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March 29, 2008

Health insurers to meet with state agency on rescission probe

California's largest health insurers, facing possible fines and other penalties for the way they sometimes cancel policies after patients pile up medical bills, meet today with regulators to discuss ongoing state enforcement efforts.

The meeting was called by the Department of Managed Health Care, which oversees health maintenance organizations and other types of health plans, because it was nearing completion of investigations into the cancellation practices of Health Net Inc., Kaiser Permanente and Blue Shield of California, said spokeswoman Lynne Randolph.

The department plans to discuss the standards to which it is holding the insurers' practices, she said, as well as remedies for problems identified in the probes of policy cancellations, known as rescissions.

"This is our opportunity to move forward and conclude this phase of our investigation into rescissions," Randolph said. "Our goal is to bring a quick resolution to this problem to protect consumers today from illegal rescissions."

Randolph said the results of the remaining three investigations would be announced soon but that the process -- including today's meeting with the health plans -- was confidential until then to protect the insurers' due-process rights.

The closed meeting has alarmed consumer advocates because it comes as the insurance industry is pushing a plan that critics believe could make it easier for sick patients to lose coverage through no fault of their own. But the department said the industry's proposal was not on the agenda.

California health insurers -- battered by newly aggressive regulators, a $9-million court judgment and stinging criticism from lawmakers, judges and consumer advocates -- are fighting on several fronts this spring in Sacramento and elsewhere.

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Posted by healthinsurance at 07:45 PM | Comments (0)

March 25, 2008

PacifiCare Capitulates to Latest California Patient Revolt

In the face of a national campaign on behalf of Nick Colombo, insurance giant PacifiCare has reversed its decisions and agreed to critically needed cancer treatments for the 17-year-old from Placentia, Calif. The decision came after the company was overwhelmed by calls organized by Nick's friends and family, along with RNs from the California Nurses Association/National Nurses Organizing Committee, and netroots activists.

Over 100 of Nick's classmates, friends of the family with their young children, and nurses protested in front of the health insurance company headquarters this morning to demand that the approval be put in writing, which a PacifiCare representative, surrounded by T.V. cameras, and promised to do.

"I am extremely happy about PacifiCare's reversal," said Ricky Colombo, Nick's 19-year old brother. "The goal was to get treatment for Nick, and CNA/NNOC and other allies helped us with that. We decided to go through with the rally in order to get their decision on the record and make sure they back up their words -- and also because there are thousands of others in similar situations who can't get the care they need. We feel blessed to have this community supporting our family."

This is the latest example of a "patient revolt," where friends, family, and healthcare activists demand treatments denied by for-profit insurance corporations. In this case, Nick's physicians pleaded with PacifiCare to approve a cancer treatment, only to be overruled by an insurance company medical reviewer. PacifiCare is owned by United Health, the nation's largest health insurer, and just last year was fined $3.5 million by the state of California for wrongly denying 133,000 cases in a two-year period.

Inspired by the pleas of Nick's 19-year-old brother Ricky -- A national web of friends and family of Nick -- CNA/NNOC registered nurses, doctors, healthcare advocates, and netroot supporters pitched in on a national day of action Monday on Nick's behalf. Hundreds of phone callers clogged the lines of PacifiCare and United Healthcare offices around the country yesterday, at times shutting down the phone system, and leading a spokesman to complain about being "overwhelmed" by healthcare activists.

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Posted by healthinsurance at 01:50 PM | Comments (0)

March 23, 2008

Fighting Health Insurance Cancellations

Imagine spending thousands of dollars a year for health insurance, only to have it canceled after filing claims for treatment of a serious illness. Some retroactive policy "rescissions" appear unfair and arbitrary, raising doubts about the value of insurance and embarrassing the industry.

Insurance companies
say they need the right to void policies because some applicants lie about their health. But stung by widespread outrage over some recent cancellations, the industry is proposing a way to resolve rescission disputes between policyholders and companies.

America's Health Insurance Plans, an industry group in Washington, is advocating an appeals process involving independent review by a panel of outside experts. Decisions would be binding on health insurers. Earlier this month, the group presented the plan to representatives of state regulators, insurance commissioners and consumer advocacy groups.

"It's a positive step in the right direction and provides an opportunity for prompt dispute resolution while minimizing the need for litigation," says Ron Pollack, executive director of Families USA, a Washington nonprofit consumer organization.

