Calif. To Examine Validity of Anthem’s Claims-Related Data

May 7, 2010

The California Department of Insurance (CDI) had begun an effort to assess the validity of the claims data used by Anthem Blue Cross to justify future rate filings.

“As Anthem readies its new rate filing, I have directed auditors at the Department of Insurance to determine whether the underlying information used by Anthem to prepare these documents is fair and accurate,” Commissioner Steve Poizner said. The review will investigate whether there are problems with the company’s claims payments systems and data controls.

The examination, started in early April, is scrutinizing Anthem’s accounting and claims systems in regards to the recording and documenting of premiums and claims data, and a review of the information systems and controls in place. The examination includes a review of the company’s paid claims database, premium database and information systems processes and controls.

The data analyzed in the exam is ultimately the input that goes into the calculation of the company’s medical loss ratio.

Commissioner Poizner also released the full independent, outside actuarial analysis performed by Axene Health Partners LLC. The report was conducted over a 10-week period and required 500 hours of work by four licensed actuaries. A summary of the review is below and the entire review is available at

Based on the review of Anthem’s calculations, Axene found numerous errors in the methodology used by Anthem to project total lifetime loss ratios. Correcting these errors resulted in lower lifetime loss ratios than initially calculated by Anthem.

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