(AP Images)

AXA Equitable Insurance Company has reached a settlement with the state regarding undisclosed changes to medical claim reimbursement policies.

The settlement requires AXA Equitable to pay restitution to members, in New York as well as outside the state, who were adversely impacted by the insurance company’s actions.

State Attorney General Eric T. Schneiderman estimated that the cost of the settlement to AXA could be as high as $850,000.

A spokesman for AXA Equitable said the issue revolves around a transition period for outside vendor health insurance companies used to handle medical claims.

The state ordered all insurance companies in the state to change their vendors in 2009, according to Schneiderman and AXA Equitable officials, and the problem developed due to problems with the protocol used to calculate reimbursements.

The settlement required all health insurers in the state to use FAIR Health, Inc., which was created as part of the settlement as the data source for its medical claims reimbursement policy. 

The issue deals with the industry’s methods for determining out-of-network reimbursement for health insurance customers.

The AXA Equitable spokesman said the problem deals with a runoff product that the former Equitable Insurance Company stopped marketing 20 years ago.

Approximately 7,000 people remain AXA Equitable customers because they took a guaranteed renewal option when they first purchased the product at issue.

The AXA spokesman estimated that there are still approximately 5,000 active participants in the particular plan, and that only 773 claims are in dispute.

According to Schneiderman, the Attorney General took action after apparently determining that AXA Equitable had made an undisclosed change to its medical claim reimbursement policy resulting in lower reimbursements for many members. 

As a result of the investigation, AXA Equitable has already changed its medical claim reimbursement policy to honor the terms of its members’ health insurance plans, Schneiderman said.

The settlement requires AXA Equitable to pay restitution to members, in New York as well as outside the state, who were adversely impacted by the problem. The issue only involves the period from September 2001 to May 2012, the AXA Equitable spokesman said.

The AXA Equitable spokesman and Benjamin M. Lawsky, Superintendent of the state Department of Financial Services, both said that AXA had acted promptly to resolve the issue once informed of the problem by state officials.