Report of examination of Healthnow New York Inc Dec 31,2003

http://http://www.ins.state.ny.us/exam_rpt/55204c03.pdf


The Plan reported reserves and unassigned funds of $221,993,959 as of December
31, 2003. As of December 31, 2003, the Plan’s required to be maintained statutory reserve
of $222,134,436 was impaired in the amount of $140,477. Subsequent to this report date,
the Plan has filed quarterly and annual statements which indicate a removal of the
impairment.


The Plan is a non-profit health service corporation organized under the provisions
of the Membership Corporation Law and Article 43 of the New York Insurance Law.
The Plan was incorporated on September 26, 1939 and commenced business in 1940



As of December 31, 2003 health care services were provided to 669,699
members. The following chart shows annual membership changes by number and
percentage:
1998 1999 2000 2001 2002 2003
Members 674,183 679,463 616,961 622,664 649,875 669,699
Change % +0.1% -9.2% +0.1% +4.4% +3.1%


Different Corporate Structures ie.


HealthNow Holdings, Inc.
As of December 31, 2003, this entity was a wholly owned subsidiary of
HealthNow Systems Inc. and currently is the for-profit holding company for
HealthNow Foundation, New York Care Plus Insurance Agency, Inc. and HealthNow
Contractor Services, Inc., which are all subsidiaries of HealthNow Systems, Inc. The
shares of HealthNow Holdings were transferred to HealthNow New York Inc. in
April, 2004.


HealthNow Foundation (Not-for-Profit Corporation 501(c)(3))
HealthNow Foundation (Foundation) is organized exclusively for charitable
purposes in the United States and abroad within the meaning of Sections 170(c)(2)(B)
and 501(c)(3) of the Code. The sole member of the Foundation is HealthNow
Holdings, Inc.


HealthNow Contractor Services, Inc.
HealthNow Contractor Services, Inc. is a wholly owned subsidiary of HealthNow
Holdings, Inc. This entity was dormant as of December 31, 2003.


Blue Care New York Benefits Agency, Inc. (BCNYBA)
The Plan maintained a 16.67% controlling interest in Blue Care New York
Benefits Agency, Inc. (BCNYBA) as of December 31, 2003. The Plan, along with
four other New York Blue Cross and Blue Shield Plans, formed BCNYBA, then
known as New York Administrative Plan Services, Inc., in 1995 for the purpose of
providing insurance marketing services for said Plans.



New York Care Plus Insurance Agency, Inc. (NYCPIA)
The Plan, in 1997, formed New York Care Plus Insurance Agency, Inc. for the
purpose of operating as an accident & health and life insurance agency. As of the
date of this report, New York Care Plus Insurance Agency, Inc. has remained a
dormant operation.
The following is a description of the inter-company agreements in effect between
HealthNow New York Inc. and other members of the holding company as of the
examination date:


The above ratio is outside Department benchmark guidelines. The Plan
experienced positive underwriting results in the traditional product lines in 2002 and
2003, particularly in the Buffalo area.
The underwriting ratios presented below are on an earned-incurred basis and
encompass the October 1, 1999 to December 31, 2003 period covered by this
examination:
Amount Ratio
Claims incurred $5,147,699,017 86.1%
Claims adjustment expenses incurred 328,037,492 5.5%
Other underwriting expenses incurred 409,944,999 6.8%
Net underwriting gain 96,482,015 1.6%
Premiums earned $5,982,163,523 100.0%



As noted in the above schedule, the Plan exceeded the 12.5% administrative
expense limitation prescribed by Section 4309(b) of the New York Insurance Law for the
years 1999, 2000 and 2001.



Sales and Advertising
The Plan disseminated comparison benefit summary charts in 2004 which
contained instances of misleading and/or incomplete comparisons of other Plans’
benefits. A total of eight (8) such comparison benefit summary charts were found to have
been presented to employer groups and/or brokers. This is a violation of New York
Insurance Department Regulation 34 (11 NYCRR 215.11) which states:
“An advertisement shall not directly or indirectly make unfair or
incomplete comparisons of policies or benefits or comparisons of noncomparable
policies of other insurers, and shall not disparage
competitors, their policies, services or business methods, and shall not
disparage or unfairly minimize competing methods of marketing
insurance.”
It is recommended that the Plan comply with the requirements of Department
Regulation 34 (11 NYCRR 215.11) relative to its sales and marketing advertising.