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WellPoint, UnitedHealth Group announce changes in their use of rescission

Under pressure from Congress and growing criticism from providers and patient right groups, health insurance giant WellPoint announced yesterday that it will begin implementing rescission reform on May 1.

UnitedHealth Group and Blue Shield of California also announced plans to essentially put an end to the controversial practice, while Health Care Services Corporation released a statement saying that it already has a "standard practice" in place of only rescinding policies in cases of fraud or misrepresentation. 

The announcements come after an April 22 Reuters report that Indianapolis-based WellPoint uses computer software to identify female policyholders who have breast cancer, with the sole object of launching a fraud investigation to find an excuse to cancel their policies. The policy changes also come hours after chairs from the House Committees on Ways and Means, Energy and Commerce, and Education and Labor sent a letter to the CEOs of WellPoint, Kaiser Permanente, Assurant, UnitedHealthGroup, Humana, Blue Cross Blue Shield Association and Aetna, urging them halt to the practice of terminating coverage for individuals once they became sick. 

"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," WellPoint CEO Angela Braly said in a statement WellPoint sent to FierceHealthPayer.

Department of Health and Human Services Secretary Kathleen Sebelius, who condemned WellPoint while speaking at the American Hospital Association's annual meeting, said in a statement that she was "encouraged" by the insurer's actions. 

"I urge other insurers to also accelerate the Affordable Care Act's deadline for ending this practice and stop rescinding patients' policies immediately," she said.

While yesterday's announcements may have provided piece of mind for both insured patients and government leaders, the Los Angeles Times reports that California insurers "had all but stopped...policy cancellations." State records, according to the Times, showed that the number of rescinded policies last year totaled four, a huge decrease from the 1,552 policies terminated by insurers in 2005.

"With the sunlight pouring in, insurers have to rethink their strategy," healthcare consultant Peter Harbage, a former advisor to Gov. Arnold Schwarzenegger, told the newspaper. "No one is going to buy insurance from a company today if they think that company will just take it away tomorrow." 

For more information:
- read this Los Angeles Times article
- here's WellPoint's announcement
- here's UnitedHealthGroup's announcement
- here's HCSC's announcement
- read the letter to the insurance CEOs
- read Sebelius' response

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
California considers regs to reduce policy rescissions

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