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October 29, 2007

California Agencies Release Proposed Regulations To Prevent Improper Cancellations Of Health Insurance Policies

The California Department of Managed Health Care and Department of Insurance on Tuesday proposed new regulations intended to prevent insurers from improperly canceling individual health insurance policies, the Sacramento Bee reports (Chan, Sacramento Bee, 10/24). The agencies said the new rules reinforce existing laws prohibiting insurers from rescinding coverage unless they can prove policyholders intentionally omitted information or lied on a medical questionnaire (Girion, Los Angeles Times, 10/24).

Under the proposed regulations, advance notice would be required before any policy cancellations; coverage could not be suspended during an investigation of a policyholder; coverage could not be canceled for an entire group if only one person is responsible for submitting false information on a medical questionnaire; and the DMHC director could review policy cancellations (Sacramento Bee, 10/24). In addition, insurers would be required to simplify their applications to avoid confusing questions about medical history (Colliver, San Francisco Chronicle, 10/24).

The proposal will be reviewed during a public hearing sometime after mid-November (Sacramento Bee, 10/24). DMHC has fined Blue Cross of California and Kaiser Permanente for improper cancellations, and the agency is continuing investigations of Blue Shield of California, Health Net, Kaiser Permanente and PacifiCare (San Francisco Chronicle, 10/24).

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Posted by healthinsurance at October 29, 2007 02:04 PM