Health Care Regulators Accused in Hearing of “Glacial Pace” In Stopping Post-Claim Rescissions, Failing to Restore Coverage to Victims

 

California’s Department of Managed Health Care has not ordered Blue Cross to restore insurance coverage in any of 90 cases of illegal rescission found by the department’s own investigators, consumer advocates revealed during a hearing in the state Senate’s Health Committee.

The Department of Managed Health Care must move forward now with regulations now to stop these illegal cancellations, said Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights), and restore coverage lost by innocent patients who have been left not only uninsured, but uninsurable.

“Despite the department’s own finding of widespread abuse, patients still are not protected from arbitrary loss of their insurance coverage when they fall ill,” said Jerry Flanagan, health policy director of Consumer Watchdog. “The department has not ordered the reinstatement of any enrollees in Blue Cross, despite DMHC’s own determination that in every one of 90 cases examined, Blue Cross acted illegally. This glacial pace is harming real people.”

Flanagan expressed alarm at reports that the department might push the issue back to the Legislature, even though the DMHC has full authority to issue regulations. “Punting to the Legislature will delay justice for those already harmed, and allow insurers to continue, perhaps for years, canceling policies when patients fall ill.”

The law states that individual health insurance policies can be cancelled only for “willful misrepresentation” by an applicant, said Consumer Watchdog. Regulators must move forward  with draft regulations, circulated in 2007, that protect innocent patients from policy cancellations. During the hearing, Flanagan cited the case of a patient whose policy was canceled when the insurer found that a doctor had diagnosed high blood pressure, even though the doctor never informed the patient of the condition.

“This is as far from willful representation as an applicant can get,” said Flanagan, “yet insurers saw it as an excuse to cancel the patient’s insurance and refuse to pay his doctors.”

Governor Schwarzenegger must make good on his own promise to protect patients from such cancellations, said Consumer Watchdog.  The hearing was convened by Sen. Sheila Kuehl, chair of the committee, to examine the performance of the Schwarzenegger Administration’s Department of Managed Health Care.

Consumer Watchdog sent a letter to Governor Schwarzenegger calling on him to either confirm or deny rumors that administration staff had told the department to “pull back” on new regulations crafted over the last two years to end the practice of illegal retroactive cancellations.

The Governor personally promised to end the so-called health insurance “rescissions” in his State of the State address this January.