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Monday, September 25th 2006

The Most Hated Entity In Healthcare?

Why do opinions of physicians remain high (in polls that is) despite a crumbling health care system? Because insurance companies can shoulder the burden of scorn. Managed Care Matters goes over a recent crop of retroactive denial of coverage.

He links to a case where the state of California has smacked Blue Cross with a large fine for such a manuever.

In the first sanction of its kind, California’s top HMO regulator fined Blue Cross on Thursday for illegally canceling a woman’s medical policy because she did not disclose corrective surgery she had 23 years earlier.

The $200,000 fine might not be the last resulting from the state’s investigation of allegations that insurers dump sick policyholders to avoid paying claims, said Cindy Ehnes, director of the Department of Managed Health Care.

“This is the first penalty in an ongoing investigation in which the [department] is still assessing the full extent of harm to consumers,” Ehnes said at a news conference in Sacramento.

She said she considered the fine “a very significant step to protect consumers from illegal rescissions of their health coverage.”

The fine comes in the wake of scores of lawsuits filed in California in recent months by consumers. They say they were stuck with medical bills after insurers canceled them for making innocent mistakes on their applications or for leaving out health history details the individuals viewed as insignificant or irrelevant.

They also allege that insurers use applications that are confusing by design to trap consumers into making mistakes that can later be used against them.

Anthony Wright, executive director of Health Access California, a statewide healthcare consumer coalition, said the fine was not enough, “given the extent of insurers’ dumping patients simply because they use their health insurance.”

“Blue Cross must end its ‘use it and lose it’ policy,” he said. “Patients need to know that their coverage will be there when they need it and not taken away at exactly the time they need care.”

Claremont lawyer William Shernoff, who represents about 100 consumers who have been canceled by Blue Cross and other insurers, said he was underwhelmed by the size of the fine but pleased that regulators were investigating “because it’s been going on for a long, long time.”

The problem involves individual health insurance, the type people buy for themselves because they are self-employed or work for companies that do not offer health benefits. More than 2 million Californians have individual policies, about half of them from Blue Cross. Unlike with many group policies, insurers can decline to cover or can charge higher premiums for individual policies based on preexisting conditions.

Blue Cross and other insurers maintain that they have a legal right to cancel such health policies if they find that a consumer omitted information about his or her health history from an application for coverage — whether the omission was intentional or an innocent mistake.

Yet another problem when employers don’t provide insurance.