State agencies lay out regulations to halt cancellation of policies retroactively.

Sacramento Bee (California)

State regulators Tuesday unveiled a long-awaited proposal aimed at cracking down on health plans illegally canceling policies retroactively.

The Department of Managed Health Care and the Department of Insurance said the proposed dual regulations would help end “this cruel practice” and protect sick patients unfairly from losing medical coverage.

But one group criticized the proposal, saying the plan falls short of protecting consumers.

“The rules will result in more litigation because patients will be forced to go to court when regulators fail to prevent illegal cancellations of coverage,” Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights said in a statement.

In the past year, regulators have cracked down on health plans wrongfully pulling coverage from patients after they submitted claims or received medical treatment. The state has levied more than $1.5 million in fines against Blue Cross of California and Kaiser Foundation Health Plan.

The proposed rules, which will be reviewed during a public hearing sometime after mid-November, clarify what is considered an unreasonable inquiry on a health questionnaire. They also state that:

– Advance notice must be given before any cancellations.

– Coverage cannot be suspended during an investigation.

– Health plans can’t cancel coverage for an entire group if only one person is at fault for misrepresenting facts.

– The director of the Department of Managed Health Care can review policy cancellations.