Anthem Blue Cross, Blue Shield of California Settle With State
On Thursday, officials from Blue Shield of California and Anthem Blue Cross agreed to pay millions of dollars in fines and offer coverage to more than 2,200 Californians whose coverage the health plans had rescinded, the Los Angeles Times reports.
Blue Shield is a not-for-profit insurer based in San Francisco, and Anthem Blue Cross is a unit of the for-profit WellPoint, based in Indianapolis.
Under the agreement, Anthem will pay a $10 million fine to the Department of Managed Health Care and offer new policies to the 1,770 former members who have had their coverage canceled since 2004, while Blue Shield will pay a $3 million fine to DMHC and will offer new policies to the 450 former members who have had their coverage canceled since 2004 (Girion, Los Angeles Times, 7/18).
Blue Shield could face an additional $2 million fine in 18 months if it does not complete corrective actions for the 450 people affected by its rescissions (Yamamura, Sacramento Bee, 7/18).
Anthem Blue Cross also must fulfill additional circumstances to avoid another fine, although the amount of that fine is undetermined, according to the Sacramento Business Journal (Robertson, Sacramento Business Journal, 7/17).
The insurers agreed to establish a process to compensate former policyholders for medical costs they paid out of pocket after their coverage was rescinded, as well as other damages, such as loss of home or business resulting from bad credit due to unpaid medical debts (Los Angeles Times, 7/18).
Neither Anthem Blue Cross nor Blue Shield admitted any wrongdoing under the settlements (Capitol Weekly, 7/17).
DMHC Director Cindy Ehnes said, "The fine is a record in DMHC history and it sends the message that if you come into California and sell health insurance, you must play by the rules" (Girion, Los Angeles Times, 7/18).
Last week, Ehnes said that insurers who did not agree to settlements would face stiffer penalties.
Gov. Arnold Schwarzenegger (R) applauded the settlements (Tayefe Mohajer, AP/Contra Costa Times, 7/18).
The settlement closes DMHC's investigation into rescissions. According to Ehnes, 3,370 Californians have had their coverage reinstated through deals with DMHC and California's five major insurers.
The settlements do not directly affect lawsuits by Los Angeles City Attorney Rocky Delgadillo against insurers for rescissions or individuals whose policies were rescinded.
In addition, the settlements do not affect Insurance Commissioner Steve Poizner's (R) investigations into rescission practices of insurers' PPO plans (Los Angeles Times, 7/18).
Meanwhile, at a hearing on health insurance policy rescissions on Thursday, House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) said that the committee will launch a broad investigation into practices used by private health insurers in the individual market, CQ HealthBeat reports (Reichard, CQ HealthBeat, 7/17). About 14 million U.S. residents purchase health insurance through the individual market (Girion, Los Angeles Times, 7/18).
Waxman said that the investigation is necessary as a number of proposals seek to expand health insurance to more U.S. residents through the individual market (CQ HealthBeat, 7/17). As part of the investigation, the committee will send inquiries and requests for policy documents to a number of large health insurers (Los Angeles Times, 7/18).
Waxman said that whether federal legislation is needed to regulate the practices used by health insurers in the individual market remains undetermined. "We'll do an investigation first, and then we'll see if it makes sense," he said (CQ HealthBeat, 7/17).