The state Department of Managed Health Care and Kaiser Permanente announced an agreement Thursday to immediately reinstate health insurance to 1,092 Kaiser patients in California whose coverage was rescinded between 2004 and 2006.

"Kaiser enrollees are clearly getting a win today," DMHC Director Cindy Ehnes said in Los Angeles. She said most of the reinstated patients are in Northern California.

Consumer Watchdog, a statewide advocacy group based in Santa Monica, said it was somewhat encouraged by the settlement but feared that it fell short of stronger regulations proposed over the previous 18 months.

Consumer Watchdog said it was concerned that the settlement "stacked the legal deck against consumers whose policies were wrongfully canceled by forcing them into mandatory arbitration, potentially limiting class-action lawsuits, and by letting insurers off the hook for punitive damages."

Kaiser is describing its move as a voluntary "Kaiser Permanente Fresh Start Program" for former California members whose health care coverage was previously rescinded.

"This program will provide those persons with the option to purchase individual health insurance coverage going forward and provide a fair and expeditious process to resolve any disputes that may remain," said Jerry Fleming, senior vice president and national health plan manager for Kaiser.

Policy rescissions differ from cancellations. When a policy is rescinded, the plan has no obligation to pay current claims, leaving patients with potentially devastating medical bills for care already provided. Cancellations are more likely to occur after claims are paid, Ehnes said.

Kaiser Permanente instituted rescissions from January 2004 to October 2006.

"We want to clear up past issues so we can move forward toward a longer-term solution addressing the larger issues of affordable health care coverage," Fleming said.

Fleming declined to provide the costs Kaiser will absorb for reinstatements and any payments.

Ehnes said a similar settlement with health insurance provider Health Net was being completed, affecting about 85 patients whose coverage was rescinded.

Kaiser said that, in the coming weeks, it will begin contacting former members with unresolved disputes, offering them the option of purchasing individual coverage from Kaiser Permanente without a medical review. Those people must meet certain criteria, such as residing in the specified service area.

Kaiser said it will then refund any amounts collected for medical service that had been provided by Kaiser Permanente.

In April, Ehnes ordered immediate reinstatement of more than two dozen patients whose insurance coverage was rescinded by several major health plans in California, including Kaiser, requiring them to pay all medical claims of the patients involved.

At that time, Ehnes also ordered independent review of thousands of other rescissions made by the state’s five largest health plans — Kaiser, Anthem Blue Cross, Blue Shield, PacifiCare and Health Net — since 2004.

Ehnes said she was optimistic of future settlement agreements with Anthem, Blue Shield and PacifiCare.

PATIENT OPTIONS

Here’s a summary of what former Kaiser Permanente enrollees can expect under an agreement announced Thursday by the state Department of Managed Health Care and Kaiser:

– Kaiser will not rescind any coverage issued prior to May 15, 2008.

– Within 45 days, Kaiser will begin contacting former enrollees to extend coverage without any medical underwriting conditions. The offer will be open for 90 days.

– Enrollees may pursue additional legal remedies.

– For those not contacted directly by Kaiser, the offer of coverage will be extended, if requested by an individual, until Dec. 31, 2008.

– Any medical charges incurred by the former enrollee during the time they had prior Kaiser coverage will either be forgiven or refunded.

– A written claim for additional damages can be submitted, with Kaiser either offering a financial settlement or rejecting the claim.

– If the amount requested is $15,000 or less and includes only medical expenses incurred following the rescission, the case will be decided by an independent third-party review on an expedited basis.

If the amount requested is more than $15,000 or includes claims other than medical expenses, the case will be decided through a more formal arbitration hearing process.

Source: California Department of Managed Health Care
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Contact The Bee’s Mark Glover at: (916) 321-1184 or [email protected]