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August 30, 2007

California Measure To End Retroactive Cancellations of Health Plans

The California Department of Managed Health Care on Tuesday said new rules to prevent HMOs from retroactively canceling individual policyholders' coverage are taking longer than expected to draw up because of the variety of plans involved, the Los Angeles Times reports. In January, the agency, which regulates California HMOs, said it would introduce in the spring regulations to stop the practice of HMOs retroactively canceling coverage because of a failure to disclose pre-existing medical conditions.

DMHC spokesperson Lynne Randolph said the delay in issuing the new rules is a result of the time required to survey the plans to make sure the rules fit them all. "These regulations need to get out in a timely way, but we also feel that consumers deserve to have regulations that will be able to be quickly adopted so that thousands of people who are now being denied health insurance or are afraid of obtaining health insurance because of possible rescission can get relief," Randolph said.

A survey of Blue Cross of California was the first to be completed in March, but the company is disputing the findings, as well as the department's decision that the HMO routinely violated state law by rescinding policies. Surveys of other plans are ongoing.

Proposed rules could take up to a year to be made public and then approved, revised or discarded. Randolph said rescission regulations would be sought even if Gov. Arnold Schwarzenegger's (R) health reform proposal is approved because major changes to the state's health care system would take a long time to implement and could face legal hurdles. Schwarzenegger's (R) plan would require that insurance be sold to all residents, regardless of medical history.

Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights on Tuesday in a letter to DMHC criticized the delay, writing, "Patients cannot afford for you to allow another company's rescission policy to leave more Californians uninsured, uninsurable and facing unpayable medical bills."

Chris Ohman, executive director of the California Association of Health Plans, said the state's efforts to pursue the regulations are "kind of silly," adding, "Let's focus on issues that are going to be relevant to health care reform"

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Posted by healthinsurance at August 30, 2007 10:51 AM

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