WellPoint, Rescissions, Fraud and Reform from Daily Kos

from http://www.dailykos.com/storyonly/2010/4/23/860070/-WellPoint,-Rescissions,-Fraud-and-Reform?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+dailykos%2Findex+%28Daily+Kos%29

Yesterday Reuters had a blockbuster story on WellPoint's practic of cancelling policies for breast cancer patients.

The women all paid their premiums on time. Before they fell ill, none had any problems with their insurance. Initially, they believed their policies had been canceled by mistake. They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.

WellPoint has responded, claiming that

The story . . . misstates the role of what it terms computer algorithms. Contrary to how its use was portrayed in the story, such software is used to look at a series of diagnostic codes meant to capture conditions that applicants would likely have known about at the time they applied for coverage. We do not single out breast cancer or pregnancy.

which doesn't necessarily take heat off of the insurer--that algorithm could (and is likely) being used to ferret out "conditions that applicants would likely have known about" for any patient newly diagnosed with a potentially expensive life-threatening or chronic condition.

The White House responded, with a statement that this is precisely the kind of "scenarios that motivated the President to work so long and so hard to pass health reform." And Sebelius wrote to Angela Braly, WellPoint CEO.

As you know, the practice described in this article will soon be illegal. The Affordable Care Act specifically prohibits insurance companies from rescinding policies, except in cases of fraud or intentional misrepresentation of material fact.

WellPoint should not wait to end the unconscionable practice of deliberately working to deny health insurance coverage to women diagnosed with breast cancer. I urge you to immediately cease these practices and abandon your efforts to rescind health insurance coverage from patients who need it most.

Breast cancer is the second-leading type of cancer among women, has touched millions of families, and will affect one in eight American women during their lifetime. This year alone, an estimated 192,000 American women will be diagnosed with breast cancer.

Speaker Pelosi responded similarly, pointing out where the new law will prevent these kinds of rescissions. The problem, however, is that the new law still allows what WellPoint has argued it did in these cases--rescind policies because of "fraud or intentional misrepresentation of material fact," as Sebelius points out in her letter. Sebelius should be taking this story very seriously, and recognize the potential still existing under the new law for a broad interpretation on the part of insurers for "fraud and intentional misrepresentation." This is an area HHS needs to pay particular attention to in crafting the regulations for the law to find any possible way in which they can tighten up potential loopholes and make the law enforcable as it was intended.