Uncategorized

HEALTH PLANS: Blue Cross makes about-face on cancellations, with late afternoon UPDATE

Lisa Girion in the LA Times reports that one of the uglier pieces of health plan activities in recent years may be drawing to a close. Wellpoint’s Blue Cross of California unit has agreed that it will only rescind policies in the future if there is obvious fraud, rather than an explainable oversight or error.

Blue Cross of California agreed Thursday to stop canceling individual health coverage unless it can show policyholder deception — a major shift by the state’s largest health insurer that could lead to sweeping industrywide changes. The move is part of an effort to settle a class-action lawsuit on behalf of as many as 6,000 people canceled since late 2001. It is an about-face for Blue Cross in what had become known as "use-it-and-lose-it" health coverage because the cancellations were often triggered by patients’ claims for treatment.

This is something of an improvement, although of course in a decent world there’d be guaranteed issue and community rating so the whole practice would be moot—and Wellpoint is fighting that in California. However, they need to cut the crap about “only 1,000 policies got rescinded and it’s less than 1%” which comes up in the article again. That’s of course lying with data. The vast majority of people in the individual market who get past the underwriting in the first place are healthy. That’s why the medical loss ratio for BC of California’s individual business is below 60%—yes apparently that’s the number. So there’s likely to be less than 10% of the enrollees and probably close to 5%, who are running up large bills in the first place. Which means that Blue Cross was scouring every one of those applications and canceling some 5–10% of them. They weren’t looking at the applications of the vast majority who didn’t have any major claims.

I still want to see how they settle the individual claimants who busted them for cancellations when BC clearly in error. Or are they in the class action too?

UPDATE: I’m adding this comment from the always sensible Barry Carol: "I wonder how much the new CEO (and former General Counsel), Angela
Braly, had to do with this settlement and whether former CEO, Larry
Glasscock, would have agreed to it. At any rate, it looks like common
sense has prevailed, and it’s about time."

This reminds me that recently Wellpoint changed its bonus structure to relate it to the overall health of their members. I was at a meeting with some Wellpoint employees (in their IT stack) last week, and they highly concerned about what that meant. But perhaps it means that the medical types (presumably led byCMO  Sam Nussbaum) are gaining the upper hand over the financial underwriting types–who’s leader as Barry points out, just got off the ship.

Meanwhile if you want some amusement looks at these comments about what some Wellpoint employees think about the new bonus policy!

Livongo’s Post Ad Banner 728*90

Categories: Uncategorized

Tagged as:

4
Leave a Reply

4 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
4 Comment authors
terence kelleyMatthew HoltJohn R. GrahamBarry Carol Recent comment authors
newest oldest most voted
terence kelley
Guest
terence kelley

“What is the new rule, that insurers have to hire clairevoyants to read the minds of applicants to determine whether their mistakes are “oversight” or “fraud”? New rule is that Blue Cross will need to apply the same standards of evidence that other companies have been using for past 30 years. Ask a simple question: “Have you seen a Dr is last 60 days?” Receive the answer and issue the policy. A few months later, review the question and answer. Was the response to the question TRUTHFUL? So easy, even a Blue Cross claims examiner can handle it! Each case… Read more »

Matthew Holt
Guest

John…there were guys setting fire to the house–many of whom the nationwide Blues busted (included some guy having an unnecessary vasectomy and circumcision). But this rash of cancellations wasn’t about that. Instead this was about BC coming along and saying, “your house had a potential fault in the electrical system & you should have told us even though it was put in 20 years before you moved in and it had passed the inspection.” After all any condition can be argued to have been pre-existing from birth. But I do agree “guaranteed issue by regulatory diktat” is much closer to… Read more »

John R. Graham
Guest

Matthew, what the devil is “obvious fraud”? Fraud is by definition not obvious, because obvious frauds do not occur. For a fraud to take place it must be, well I suppose the right word is: “confounding”. All insurance markets are susceptible to fraud by their beneficiaries. Reason demands that insurance contracts, above all other contracts, must be scoured for malfeasance. In a world where grown-ups sign contracts, the signator is responsible for “oversights” that create false information in the contract, not the counter-party. What is the new rule, that insurers have to hire clairevoyants to read the minds of applicants… Read more »

Barry Carol
Guest
Barry Carol

I wonder how much the new CEO (and former General Counsel), Angela Braly, had to do with this settlement and whether former CEO, Larry Glasscock, would have agreed to it. At any rate, it looks like common sense has prevailed, and it’s about time.