Insurance reinstated for some — thousands more get reviews
State regulators Thursday set the stage for the reinstatement of
thousands of Californians who may have been wrongfully dropped from
health care plans over the past four years.
In an extraordinary move, Cindy Ehnes, director of the California Department of Managed Health Care, ordered immediate reinstatement of more than two dozen patients whose insurance coverage was rescinded. The health plans will
be required to pay all medical claims of the patients involved.
Ehnes
also ordered independent review of thousands of other "rescissions"
made by the state’s five largest health plans – Kaiser Permanente,
Anthem Blue Cross, Blue Shield, PacifiCare and Health Net – since 2004.
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 When a policy is rescinded, the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, she said.
The
department’s action drew immediate, if cautious, praise from consumer
groups who have been pushing state regulators to enforce existing laws
that protect health plan enrollees.
"This is a landmark victory
for those 26 people reinstated," said Jerry Flanagan of Consumer
Watchdog, a Santa Monica-based health care advocacy group. "Most
importantly, it opens the door for thousands more."
Attorney
General Jerry Brown said Thursday that his office is investigating
health plans and other insurers for wrongful rescissions and insurance
claim denials, according to a spokesman.
Gov. Arnold
Schwarzenegger also registered his objection to rescissions, saying it
is "outrageous that innocent patients have to live in fear of losing
their health care coverage. I look forward to working with my partners
in the Legislature to ensure this egregious practice is stopped."
Two
bills addressing rescissions are in play in Sacramento. And
Schwarzenegger said his health care proposal offers a solution: a
prohibition of denials based on age or pre-existing medical conditions.
Insurance
industry representatives said health plans have been working for the
past year – both on their own and with government officials – to
develop clear, fair and standardized underwriting and rescission rules.
"Rescissions
are not common, but when they are done we very much want a process that
is fair and accurate," said Kaiser spokeswoman Kathleen McKenna. She
said Kaiser hasn’t rescinded a policy in California since October 2006.
Ehnes’
order to reinstate 26 enrollees – issued to Kaiser Permanente, Blue
Cross and Blue Shield – followed an investigation into practices of
health plans offering individual health insurance coverage. Of 28
million insured Californians, about 2.6 million have individual
policies.
"These (26 cases) are the most egregious," Ehnes said.
"I am using fairly extraordinary authority to pull these out … because
I think the aspects of these are so severe."
Ehnes said that
under state law, insurers can rescind policies only if applicants
deliberately misrepresent health histories. Insurers are prohibited
from "post-claims underwriting" – accepting new enrollees, then
scouring applications for potential fraud, omissions or misstatements
after claims are submitted.
Anthony Wright, executive director of
Health Access, a California consumer health group, cited the case of an
unnamed Rancho Cordova woman who was being treated for breast cancer
when she was abruptly dropped by her health plan. The reason: She had
failed to disclose an old prescription for an antidepressant.
Said
Ehnes: "We believe that anyone who has made an innocent mistake should
never be rescinded." Proper underwriting, she said, uncovers mistakes
before potentially harmful rescissions can occur.
In a 2007
review of 90 rescissions by Blue Cross, the managed health department
determined none met California legal criteria for discontinuing a
policy.
Flanagan, of Consumer Watchdog, praised Ehnes’ actions
but questioned whether reinstatements would be retroactive to the time
the policy was rescinded and whether the health plans would be
responsible for all related health expenses.
He also argued that
a third-party review of other rescinded policies is unnecessary because
the state already has determined the health plans were not following
rules. "All illegally canceled patients must be swiftly reinstated in
full, without dragging the process through months or years more of
review," he said. "That will at least make the insurance companies
follow the law on future policy applications."
In response, Ehnes said she does not have the authority to order a blanket reinstatement.
Chris
Ohman, president and CEO of the California Association of Health Plans,
cautioned that sweeping regulatory action could have unintended
consequences. "California is the largest insurance market in the
country, and our rates are at or below the national average," he said.
"We don’t want to jeopardize that."
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