Direct Buyers Only

This issue affects people who purchase their own policies -- not those who are covered under an employer-sponsored plan. Health insurers in most states can deny coverage based on an applicant's health history. Disclosure of some pre-existing conditions, such as cancer or heart disease, may result in a policy denial. But failure to do so could trigger a retroactive policy cancellation in the midst of treatment.

One challenge for health insurance applicants is that sometimes the medical-history forms they must complete are confusing and difficult to understand. Minor health issues that may not seem worth mentioning, and that were never treated by a physician, may later turn out to have been early warning signs of disease. Brokers or agents eager to complete a sale may urge a naive applicant to fudge an answer.

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Posted by healthinsurance at 08:29 PM | Comments (0)

March 18, 2008

Health care a prime target for states' cutbacks

Financially strapped states are looking to take away government health insurance and benefits from millions of Americans already struggling with a souring economy.

An Associated Press review of the budgets in all 50 states reveals that coverage would be eliminated for hundreds of thousands of poor children, disabled and the elderly. More than 10 million people would lose dental care, access to specialists, name-brand prescription drugs or other benefits. About 20 million could see their care jeopardized by further cuts to doctors' reimbursements.

Health care in California is a choice target as governors and legislators confront the worst deficits they have faced in a decade or more, but that is not their only target: They also are considering cuts in aid to schools and universities, shrinking state work forces and even releasing prisoners before their sentences are completed.

Safety-net programs for the elderly, disabled and out-of-work also could be cut, even as the demand for those services is on the rise.

Despite the dire conditions, only a few states are seriously considering general tax increases or even modest increases on the wealthy to close the gaps. Lawmakers say they fear such actions would only further stress the economy.

Instead of health insurance, states are looking to increase lottery ticket sales, promote Indian gambling or further raise taxes on cigarettes and alcohol. Those taxes disproportionately hit the pocketbooks of the same poor and working-class that would be hurt by the spending cuts, studies show.

Nearly two dozen states are grappling with deep cuts and tax proposals to close shortfalls totaling more than $34 billion. That includes California, where lawmakers have made emergency cuts and authorized billions in bond sales to halve a deficit once projected at $16 billion through June 2009. Another dozen states are bracing for falling revenue.

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Posted by healthinsurance at 01:06 PM | Comments (0)

March 14, 2008

Insurance Drops for Municipal Debt, Undermines MBIA

Demand for municipal bond insurance is shrinking at the fastest pace in the industry's 36-year history.

The backing of an insurer has become a liability for tax- exempt borrowers, sometimes doubling interest rates instead of lowering them. State and local governments bought protection on 26 percent of the $40.8 billion in bonds they sold in January and February, down from 53 percent a year earlier, according to data compiled by Bloomberg. At that rate, 2008 will mark the steepest-ever annual decrease, wiping out almost two decades of growth, Thomson Financial data show.

An extended decline would undermine the two biggest bond insurers, MBIA Inc. and Ambac Financial Group Inc., because they're counting on municipal sales to shore up credit ratings threatened by losses on mortgage-backed debt. Treasurers from California, Pennsylvania and Mississippi told lawmakers yesterday many borrowers would never have relied on insurers' ratings if their own were assessed like corporate debtors.

``This is a watershed moment in the municipal bond industry,'' said Richard Larkin, research director at brokerage Herbert J. Sims & Co. in Iselin, New Jersey, and the former chief municipal rating officer at Standard & Poor's. ``The bond insurers have lost a tremendous amount of credibility.''

Municipalities from California to New York are rejecting insurance as fallout from the collapse of the subprime mortgage market strips some of the biggest guarantors of their top AAA ratings. Even the safest debt that they back is tainted.

AAA Ratings

California, which spent $102 million to insure $9.1 billion of bonds between 2003 and 2007, decided insurance wasn't worth it on its most recent $5.95 billion of debt sales, said Treasurer Bill Lockyer.

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Posted by healthinsurance at 04:17 PM | Comments (0)

March 13, 2008

Legislation Would Set Standards for Individual Health Insurance Market in California

The fight on health reform in the last year put a spotlight on many of the real issues in the health insurance market, and in response, legislators this year have introduced a slew of stand-alone bills designed to set cost and benefit standards for health insurance and otherwise increase oversight of the private insurance industry.

A list of many of these bills is available at the Health Access California website.

