborhood Health Plan will pay the most, more than $6 million. Fallon Health will pay more than $4 million, and Tufts nearly $3 million.
The state’s largest private health insurers, Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care, met the threshold for spending on patient care and don’t have to refund money.
Nationally, insurers are returning $332 million to consumers, down from about $504 million last year.
“Plans have been working very hard to keep costs under control,” said Eric Linzer, senior vice president of the Massachusetts Association of Health Plans. “The fact that you’re seeing lower rebates than in past years demonstrates that the plans are pricing their products very competitively.”
The federal government requires health plans to spend at least 80 percent of premium dollars on patient care, but Massachusetts law is even stricter — it mandates 90 percent be used on medical costs. The state Division of Insurance said earlier this month that seven health insurers would pay $10.4 million in rebates to members. The $15 million in refunds announced Thursday comes on top of that.
Neighborhood Health Plan’s chief operating officer, David Segal, said the company’s growth had a role in its refunds.
“NHP experienced strong membership growth in 2013, and there is often a lag between premium revenue and the use of medical services for new members,” Segal said. “Much of NHP’s growth skewed to members with lower medical utilization, which follows national trends.”
Another reason health plans are issuing refunds is they’ve had to pay unanticipated administrative costs to address technical and other issues with the state’s broken health insurance exchange, Linzer said.
This is the third year that insurance companies have returned money to consumers.Priyanka Dayal McCluskey can be reached at priyanka. firstname.lastname@example.org.
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