California HMO Chief Reinstates Policies, Orders Larger Review
On Thursday, the Department of Managed Health Care ordered the reinstatement of 26 patients' health policies after they were wrongfully rescinded, and an investigation into all rescinded health insurance policies by the state's five largest insurers since 2004, the Sacramento Bee reports.
Cindy Ehnes, director of DMHC, explained that rescissions differ from more common policy cancellations, in that health plans are not required to pay current claims when they rescind a policy. In cancellations, health plans pay claims before terminating coverage (Griffith, Sacramento Bee, 4/18).
Of the 26 reinstatements, 10 are from Kaiser Permanente, eight are from Anthem Blue Cross -- formerly known as Blue Cross of California -- and eight are from Blue Shield of California.
DMHC is expected to reveal the results of a separate investigation into rescissions by PacifiCare Health Systems and Health Net in the next few weeks (Hogarth, East Bay Business Times, 4/18).
Ehnes said Anthem Blue Cross, Kaiser Permanente and Blue Shield would be required to pay all medical claims for the 26 patients (Girion/Lifsher, Los Angeles Times, 4/18). The cases were part of a sample of 286 cases randomly chosen for review (Sheppard, Los Angeles Daily News, 4/17).
Reviews of four insurers are pending.
The investigation into Anthem Blue Cross concluded last year and found 90 patients had their insurance wrongfully rescinded. Ehnes said she would fine Anthem $1 million but has not collected the funds yet.
Ehnes also said that a third-party review of the insurers would begin "within the month" and that insurers will pay for the cost of the investigations, which will be "several million" dollars.
She estimated that the number of policies that have been rescinded since 2004 is likely in the "thousands" (Los Angeles Times, 4/18).
The Los Angeles Daily Journal estimates that the review will involve "[t]ens of thousands" of people whose policies have been rescinded (George, Los Angeles Daily Journal, 4/18).
Ehnes said that the state does not have an exact count because HMOs are not required to report such data to the state (Los Angeles Times, 4/18).
Legislation is pending in the Assembly that would require HMOs to report policy cancellations (Howard/York, Capitol Weekly, 4/17).
Gov. Arnold Schwarzenegger (R) praised the reinstatements and said it is "outrageous that innocent patients have to live in fear of losing their health care coverage" (Los Angeles Times, 4/18).
Jerry Flanagan -- health policy director for Consumer Watchdog, a health care advocacy group -- also praised Ehnes' actions but questioned whether the reinstatements would be retroactive to when the policy was rescinded and whether the insurers would be responsible for all related health care expenses.
Flanagan also urged DMHC to order a blanket reinstatement for all people whose policies have been rescinded illegally (Sacramento Bee, 4/18).
However, Ehnes said that she does not have the authority for such action and that DMHC must evaluate them on a case-by-case basis. She said the department's current focus was on cases that demonstrated that the patient was clearly not at fault (Colliver, San Francisco Chronicle, 4/18).
Shannon Troughton -- a spokesperson for WellPoint, the parent company of Anthem -- said it has taken steps to improve its rescission processes before DMHC concluded its investigation.
Health Net spokesperson Margita Thompson said the company would work with DMHC to "meet our shared goal of ensuring that people have confidence in their health care coverage."
A Blue Shield spokesperson declined to comment (Los Angeles Times, 4/18).
Kaiser spokesperson Kathleen McKenna said Kaiser has not rescinded a health policy since October 2006 (Sacramento Bee, 4/18).
Insurance Commissioner Steve Poizner (R), Los Angeles City Attorney Rocky Delgadillo, lawmakers and courts also are scrutinizing insurers' cancellation practices (George, Los Angeles Daily Journal, 4/18).
KPBS' "KPBS News" on Friday reported on the reinstatements (Goldberg, "KPBS News," KPBS, 4/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.