California Regulators Order Health Insurers To Reinstate Coverage for Some Members Whose Policies Were Improperly Canceled; State Will Continue Investigation of Rescissions
The California Department of Managed Health Care on Thursday ordered the immediate reinstatement of 26 individual health insurance policies that were wrongly rescinded and said it will review all policy rescissions by five insurers over the past four years, the San Francisco Chronicle reports. Under state law, health insurers can legally rescind coverage if it is determined that a member intentionally lied or withheld information on an application. However, insurers have been accused of using a practice called rescission, in which they cancel coverage after a person gets sick, citing minor or inadvertent mistakes on applications.
The reinstatements announced Thursday were the result of an initial review by the department of 286 policies canceled by Kaiser Permanente, Blue Shield of California and Anthem Blue Cross (Colliver, San Francisco Chronicle, 4/18). DMHC Director Cindy Ehnes said the 26 rescissions that were reversed were "so clearly wrong that they needed to be reinstated right away" (Girion/Lifsher, Los Angeles Times, 4/18). She said a third-party reviewer will evaluate all rescissions that occurred between 2004 and 2008. She added that the investigation would cost "several million" dollars and would be funded by the insurance companies (Tayfe Mohajer, AP/Contra Costa Times, 4/17).
The administration of Gov. Arnold Schwarzenegger (R) indicated that thousands of people who had policies rescinded would have a chance to get their coverage reinstated and receive reimbursement for outstanding medical bills (Los Angeles Times, 4/18). "Today's announcement applies to only 26 people, but the same law used here will provide reinstatement for thousands more," Jerry Flanagan, health care policy director for Consumer Watchdog, said (San Francisco Chronicle, 4/18).
Insurer Reaction
Christopher Ohman, president of the California Association of Health Plans, said, "On their own, health plans have been implementing new policies to strengthen and make more transparent the process for rescinding policies" (Los Angeles Times, 4/18). Anthem in a statement said it is "important to clarify that the survey found only a relatively small number of rescissions reviewed were improper." Kaiser Permanente issued a similar release and noted that the company had suspended the practice of rescission since 2006 and was "awaiting clear guidelines from the state" (AP/Contra Costa Times, 4/18).
Please note: The Kaiser Family Foundation is not associated with Kaiser Foundation Health Plan, Kaiser Permanente or Kaiser Industries.
