Calif. Blues asked to explain rate hikes

The California agency that oversees HMOs has asked Blue Shield of California to explain rate increases for about 70,000 members covered by individual plans.

The California Department of Managed Health Care said not-for-profit Blue Shield of California raised rates on average by 37.5%. The increase included an 18.8% hike that went into effect in January, and a 15.8% increase effective Oct. 1, 2010, according to the agency.

In a letter (PDF) to the health plan, the DMHC requested further information on how the rates were calculated, and to explain how they were deemed reasonable and justified.

Tom Epstein, Blue Shield of California spokesman, said in a statement that the rate hikes “are the result of the rapidly rising cost of medical care for our individual and family plan members.”

In March, San Francisco-based Blue Shield of California announced it would abandon plans to raise rates on individual policyholders for the rest of the year, under pressure from the California Department of Insurance. The DMHC query is in regards to rate hikes that already went into effect.