One of North Carolina’s largest health insurers sold policies to an estimated several hundred residents here without approval from the N.C. Department of Insurance.
The state agency on Wednesday approved the policies on an expedited basis to resolve the matter. The insurance department is now reviewing whether Aetna should be fined or penalized for marketing insurance products without authorization.
Still, it took about three weeks for the policies to be approved after Aetna’s initial application was rejected because of more than a dozen instances where Aetna could have potentially denied coverage it is required to provide by state and federal law.
Insurance department spokeswoman Kerry Hall said the agency is gathering information on the episode but noted that it looks favorably on insurers who self-report infractions.
“There is no evidence this was purposefully done to skirt the regulation,” Hall said. She characterized it as “more of an oversight.”
At this point the insurance department is not sure how many people were affected because Aetna has not yet responded to all the agency’s questions. However, Aetna sold health insurance to 349 residents in this particular business line in 2013, the most recent year for which information is available.
The problem affected a tiny fraction of Aetna’s 685,000 customers in the state. The affected customers bought the coverage through their employers, who had contracted for Aetna’s preferred provider organization product for small businesses.
In addition to renewal policies that rolled over from 2014 and became effective in January, Aetna had signed up 52 new customers through 14 employers on plans effective Jan. 1 and March 1.
Aetna spokesman Walt Cherniak said its customers were not informed of the problem.
“This is a small matter,” Cherniak said. “The changes we made to our plans were minimal. It doesn’t involve rates.”
Aetna notified the insurance department’s Health and Life Division by email on Feb. 11 that it had failed to file the health plans for approval. The Hartford, Conn.-based insurer submitted applications on Feb. 16, but the insurance department rejected the application as inadequate.
The rejection, made public by the insurance department, offers a rare glimpse of the state’s rate review process, which is typically conducted in secrecy under the state’s trade secret provisions.
The insurance department requested a number of changes. For instance, the agency asked Aetna to rewrite policy terms to make clear that minimum hospital stays after childbirth do not require pre-certification.
The department also noted that Aetna can’t refuse to permit a traditional retail pharmacy from participating in Aetna’s mail order program for medications.
In another observation, the department wrote: “Please be advised that coverage for lactation support counseling services and post partum women is required under Federal ACA preventive services. Please provide a detailed explanation as to how you will comply with these required benefits.”
While it is unlawful in North Carolina to sell insurance policies without state approval, Aetna was still bound by the contracts it sold without authorization.
“Therefore the consumers covered under the contracts would be entitled to all of their rights under NC’s laws regarding appeals, grievances, etc.,” the insurance department said by email.