New Rules Should Reflect Survey Findings
Santa Monica, CA — In a survey released today, California’s top HMO regulator harshly criticized Blue Cross of California for violating a state law that bars health insurers from retroactively canceling coverage unless the insurers prove that a patient willfully misrepresented past medical conditions. The survey found that out of 90 patient complaints reviewed, Blue Cross illegally rescinded coverage in each case.
“Out of 90 cases reviewed to determine whether Blue Cross abided by state law, Blue Cross struck out 90 times. This survey is damning evidence that Blue Cross has put patients at risk of medical bankruptcy by flagrantly violating state patient protection laws,” said Jerry Flanagan, Health Care Policy Director for FTCR. “The survey clears the way for tough new rules designed to crack down on lawbreakers. Other insurers can expect the same tough review and all companies will likely face fines and penalties.”
Currently, insurers often retroactively cancel individual policyholders’ coverage due to so-called “omissions” on a patient’s enrollment application — which by design is vague, overcomplicated and asks misleading questions — regardless of whether a patient intentionally misrepresented their medical histories. However, § 1389.3 of the California Health and Safety Code bars such cancellation unless there is a “showing of willful misrepresentation.”
The DMHC audit shows that Blue Cross does not review medical records until after a patient gets sick, then rescinds coverage based upon discrepancies between the medical records and the application. DMHC issued a $1 million fine against Blue Cross.
– Out of 90 cases reviewed, Blue Cross violated state law in every case by retroactively canceling policies without determining whether patients “willfully misrepresented” their medical histories on their enrollment application.
– In 39 of 90 cases reviewed, Blue Cross failed to comply with even its own guidelines for reviewing applications. DMHC has found those voluntary guidelines to be inadequate.
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FTCR is California’s leading public interest watchdog. For more information, visit us on the web at www.ConsumerWatchdog.org