SB 1522 (Steinberg), sponsored by Health Access California, would set standards for cost and coverage in the individual insurance market. It would provide immediate help to consumers who have to buy insurenace coverage in the individual market, such as the self-employed and those between jobs, while providing a framework for further health reform.

THE BILL

SB1522 (Steinberg) organizes the individual insurance market and makes it understandable for consumers. It would allow consumers to see and understand their choices in the individual market, and be better informed about a plan's premium, benefits and cost-sharing. By setting a standard for coverage, it would also effectively weed out a lot of "junk" insurance.

Consumers in the individual market would have a better sense of their health coverage choices, since all health plans sold in the individual market would be classified into five "tiers." In this way, consumers would be able to know if a certain plan is a top-tier comprehensive plan, or a bottom-tier catastrophic plan, or something in between, and if one plan from one insurer is roughly comparable with another plan by another insurer. This provides some standardization and simplification of the marketplace, while preserving a wide range of choices for consumers.

To allow real price comparison, Insurers would be required to offer five "benchmark" plans, one in each tier. The bill would enable consumers to do cross-insurer price shopping, to make apples-to-apples comparisons, with the confidence of knowing that benchmark plans in a given tier have similar cost-sharing, benefits, and other plan features. The benchmark plan would help define the tier, by being the lowest-price plan in a given tier.

The bill would eliminate some "junk" insurance, products that are coverage in name only, that provide such limited benefits or leave consumers so financially exposed, that the product is not of value. Such plans, deceptively offer "coverage" but leave consumers facing major gaps in coverage and significant out-of-pocket costs. California health insurers would not be able to sell new plans that do not meet the minimum benefit standards.

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Posted by healthinsurance at 11:18 AM | Comments (0)

March 11, 2008

Scrutiny of California Health Insurers Draws National Attention to the Problem

Dow Jones on Friday examined how a "series of troubling developments" related to rescissions of individual health insurance policies in California "is bringing national attention to the problem of patients having their coverage taken away when they need it most." According to Dow Jones, health insurers maintain that they "have a responsibility to ensure applicants are truthful about any pre-existing conditions they may have so companies can accurately price insurance policies and hold down costs for all their members," but consumer advocacy groups "warn that tactics such as tying financial incentives to the number of rescissions an employee makes or involving doctors in investigations after policies have been issued aren't working and may be illegal in some states."

California Department of Managed Health Care spokesperson Lynne Randolph said, "We don't think it is only happening in California ... but California's farther ahead in terms of enforcement," adding, "We had a statute in place that companies must do underwriting up front and a consumer must willfully misrepresent their health condition on an application in order for a company to rescind. We feel that means it can't just be an inadvertent omission."

America's Health Insurance Plans, which has begun to draft a proposal that would allow individual health insurance policyholders to appeal rescissions, said that the practice affected only 0.15% of individual health insurance policyholders in 2006. AHIP President Karen Ignagni said, "We recognize the process needs to be very transparent and people need to have peace of mind that they will have an independent review," adding, "As states adopt this proposal, they'll have a place where they can have these cases vetted external to the health plan." Meanwhile, some health insurers, such as Health Net, have begun to establish their own independent review programs.

Sandy Praeger, president of the National Association of Insurance Commissioners, said that health insurers are "making a lot of money collecting premiums" on individual coverage policies and "need to honor those contracts." She said, "I don't dispute (their) ability to drop someone who's intentionally lied," adding, "But to have policy language and application forms that are hard to understand and rely on a third party to explain them to you, it opens the door to people making unintentional mistakes. They shouldn't be held accountable for those." NAIC has begun to develop a standardized application for individual health insurance policies that could help prevent unintentional errors (Gerencher, Dow Jones, 3/7).

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Posted by healthinsurance at 12:06 PM | Comments (0)

March 08, 2008

How to Spot a Health Insurance Scam

The law offers Medicare beneficiaries a bewildering array of new health-insurance options. They can now choose from dozens of Part D prescription-drug plans to supplement Medicare, or they can opt out of traditional Medicare and enroll in a Medicare Advantage plan to get both medical and drug coverage from a private insurer.

All of the new choices have resulted in "an immense amount of confusion," says Micah Roderick, of the Illinois attorney general's office. They've also led to an epidemic of fraudulent sales practices, ranging from sales abuses to criminal activity:

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To reap big commissions, some insurance agents sell seniors Medicare Advantage plans without explaining the limitations, and even sign people up without their knowledge.

