NU Online News Service, May 10, 3:51 p.m. – The New York State Insurance Department is changing the complicated system it uses to protect the state’s health insurers and health maintenance organizations from differences in patient health levels.

The state will be setting up dozens of small risk pools that will focus on the number of health plan members that have specific medical diagnoses, such as pulmonary tuberculosis, cancer of the tongue or congestive heart failure.

Pool administrators will collect payments from carriers that have a below-average number of members who have specific problems. The administrators will send cash to carriers that cover an unusually large number of sick members.

The new risk-adjustment system affects individuals and small groups that buy commercial health coverage from health insurers and HMOs. The changes will not affect purchasers of Medicare supplement insurance policies or large commercial plans, according to the New York department.

The New York department is making the changes to the risk-adjustment system in the fourth amendment to Regulation Number 16, which takes effect May 22.

The department has posted a summary of the amendment at http://www.ins.state.ny.us/r146p4au.htm

The full text of the amendment is available at http://www.ins.state.ny.us/acrobat/r146f4at.pdf

New York first began using risk pools to keep health carriers from shunning sick applicants in 1993. Up till now, the state has used general demographic factors, such as member age and sex, to adjust for differences in plan member health status.