On Tuesday, July 22, 2008 the Governor of California signed a bill into law that prohibits Health Insurance Companies from awarding bonuses to their employees based on canceling or rescinding a Policyholder's-Patient's Health Insurance Coverage. Lisa Girion, "Schwarzenegger Signs Ban on Health Insurers' Rescission Reward Practice" (Los Angeles Times Online, Wed., July 23, 2008).
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The State of California's Department of Managed Health Care has reached an agreement with two of the larger Health Insurance Companies in California, Blue Cross and Blue Shield, to resolve complaints investigated by the Department about the Companies' alleged "post-claims underwriting" practices. Lisa Girion, "California Fines Two Health Plans $13 Million" (Los Angeles Times Online, Friday, July 18, 2008). By those practices the Health Insurance Companies allegedly attempted to rescind Health Insurance Policies for supposed misrepresentations made in the application at the beginning of the underwriting process, after the Policyholder made a claim for a lot of Health Insurance Benefits under the Policy. The agreement includes these features:
1. Payment of a fine. The two Health Insurance Companies together agreed to pay $13,000,000.00 or $13 Million in fines, $10 Million by Blue Cross and $3 Million by Blue Shield.
2. Payment of amounts which most lawyers would view as "consequential damages" or money for damages that are a consequence of the alleged unlawful actions. No amount was reported, but instead a "process" was agreed to by which former Policyholders could "recover medical expenses they paid out of pocket after they were dropped as well as other damages, such as homes or businesses that were lost because unpaid medical debts ruined the former members' [i.e., Policyholders'] creditworthiness."
3. Offer of new policies. Both Blue Cross and Blue Shield agreed to offer new policies to certain of their Policyholders whom they canceled since 2004.
4. Finally, both Companies agreed to write new application forms that would somehow be "easier for consumers to understand."
The Director of the California Department of Managed Health Care is quoted in the article as saying that the fine is a record. On the other hand, the Director of healthcare policy for "Consumer Watchdog" is also quoted in the article as saying that the agreement is "'obstructing justice'".
In related developments, the Los Angeles City Attorney is pursuing his own previously filed lawsuit based on accusations of false advertising, unfair practices, and using intentionally misleading application forms, also reported by Lisa Girion, "Blue Shield Sued for Allegedly Lying About its Coverage" (Los Angeles Times Online, Thursday, July 17, 2008). The president of the California Medical Association and the president-elect of the Los Angeles County Medical Association are both identified in this article as praising the efforts represented by this lawsuit against these alleged rescission practices directed at Health Insurance Policies. On the other hand, a spokesperson for Blue Shield announced that it has 400,000 "individual policyholders," that Blue Shield has paid "nearly $4 billion in claims for those policyholders" since 2002, that Blue Shield's application forms "were reviewed and approved by two state regulators," and that its investigative and underwriting practices are in essence top notch, which he said, "'is why we have rescinded a fraction of 1% of individual and family policies.'"
Not to be outdone, perhaps, the United States Congress has reportedly scheduled hearings on the accusations that Health Insurance Companies engage in post-claims underwriting or rescission of certain Health Insurance Policies. Avram Goldstein, "U.S. to Probe Health Plans That Cancel Sick Members (Update 3)" (Bloomberg.com, Thursday, July 17, 2008). It is noteworthy that, according to this article, the Health Insurance Policies that are the alleged targets of rescission are only Health Insurance Policies issued to individual persons.
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Current market conditions strongly reflect significant risk. In this situation, Insurance Coverage Issues and Claims are inevitable. They are coming. They are coming under all sorts of Insurance Policies. These Insurance Coverage Issues and Claims will in turn trigger many accusations that Insurance Companies and others acting in Fiduciary settings did not act in Good Faith and Deal Fairly. In a climate like this one, these Issues and Claims are inevitable. See generally Peter G. Gosselin, "In This Economy, Failure is an Option" (Los Angeles Times Online Sunday, July 20, 2008).
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The American Medical Association recently held its annual meeting. One of the physicians' reports released at the 2008 A.M.A. annual meeting reported the following facts about physicians' payments received from Health Insurance Companies and from Medicare. The report focused on how often claims were denied, whether claims were paid on time, and how often claims were paid at the rate the physicians agreed to, before performing their medicalcare services.
First, claims were denied totally from a low reported rate of 3% of the time by United HealthCare and by Coventry Health Care, to a high reported rate of 7% of the time by Aetna and by Medicare.
Second, delays in the payment of claims were reportedly caused by requests for resubmission of the physicians' reimbursement requests, or by requests for more information. The turnaround time ranged from a reported low of 5 days at the hands of Coventry Health Care, along a reported range of 17 days for Health Net Inc. (of California), 20 days for Cigna, and 22 days for Humana, Inc.
Third and finally, the physicians reported that payment at contracted prices they agreed to in advance with the Health Insurance Companies or Medicare ranged down from Medicare's 98% to Aetna's 71% to the low of 62% owned by PacifiCare, a California Health Insurance Company.