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Posing as Medicare representatives, unscrupulous agents use Part D to get a foot in the door -- or even into a whole senior high-rise building. Then they tout a slew of high-priced insurance policies, including annuities, life insurance, gap coverage for Medicare Advantage and other products that people may not need.

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Once they have personal information about their victims, some of these renegade agents steal their identities.

In other cases, regulators have uncovered fraud rings selling fake drug-discount cards and bogus coverage for home health care. It's a huge racket, says Paul Greenwood, head of the elder-abuse prosecution unit for the San Diego district attorney's office. "These crooks realize there's money to be taken from elderly victims looking for a way to save on health-care costs."

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Posted by healthinsurance at 08:11 PM | Comments (0)

March 06, 2008

California Senate Kills $15 Billion Health Insurance Plan

A California Senate committee has rejected Gov. Arnold Schwarzenegger's plan to provide government-controlled health insurance to millions more of California's citizens.

The January vote of the Senate Health Committee against the $14.9 billion plan came after nearly a year of tense negotiations between Schwarzenegger (R) and Assembly Speaker Fabian Nuñez (D). Last December the two announced a bipartisan compromise on a plan to add 3.6 million of California's five million citizens without health insurance to the rolls of the insured by 2010.

Called "an incredible plan" by Nuñez, the proposal--which would have appeared on the California ballot in November if lawmakers had approved it--included a mandate requiring nearly all Californians to buy private health insurance or enroll in a government program that would have been expanded to meet the additional demand.

Analysts called the plan unworkable, saying the revenue sources were too unsure and the mandate too difficult to enforce.

The committee voted 7-1 against the plan. Much of the opposition was based on the projected impact on the cash-strapped state's economy.

The estimated price tag had climbed from $14 billion at the time the plan was announced to $14.9 billion by the time of the committee vote. State budget officials are projecting a $14.5 billion overall budget deficit.

Tax Increases

The Health Care Security and Cost Reduction Act, Assembly Bill X1 1, was to receive funding from four sources: a $2.3 billion increase in the state hospital tax, a new payroll tax on businesses of 1 to 6.5 percent, an additional $1.50 to $2 per pack tax on cigarettes, and another $2.3 billion in funding from the federal government.

The measure also would have prohibited insurers from denying coverage to people because of existing medical ailments and would have required them to spend at least 85 percent of insurance premiums exclusively on medical care.

The plan was scheduled to move through California's state legislature in two parts.

The first, which laid out the changes and expansions being made to the state health care system, passed the General Assembly by a party-line vote at the end of 2007.

The second piece of legislation, dealing with program funding, was expected to take more time to pass than the first part because California requires a two-thirds majority vote to approve tax increases. Tax hikes therefore need bipartisan support.

Job Loss Fears

"The biggest problem for the state was the proposal to force employers to spend between 1 percent and 6.5 percent of payroll on health coverage," said Devon Herrick, a senior fellow at the National Center for Policy Analysis. "This tax on labor would have stalled job growth and increased costs on employers whose workers aren't willing to forgo sufficient cash wages to cover health benefits."

Stephen J. Entin, president of the Institute for Research on the Economics of Taxation, called the health plan "a tax on the poor, who smoke disproportionately, as well as on young workers and small businesses. Low-income workers would have been forced to use a large part of their limited compensation for insurance and taxes."

California Senate Health Committee Chair Sheila Kuehl (D-Santa Monica) said, "It doesn't matter how many good things are in the bill if there isn't money to pay for them."

State Sen. Leland Yee (D-San Francisco) concurred, saying, "Nothing that came out of [the committee] hearing gives me the comfort level that working people of California won't be left holding the bag."

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Posted by healthinsurance at 11:14 PM | Comments (0)

March 02, 2008

Insurance company: Doctors' Social Security numbers went on Web

A health insurance company in California has notified more than 100,000 doctors in Michigan and 10 other states that their personal information was posted on the Internet.

Health Net Federal Services spokeswoman Molly Tuttle says the doctors' Social Security numbers were accidentally posted on a Web site for about two months, beginning in November.

Tuttle says the company has no indication that anyone's doctor's personal information has been misused.

HNFS is a government contractor providing health insurance for nearly 3 million military families and veterans in 23 states.

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Posted by healthinsurance at 12:50 PM | Comments (0)