Kaiser, Health Net To Reinstate Coverage for 1,200 Members
On Thursday, Kaiser Permanente and Health Net agreed to reinstate health coverage to nearly 1,200 patients whose policies were rescinded after they incurred costly medical expenses, the Los Angeles Times reports.
The state Department of Managed Health Care, which brokered the deal, is working to reinstate coverage for about 4,000 more patients through similar deals with Anthem Blue Cross, Blue Shield and PacifiCare.
Insurers argue that some people with individual coverage lie on their applications about pre-existing conditions to gain coverage and that rescinding policies from those customers prevents premiums from increasing. However, regulators and law enforcement officials say health plans do little to verify applications for coverage until patients incur substantial medical claims.
Mike Lassiter, a Kaiser spokesperson, said the insurer proposed the agreement to reinstate up to 1,092 former enrollees whose coverage was rescinded from April 2004 until October 2006, when the health plan ceased the practice of policy rescissions.
Under the agreement with DMHC, Kaiser will pay a $300,000 fine but will not admit any wrongdoing (Girion, Los Angeles Times, 5/16). In addition, the insurer could face a potential $3 million fine if it fails to pass a survey of its practices by state regulators in the next 18 months (Robertson, Sacramento Business Journal, 5/15).
Kaiser also has agreed to allow patients whose coverage was rescinded to submit claims for gap damages, or any costs incurred after the policy was dropped, such as bankruptcies, job loss or other problems. Kaiser will offer a financial settlement within 60 days, and disputes will be resolved by a third-party or arbitrator review.
Jerry Fleming, senior vice president and national health plan manager for Kaiser, acknowledged that adding 1,092 patients, who might have serious medical conditions, to the risk pool could increase the cost of care, raising premiums (Hogarth, East Bay Business Times, 5/15).
Under a similar deal, Health Net will reinstate coverage for 85 former enrollees whose policies were rescinded since 2004. In a statement, Health Net said it will "work as expeditiously as possible with these individuals to resolve their eligible out-of-pocket costs."
The settlement process with both insurers allows patients to seek repayment of medical expenses of up to $15,000 and larger, and disputed medical bills will be submitted to an arbiter selected by DMHC. Former enrollees also can opt out of the settlement process and take their claims to court.
Gov. Arnold Schwarzenegger (R) said, "This important settlement should pave the way to similar agreements with other health plans to reinstate health coverage" (Los Angeles Times, 5/16).
Anthony Wright -- executive director of Health Access California, a health care consumer advocacy coalition -- said, "While we think the fines don't match the scale of the insurer's wrongdoing, the priority is to make the patients whole, and to make sure they have coverage."
Cindy Ehnes, the department's director, said, "Our goal is to get all consumers, not only those within Kaiser, covered again without having to go through a long process that may not be decided in their favor" (Colliver, San Francisco Chronicle, 5/16).
Jerry Flanagan, spokesperson for Consumer Watchdog, said the deal was not a substitute for the regulations promised 18 months ago by DMHC that will be put on hold pending legislation. "Punting this issue to the Legislature where insurers have immense lobbying power risks regulation that is more loophole than protection," he said (Los Angeles Times, 5/16).
Thursday's settlement follows DMHC's decision last month to reinstate coverage for 26 patients and review thousands of other rescissions made by Kaiser, Health Net, Anthem Blue Cross, Blue Shield and PacifiCare (San Francisco Chronicle, 5/16).
Ehnes said she is optimistic about future settlement agreements with Anthem, Blue Shield and PacifiCare (Glover, Sacramento Bee, 5/16).
Meanwhile, the Los Angeles City Attorney's Office has sued Health Net and Blue Cross for rescinding health policies. The city attorney also filed a criminal investigation into the rescissions by Health Net. Chief Assistant City Attorney Jeffrey Isaacs said Health Net's latest deal would not affect the lawsuit or investigation (Los Angeles Times, 5/16).