Kaiser Proposes Individual Policyholder Guidelines
Kaiser Foundation Health Plan on Tuesday announced that it is working with state regulators to develop a new protocol for canceling individual policyholders' coverage, the Los Angeles Times reports.
If the guidelines proposed by Kaiser are approved, managed care organizations would be required to seek the input of individual policyholders before deciding whether to cancel coverage, according to a Kaiser official.
The consultation step is intended to help the HMO determine whether policyholders intentionally provided inaccurate information about their medical history to obtain coverage, according to the Times.
Individual policyholders, unlike people covered under group plans, are subject to rejection of an application for coverage because of current or past health conditions, as well as rescission of coverage for inaccuracies on an application.
The Times reports that Kaiser's position marks "the first sign of a substantive split within the health plan industry on the issue" of cancellation standards for individual coverage. Blue Cross of California, Blue Shield of California and other insurers maintain that they can rescind coverage based on any omission from an application for coverage, even if the omission is inadvertent.
Kaiser proposed the new standard as the Department of Managed Health Care issued a $100,000 fine against the HMO for its cancellation of an individual policy. DMHC found the cancellation to be improper because the individual's condition had not been diagnosed by a physician, the individual was not aware of the condition and Kaiser had not asked the individual about the alleged omission on his application before canceling coverage.
Kaiser did not admit wrongdoing in the case but agreed to pay the fine.
The fine against Kaiser is the second that DMHC has issued against insurers in recent months for cancellation of individual policies (Girion, Los Angeles Times, 1/3).