BCBS of Alabama hit with $8M penalty for charging unapproved rates

Birmingham-based Blue Cross and Blue Shield of Alabama faces an $8 million penalty from the Alabama Department of Insurance for selling policies at rates discrepant from those approved between 2005 to 2013, AL.com reports.

The charges, which were not filed with and approved by the department, comprised approximately 1,400 plans sold to small group employers and short-term Consolidated Omnibus Budget Reconciliation Act plans. The rate changes led to nearly $107 million in undercharges and roughly $33 million in overcharges, according to an Aug. 16 Alabama Department of Insurance order obtained by AL.com.

BCBSA issued refunds to more than 1,400 small group employers and 2,200 COBRA plan enrollees for the overcharges.

"Although premium rate stabilization efforts are common insurance practices, we mistakenly did not document these practices in our small group rate filings," BCBSA told the publication in a statement. "We also did not adjust the rating category for some small business customers when their annual employee health insurance enrollment fluctuated from the previous year."  

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