Last week's Reuters story by Murray Waas detailing WellPoint's targeting of breast cancer patients for rescission brought a swift response from WellPoint. That response included correspondence from WellPoint's Director of Corporate Public Relations, Jon Mills, pointing me to their official response to the story.
It also, however, likely resulted in WellPoint's decision to implement health insurance reforms regarding rescission before 2014, when the new law requires it. Mr. Mills e-mails the WellPoint press release:
(Indianapolis, April 27, 2010) WellPoint, Inc. (NYSE: WLP), the nation’s largest health insurer, announced today that it will implement federal legislation regarding individual market rescissions effective May 1. This is well ahead of the effective date contained in the legislation. WellPoint is the first insurer to implement the provision. This move builds on WellPoint’s leadership in the early implementation of reform by extending coverage to dependents up to age 26.
Rescissions, while rarely used, are one process insurers employ to reduce fraud and protect members. The standard contained in the federal legislation requires insurers not to rescind policies except in cases of fraud or intentional misrepresentation of material fact.
WellPoint welcomes greater uniformity among insurers in this area. In June 2006, WellPoint was the first insurer to announce the establishment of a variety of changes to its rescission practices in an effort to ensure that rescissions are handled as accurately and appropriately as possible. WellPoint followed that in 2008 by being the first in the industry to offer a binding, external, independent third-party review process for rescissions, a move that was cited at the time as a model for the industry and goes beyond the requirements in the federal law.
"Our goal is to make reform work for our members and for the country," said Angela Braly, Chief Executive Officer of WellPoint. "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."
That 2006 policy change, perhaps not so coincidentally, came after some great investigative reporting from the LA Times' Lisa Girion, that California Blue Cross (a WellPoint subsidiary) "routinely canceled policies of sick members after looking for inconsistencies -- not fraud -- in their applications." The article was based on secret testimony from a Blue Cross employee who said that, as was reported by Waas last week, the "reviews were triggered by claims for treatment of certain illnesses."
UnitedHealthcare announced last night that it will join WellPoint.
UnitedHealthcare, "has ended its limited use of rescissions effective immediately, except in cases of fraud or intentional misrepresentation of material fact," the company announced on Wednesday in a clear admission that it was engaged in the practice as a matter of policy....
UnitedHealthcare also intends to comply with an additional request, the company said, and "will be instituting independent, external third party review in the near term" that would allowed patients whose coverage is terminated to appeal the decision.
As Ryan Grim notes in that story, "exactly constitutes fraud or misrepresentation will continue to be subject to dispute. Does forgetting to note childhood acne give insurers license to rescind a policy?" That's particularly a question considering that after WellPoint supposedly changed its policy in 2006, last year House Energy and Commerce committee staff found that the practice continued.
On October 10, 2008, the Oversight Committee sent requests to three insurance companies, WellPoint, Assurant, and UnitedHealth Group, to explain when and how they launch investigations into medical histories of policyholders in order to find discrepancies and potentially rescind coverage.
Two companies, WellPoint and Assurant informed the committee that they automatically initiate a claims review every time policyholder review every time policyholders receive medical treatment for certain conditions. These reviews can leap to full-blown investigations of discrepancies between past medical records and information provided during the application process. Each company provided the committee provided the committee with a list of diagnostic codes they use to automatically trigger medical history investigations. Each company provided the committee with a list of diagnostic codes they use to automatically trigger medical history investigations. These codes re based on the international Classification of Diseases (CID) coding system.
WellPoint’s list of automatic triggers includes more than 1,400 diagnostic codes, including breast tumors, cystic fibrosis, schizophrenia, bronchitis, asthma, chronic sinusitis, and rheumatoid arthritis....
WellPoint has been forced to reverse thousands of rescissions and pay millions of dollars for improperly terminating health insurance coverage in recent years. In July 2008, a subsidiary of WellPoint, Anthem Blue Cross, entered into settlement with the California Department of Health Care under which the company reversed 1,770 rescissions and paid a $10 million fine. This year, in February, 2009, the company entered into an additional settlement with the California Department of Insurance, which it reversed 2,300 more rescissions and paid an additional $15 million in penalties.
The lesson for HHS rule writers and for Congress in this? Don't trust without verifying. There are plenty of state laws intended to regulate rescissions, along with many other insurance company practices, that have been on the books for years. California has had some of the best. And they have been thwarted time and time again, as apparently have the companies' own internal policies. Health insurance reform was a good start, but ending insurance company abuses is probably going to require more.