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No refunds for local health insurers' members Firms exceed federal requirements for percent of premiums devoted to medical expenses

Western New York's three local health insurers exceeded federal requirements for spending on member health, so they will not have to pay any refunds to consumers, company officials said.

The federal health care reform law requires that at least 80 percent of the premium dollars insurers collect for individual and small-group plans and at least 85 percent for large-groupplans be spent on medical expenses for members.

That includes both "community-rated" and "experience-rated" plans, both of which are fully insured, but not self-insured employers.

Under the Patient Protection and Affordable Care Act, health insurers for the first time had to report those percentages, known as medical loss ratios, to the federal government by June 1.

New York State, which has long had minimum standards, also requires insurers to report the ratios to the state Department of Financial Services by June 30.

Those insurers that fall short of the requirements must issue refunds or credits to the employer or individual by Aug. 1 to make up the difference. The goal is to ensure that health plans aren't charging too much in premiums, only to spend more of their money on administrative expenses and salaries.

Insurers, especially for-profit and publicly traded companies, have been widely criticized for overcharging on premiums and spending too much of the money on operations and executive pay.

Under the law, health plans nationwide will be issuing hundreds of millions of dollars in refunds -- as high as $1.3 billion, or an average of $127 per person, according to an estimate by Kaiser Family Foundation that excludes California. In that state, UnitedHealth Group already announced last month it will pay $3.5 million in rebates to nearly 4,400 small businesses.

That's not the case in Western New York for HealthNow New York, Independent Health Association, and Excellus Blue Cross and Blue Shield's Univera Healthcare. All three nonprofit carriers said their medical loss ratios exceeded the federal requirements, so they will not have to issue any refunds.

They will, however, still have to notify customers in writing that no refunds are due.

"Our administrative, operating costs are among the lowest in the nation among all U.S. health plans," said Frank Sava, spokesman for Independent Health Association, whose ratios were 95.8 percent for small groups and 85.3 percent for large groups, according to its annual earnings report.

"This reinforces the company's efforts to operate as efficiently as possible and that our products are priced appropriately."

Univera, which said it posted ratios of 93.4 percent for individuals and 90.9 percent for small and large groups, calculated that it spent $255 million more on hospital and doctors' services, drugs and other medical benefits than the state and federal standards require.

"We seek to provide competitive, affordable access to coverage in our markets that maximize benefits for our customers," said Univera President Arthur Wingerter.

"By exceeding the standards, it means our members collectively got more in medical benefits throughout the year than the minimum amounts set by federal and state governments."

HealthNow, according to its federal filing, posted ratios of 96.8 percent for small groups, 89 percent for large groups and 138 percent for individuals.