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May 15, 2008

Kaiser patients to receive health coverage again

Kaiser Permanente today became the first California health plan to reinstate the individual insurance policies of consumers who were improperly dropped, often after running up expensive medical bills.

The California Department of Managed Health Care announced that Kaiser will offer coverage to 1,092 consumers whose policies were rescinded from 2004 until 2006, when Kaiser stopped the practice. The state has been investigating the five largest health plans for retroactively dropping consumers for making minor mistakes about their medical histories on their health insurance applications.

Kaiser will also pay a $300,000 fine.

One of those dropped consumers, Denise Fenton of Lake Forest said she bought an individual Kaiser policy because she’s self-employed. While insured, she was diagnosed with diabetes. Kaiser then dropped her, she says, calling her diabetes a preexisting condition.

“I was suddenly left with no insurance and now knowing I had diabetes I was going to have to disclose it, basically making it impossible for me to get health insurance from anyone else,” she said.

Fenton said she was able to form a corporation and then qualify for Kaiser insurance again, but at double the price.

Cindy Ehnes, director of the agency, said Health Net will be the next insurer to approve a similar plan to reinstate 85 consumers.

In addition to the offer to repurchase their insurance, Kaiser will reimburse those dropped for medical expenses accrued while they were insured, but that were not paid by Kaiser once their policies were canceled. Kaiser will also pay for medical bills incurred after consumers lost their health coverage.

Ehnes estimated that roughly 4,000 more Californians were rescinded by the other major health plans. The state is undertaking a review of patients from other health plans who were rescinded to determine if insurers should be ordered to reinstate them.

William Shernoff, a Claremont attorney representing several Orange County patients who are suing other insurers who dropped them, said though Kaiser wasn’t a big player, he hopes the other health plans will follow suit.

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Posted by healthinsurance at May 15, 2008 01:59 PM