Aug 17, 2017

Latest on the California Rescission Front


Blog Category:
11/17/2008
Brian S. King
Comments (0)

Both Anthem Blue Cross and Blue Shield have entered into settlement agreements with the California Department of Managed Health Care to put behind them allegations made by that state agency about the comanies' improper rescission practices.  The L.A. Times article is here.  Blue Cross, part of the Wellpoint, Inc., will pay $10 million in a fine to the DMHC and reinstate coverage for all members whose coverage it rescinded.  It will also establish a process whereby individuals who were left holding the bag for medical expenses after Blue Cross rescinded will have those expenses paid, together with payment of other out of pocket expenses that directly resulted from Blue Cross's improper retroactive cancellations. 

Blue Shield's settlement agreement is similar but with smaller numbers in light of the substantially lower number of covered persons it has compared to Anthem Blue Cross.  It will pay $3 million in fines, reinstate cancelled coverage and arrange to pay previously denied medical expenses and consequential damages. Finally, both Anthem Blue Cross and Blue Shield agreed to develop new applications that are easier to understand and fill out correctly.  The settlements follow on the heels of earlier DMHC settlements with Kaiser Permanente, Health Net and PacifiCare. 

While the settlements are good news for the insurers, not everyone is happy about them.  A bit of background is helpful.  The California Department of Managed Health Care is that state's regulatory agency for health maintenance organizations.  This is separate from California's Department of Insurance which regulates the indemnity products of insurance companies in California.  The latter include insurers which reimburse consumers for medical expenses incurred or provide medical coverage through a preferred provider network.  The departments of insurance in most states regulate all insurers products, from HMOs to traditional indemnity payers.  But California has a higher than average penetration of HMO coverage. The DMHC settlements deal only with the HMO aspects of the insurers' businesses.  The California Department of Insurance continues to carry on separate, ongoing investigations of the insurance industry.

In addition, the Los Angeles City Attorney, Rocky Delgadillo, has sued the insurers separately.  He alleged last week that, among other things, Blue Shield systematically sought to target for rescission individual policies where individuals had submitted high dollar claims to the insurer.  Delgadillo thinks the DMHC deals with Blue Shield and Anthem Blue Cross are sell outs.  The healthcare policy director for Consumer Watchdog in California likewise feels that the DMHC deals are far too generous to the insurers and allow Blue Shield and Anthem Blue Cross to get away with paying pennies on the dollar for clearly wrongful conduct.  In addition to the Department of Insurance and the L.A. City Attorney's actions are the array of individual lawsuits brought against the insurers by various families who argue that their policies were improperly cancelled. 

Insurer rescission woes in California are not at an end, not by a long shot. 



Category: General

Labels:

There are no comments.

Post a comment

Post a Comment to "Latest on the California Rescission Front"

To reply to this message, enter your reply in the box labeled "Message", hit "Post Message."

Name:*

Email:* (will not be published)

Message:*

Notify me of follow-up comments via email.