Blue Shield of California, stung by public outrage over its latest premium hikes, said Friday it won't back down from its plans to raise rates by as much as 59 percent, setting the stage for a confrontation with the state's new insurance commissioner.

Last week, Insurance Commissioner Dave Jones asked Blue Shield to delay for 60 days a planned rate hike the company said would go into effect in March. Earlier this week, Jones also asked Aetna, Anthem Blue Cross and PacifiCare to delay their previously announced rate hikes.

Blue Shield officials "believe the rates are appropriate," company spokesman Johnny Wong said in an e-mail Friday. As a result, "We are moving forward with the March 1 rate increase."

But the embattled San Francisco-based insurer on Friday also said it will submit its rates to an independent actuary for review and would refund overpayments, with interest, if the actuary "finds that the rates are not sound."

Blue Shield said it hired David Axene, the same actuary who last year found errors in rate filings by Anthem Blue Cross after it came under fire for a substantial rate hike. That increase was rescinded because of the review.

Jones, who took office just last week said he was "disappointed that Blue Shield has not agreed to my reasonable request that they delay the implementation of their March 1, 2011, rate increase."

Jones on Friday repeated his call for legislation to give his agency the authority to reject rates it deems excessive.

Last year, Jones, a former Democratic assemblyman from Sacramento, joined fellow Democrat Assemblyman Mike Feuer of Los Angeles in sponsoring such a bill. The legislation died in the Senate.

Feuer introduced a new version of the bill in December, and on Friday said "this episode underscores the critical need for the state to have robust authority to review and approve rate increases — and to reject increases that insurers can't justify."

State regulators have the authority to review rates but no veto power over premium hikes, as long as the increases comply with state and federal rules on minimum spending for direct medical care.

Jones contends that Blue Shield was required to have the actuarial review under a new state law that requires that rate hikes be certified as actuarially sound.

Blue Shield last month informed nearly 200,000 customers that it would again be raising rates — by as much as 59 percent — because of its own rising costs.

"We regret that our members have received significant rate increases in recent months and want to be absolutely certain that the rates reflect our actual cost of providing medical care," Blue Shield Chairman and CEO Bruce Bodaken said in a statement announcing the review.

"If this independent review finds that the rates are not sound, we will hold our members harmless by refunding the difference with interest."

On average, the latest Blue Shield increase would raise rates by about 15 percent, the company said. Since last fall, the company has announced three separate rate hikes — amounting to an average combined hike of about 30 percent — on policies bought on the individual market.

The incendiary rhetoric flew on Friday.

"It's not every day that an insurers spits in the eyes of nearly 200,000 Californians and their newly elected insurance commissioner," said Doug Heller, executive director of Consumer Watchdog.

"Instead of submitting to real public review, they're basically picking somebody to check their math," he said.

Last year, Axene Health Partners discovered numerous mathematical mistakes in a filing submitted by Anthem Blue Cross, which sought to increase rates on about 700,000 Californians by as much as 39 percent. The company resubmitted the filing and adjusted its premium increases downward after the review.

Blue Shield expects Axene to complete the review of its rate hike within 45 days.

The insurer said its rates would be reviewed to confirm that calculations are "accurate and its assumptions are sound." It will also review the rates for compliance with the new standard under the new federal health care law to see if the new premiums are "excessive, unjustified, or unfairly discriminatory."

The company said it expects to lose $20 million to $30 million this year on individual policies. In the past three years, the company said, its costs for hospitals, physicians and prescription drugs have risen by an average of 15 percent annually.

Contact The Bee's Bobby Caina Calvan, (916) 321-1067 or [email protected]