NEW YORK, N.Y., August 17 – New York Insurance Department Superintendent Howard Mills has ordered the distribution of $71 million in surplus market stabilization pool funds to New Yorkers in the individual direct-pay health maintenance organization (HMO) market.

The $71 million represents surplus monies that have accumulated in two Insurance Department-administered market stabilization pools, and does not involve taxpayer dollars, Mills explained. These pools, one dealing with Specified Medical Conditions (SMC) and the other created to assist companies that insure a higher-risk, higher-cost population, were created in the early 1990s. The pools were aimed at promoting stability in the marketplace while also allowing insurers and HMOs to share the risk of paying for costly treatments, such as for those who are diagnosed with HIV or in need of an organ transplant.

The department has phased out the two pools and is creating a new mechanism to provide market stabilization.

Mills said he has directed HMOs to make direct refunds or apply premium credits to HMO policyholders beginning October 1. More than 67,000 people are covered by the policies in question, and the average premium refund will be about $1,000 for individuals and nearly $2,500 for those covered under family contracts, the department said.