Saturday, April 19, 2008

Bustin' Chops

For the past several weeks I've been whining about the mess the governor and state legislature have made of the California budget and the resultant mess they've made of the state due to their recalcitrance and ineptness. Today, however, I've got some good news. The state stepped forward in the battle against health insurers who rescinded policies when the policy holders naively filed claims under the policy. From yesterday's Sacramento Bee:

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of Managed Health Care, ordered immediate reinstatement of more than two dozen patients whose insurance coverage was rescinded.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. ...

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.

"Post-claims underwriting" is the perfect term for this outrageous practice. Let me provide a brief reminder of how the insurance companies operated this scam. Prospective customers filled out an application for health insurance and submitted the first premium payment. They continued to pay the premiums and the insurance companies cashed their checks. Then, when the policyholder filed a claim for benefits under the policy, the insurance company went back and reviewed the applications looking for even the slightest error, and finding one, rescinded the policy without paying a nickle on the claim. One consumer advocate gave an example: a woman with breast cancer had her policy rescinded during treatment because she failed to note that she had taken an antidepressant drug in the distant past. Nice, eh?

It is precisely because of this scenario, which was repeated thousands of times over the past four years, that the state regulatory agency stepped in. The practice is illegal, and has been all along. A District Court of Appeals judge agreed last December in a case I posted on here.

And the response by health insurers to this latest bit of chop-busting? Just a little not-so-veiled threat:

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."

Careful, Mr. Ohman. You and your members just might be stoking the fires in the movement towards a government managed universal access program.

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Anonymous Anonymous said...

Let's hope this case is precedence for all states. It is past time for closer attention to the protection robbers/mafia of insurance. The masses have had enough.


6:43 AM  
Blogger Dallas Health said...

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9:58 AM  

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