These and other features of the A.M.A. report are explored by Lisa Girion, "AMA Calls Physician Reimbursements Flawed" (Los Angeles Times Online, Tuesday, June 17, 2008).
Postscript: A Medicare bill which includes among its proposed provisions a measure to insure steady payments to participating physicians, passed the House of Representatives by a vote of 355 to 59. "Senate Republicans," however, reportedly "used the filibuster rule ... because of a dispute over small cutbacks in a program run by private insurers called Medicare Advantage." The Senate adjourned for its July Fourth Holiday as the filibuster continued. Lori Montgomery & Jeffrey H. Birnbaum, "Political Maneuvers Dealy Bill After Bill in Senate" (Washington Post Online, Saturday, June 28, 2008).
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Ever wonder what to do when you or someone you represent was facing a major Health Insurance Issue? There is an excellent guide written by Lisa Girion, "A Guide to Getting Help With Health Insurance Problems" (Los Angeles Times Online, Sunday, June 8, 2008). Although this 'guide' is oriented toward California, it is useful in other places as well. Let it be your guide too.
Have a Safe and Happy Fourth!
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Can anorexia or bulimia be covered under Health Insurance Policies? They can if the Legislature mandates Coverage. There is an act that recently reached the desk of the Governor of Illinois, which would reportedly make Illinois the 17th State to mandate Health Insurance Coverage for anorexia and bulimia, if the Governor signs the law. See Bonnie Miller Rubin & Ahsley Wiehle, "Anorexia, Bulimia May Soon Become Part of Mandatory Health Insurance in Illinois" (chicagotribune.com, Tuesday, June 24, 2008).
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Applying for individual Health Insurance Coverage presents at least two issues addressed by David Lazarus, "Consumer Confidential/Gender Can Cost You in Individual Health Insurance" (Los Angeles Times Online, Sunday, June 22, 2008).
One issue in applying for individual Health Insurance Coverage that is addressed in this newspaper article is that part time employees may need individual Health Insurance since most employers will not offer either a Health Insurance Plan or the expensive benefit of paying all or part of Premiums for Health Insurance Coverage for part time employees.
The other issue addressed in this newspaper article is gender. Women are charged higher Premiums than men for individual Health Insurance Coverage as explained by the newspaper reporter who wrote this article.
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In a landmark opinion released yesterday, the Supreme Court of the United States changed the factors to review in employee challenges to adverse disability benefit decisions. The High Court ruling was by an overwhelming vote, 6 to 3. From now on, judicial review of a plan administrator's denial of benefits must include the administrator's conflict of interest, it is reported by Mary Williams Walsh, "In a Ruling on Benefits, Justices Aid the Worker" p. C3, col. 6 (New York Times Nat'l Ed., Friday, June 20, 2008).
Plan administrators are hired by employers to run group health and disability plans for insurance benefits given to employees. By statute, plan administrators are mandated to act in the best interests of the employee, it is reported, when they decide whether the employer's plan extends the requested insurance benefits to that particular employee. The review applied before yesterday's decision allowed Federal Courts to overturn an administrator's decision only if the decision was proven to be "arbitrary, capricious or unprincipled," in basic terms. The Supreme Court's ruling adds another factor into the mix for a Court reviewing a plan administrator's insurance benefit decisions.
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Massachusetts has required universal purchase of Health Insurance Coverage or the Commonwealth will impose severe penalties on the intentionally uninsured, in basic terms. A new study by the Urban Institute reportedly discloses that even the fear of potential penalties under the new law has not changed the use of emergency rooms as primary care physicians, if you will, for the poor. This finding is reported alongside findings that the law is forcing many of the poor to purchase Health Insurance Coverage -- some 350,000 people out of an estimated 600,000 previously uninsured residents of Massachusetts have reportedly purchased Health Insurance Coverage since the law went into effect in 2007. See Kevin Sack, "Study Finds State Gains in Insurance," New York Times, Tuesday, June 3, 2008, no hyperlink directly available to the article through the web log host TypePad at the time of this post by the author, but available online at www.nytimes.com.
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.... Before They Will Even Consider Covering Women Who Have Had a Caesarean.
Insurance Companies willing to issue private Health Insurance Policies, i.e., Policies that are not employer-based and that do not depend on a group of employees, but are instead issued to individuals, are skittish about covering women who have had a Caesaren Section. They contend that having a Caesarean Section is a marker of possible future Health Insurance claims which they do not want to cover. Some Health Insurance Companies demand that such a woman applicant be sterilized, before they will even consider offering a Health Insurance Policy to a woman who has had a Caesarean Section, it is reported by Denise Grady, "Some Insurers See Past Caesarean as Costly Risk" p. 1, col. 4 (New York Times Nat'l Ed., Sunday, June 1, 2008, available online at www.nytimes.com).
However, sterlization is no guarantee of obtaining a Health Insurance Policy or, having obtained one, of having a claim be paid, according to the newspaper report.
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