SACRAMENTO, CA — The state Department of Managed Health Care ordered the policies of 26 consumers immediately reinstated and opened the door to potentially reversing policy cancellations for thousands of more Californians deemed to have been wrongfully rescinded.
The 26 were identified as part of an investigation into the rescission practices of the largest health plans offering individual coverage in the state. DMHC Director Cindy Ehnes also ordered a re-review of all other rescissions made over the past four years.
"Today, for the first time, consumers who have fallen victim to rescission will get a second chance at health coverage," Ehnes said in a statement.
The DMHC will use an outside arbiter to review every rescission discovered during the investigation and determine what remedies should be made, including payment of medical care and premiums, for those found to have been wrongfully rescinded, Ehnes announced. The DMHC also ordered the insurance plans to institute uniform business practices for rescission.
Tom Epstein, vice president of public affairs for Blue Shield of California, declined comment, saying the insurer has not received any formal notification of the DMHC announcement.
In a statement from Jerry Fleming, senior vice president and national health plan manager, Kaiser Permanente said it has been cooperating with the DMHC and supports an independent third-party review process. The company voluntarily suspended rescissions in October 2006, pending clear guidelines from the state, Fleming said.
"We will continue working with the Department to develop a process that will work for reviewing past cases and future applicants. We very much want a process that is fair and accurate," Fleming said.
"This a landmark step on the road to justice for the thousands of innocent patients those health insurance was retroactively cancelled," Jerry Flanagan, Health Care Policy Director for Consumer Watchdog, formerly the Foundation for Taxpayer and Consumer Rights, said in a statement. "However, we caution that reinstatement must be retroactive to the time of the policy cancellation, and health insurers must be liable for all health expenses from the date of issuing the contract through the date of reinstatement."
In a related development, a bill to require health care service plans and health insurers to seek regulatory approval before dropping policyholders they believe failed to disclose preexisting medical conditions cleared the Assembly Health Committee in a 14-0 vote earlier this month. State Assemblyman Hector De La Torre, sponsored A.B. 1945 amid heavy criticism of Blue Cross of California (now Anthem Blue Cross), for sending letters to doctors asking that they report new members’ pre-existing conditions, which the company could then use to cancel patients’ medical coverage. Blue Cross announced it was stopping the practice on Feb. 13 (BestWire, Feb. 15, 2008).
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