After bad publicity, insurer to act early on ending practice of canceling policies of sick patients

WellPoint will put into effect this week a health overhaul provision preventing insurers from canceling policies -- a practice known as rescission -- except in fraud cases, even though the change isn't required until September, the Indianapolis Star reports. The announcement comes on the heels of a Reuters report saying WellPoint used computer software to automatically target women diagnosed with breast cancer for rescission and fraud investigations. WellPoint denies the news story, but House Democrats have asked insurers, including WellPoint, to implement the health law provision ahead of schedule. WellPoint said its "announcement was not a reaction to the investigation" (Lee, 4/28). 

"Insurers have defended rescissions, saying they were trying to stop fraud," the Los Angeles Times reports, noting that 5,000 people have been rescinded from top California insurers since 2004. Nonetheless, the paper says the practice had nearly stopped and only "four such cancellations were reported" last year. "[A] series of Times articles, legislative hearings, lawsuits and regulatory investigations showed that insurers often rescinded without regard for whether their customers intended to deceive them about preexisting conditions on their applications for coverage." In some cases, people have been rescinded even when they have done nothing wrong (Girion, 4/28).

Politico: After the Reuters story broke, House Democrats chimed in. "These rescissions hurt patients who need coverage the most, such as women diagnosed with breast cancer. We are writing to ask all of your companies to end any such abusive practices immediately," said a letter written to insurance companies by Democratic House Chairmen Sander Levin (Mich.), George Miller (Calif.) and Henry Waxman (Calif) (Haberkorn, 4/28). 

Modern Healthcare: "Rep. Lois Capps (D-Calif.), vice chair of the Energy and Commerce Health Subcommittee, said the WellPoint case is 'egregious and unconscionable,' adding that the new reform law would stop such cancellations. 'This is the very thing that will be disallowed,' she said" (DoBias, 4/27). 

The Associated Press/ABC News: WellPoint CEO Angela Braly said in a statement, "There have been a lot of misrepresentations and inaccuracies in recent days that have caused confusion among our members and among the public generally about our policies in this area. … We think today's announcement will go a long way toward bringing greater clarity" (Murphy, 4/27).

---

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.