26 to get back health coverage taken away

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/17/BUNV107EF0.DTL

26 to get back health coverage taken away
Victoria Colliver, Chronicle Staff Writer
Friday, April 18, 2008

State regulators ordered on Thursday the immediate reinstatement of 26 health insurance policies for consumers who were wrongly stripped of them, marking the beginning of a process that could lead to restoring coverage to thousands of Californians.

The Department of Managed Health Care, which has been investigating the practices of the five largest health plans offering individual coverage in California, plans to review every revoked individual policy identified in its investigation over the past four years to determine whether the decisions were justified.

Health insurers can legally rescind coverage if a member intentionally withheld or lied about his or her medical history on the application. But insurers have come under fire for a practice known as "rescission," in which they use minor or inadvertent mistakes to justify canceling coverage after a member becomes sick.

While consumers appeal the decision or sue their insurer for dropping them, they typically are left with large medical bills, no insurance and zero chance of getting another insurer to cover them.

"We are moving forward now on restoring coverage and giving consumers the fair process they are owed as fast as possible," said Cindy Ehnes, director of the Department of Managed Health Care. "People need their medical bills paid, and they need their coverage now."

As part of Thursday's announcement, the department conducted an initial review of 286 policies that were rescinded by Kaiser Permanente, Blue Shield of California and Blue Cross, now called Anthem Blue Cross.

The agency identified 26 of the most egregious cases and ordered those policies be reinstated immediately. The 26 consumers have not yet been informed of the decision.

Ehnes said the department focused on cases that demonstrated the consumer was clearly innocent, such as the case of a woman who was accused of lying about having a condition for which she was never diagnosed or treated.

Ehnes said her department does not have the authority to order a blanket reinstatement for all rescinded policies, but must consider each on a case-by-case basis. She did not know how long the process will take, but said a third-party reviewer would investigate all rescissions between 2004 and 2008.

Consumer groups were pleased the state took action, but were concerned about outstanding rescissions.

"Today's announcement applies to only 26 people, but the same law used here will provide reinstatement for thousands more. We look forward to working with the department," said Jerry Flanagan, health care policy director for Consumer Watchdog.

E-mail Victoria Colliver at vcolliver@sfchronicle.com.