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INSURANCE EXECS TELL OF TARGETING SICK PATIENTS TO CANCEL COVERAGE
June 20, 2009
(WASHINGTON, DC) -- Three rather ordinary looking insurance executives may have inadvertently this week presented the best case to date for fixing America’s frayed at the edges, patchwork style health insurance system and for including in that fix a government run plan to compete with private firms, in order to stem abuses in the system if nothing else.
Some who viewed the testimony thought it compelling evidence that access to health care should not be left to private insurance companies alone as the system is overhauled.
Insurance executives from three major health insurance companies appeared before Congress on Tuesday, admitting that they routinely cancelled medical coverage of seriously ill customers in a practice called “rescission”, leaving patients without health coverage and in many cases causing patient suffering, bankruptcy and even death.
And all three said their companies would continue the practice despite blistering criticism from lawmakers on both sides of the aisle who decried the practice as both unfair and abusive.
The hearing on the controversial action known as rescission, which has left thousands of Americans burdened with costly medical bills and nowhere else to turn, began a day after President Obama outlined his proposals for revamping the nation's healthcare system.
An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies in turn to avoid paying more than $300 Million dollars in medical claims over a five-year period.
It also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were actually targeted for rescission and that employees were, in some cases, praised in performance reviews for terminating the policies of customers with expensive illnesses.
"No one can defend, and I certainly cannot defend, the practice of canceling coverage after the fact," said Rep. Michael C. Burgess (R-Tex.), a member of the committee. "There is no acceptable minimum to denying coverage after the fact."
The executives -- Richard A. Collins, chief executive of UnitedHealth's Golden Rule Insurance Co.; Don Hamm, chief executive of Assurant Health and Brian Sassi, president of consumer business for WellPoint Inc., parent of Blue Cross of California – all said they would not commit to limiting rescissions to only policyholders who intentionally lie or commit fraud to obtain coverage.
All three executives politely yet firmly refused, when asked by lawmakers to stop canceling coverage unless they could show “intentional fraud,” on the part of their customers.
That refusal was met with some degree of shock and dismay from legislators on both sides of the political aisle.
TO MOST AMERICANS RESCISSION WAS A DARK SECRET
The practice of rescission was, for the most part, an insurance industry secret that was kept from public view or scrutiny until three years ago when The Los Angeles Times launched a series of stories disclosing that insurers routinely canceled the medical coverage of individual policyholders who required expensive medical care.
Rescission is generally described, by those who have experienced it, as a practice where insurance companies have employees dig deep into the medical histories of those who have illnesses that require expensive treatment - often going back years and years in a patient’s history - attempting to find any tiny issue or discrepancy that can be matched to the fine print in an insurance policy in order to cancel the patient’s insurance coverage at a time in the patient’s life when the patient most desperately needs the coverage to help pay for medical treatments that may be a life or death matter or a matter of bankruptcy.
Rescission victims testified that their policies were canceled for inadvertent omissions or honest mistakes about medical history on their applications. Rescission, they said, was about improving corporate profits rather than rooting out fraud.
"It's about the money," said Jennifer Wittney Horton, a Los Angeles woman whose policy was rescinded after failure to report a weight-loss medication she was no longer taking and irregular menstruation.
"Insurers ignore the law, and when they find a discrepancy or omission, they rescind the policy and refuse to pay any of your medical bills -- even for routine treatment or treatment they previously authorized," Horton said.
Horton testified how her health insurance with Blue Cross, a division of WellPoint, was retroactively cancelled, after she went for routine medical care. Her medical records included a notation from her doctor that he suspected she may have “polycystic ovaries,” but he never discussed it with her.
Not knowing of the doctor’s note, she didn’t include the condition on her health insurance application and yet the insurance company rescinded her coverage based on her “misrepresentation.”
Horton and others from around the country accused insurers in testimony of gaming anti-fraud laws to take policyholders' premiums, only to drop people who developed serious illnesses. They testified that they or a deceased loved one had had policies canceled over innocent mistakes and inadvertent omissions on their applications.
A nurse from Texas said she lost her coverage, after she was diagnosed with aggressive breast cancer, for failing to disclose a visit to a dermatologist for acne.
Peggy Raddatz testified about her brother, Otto Raddatz of Illinois, who died of lymphoma after his health insurance was cancelled soon after he became ill. The insurance company based the rescission on Otto’s omission of an aneurysm and gall stones on his application, conditions noted on his medical records by a doctor, but never disclosed to Otto.
EMPLOYEES PRAISED FOR TARGETING SICK PATIENTS AND THEN DENYING COVERAGE
The committee's investigation found that WellPoint's Blue Cross targeted individuals with more than 1,400 conditions, including breast cancer, lymphoma, pregnancy and high blood pressure.
And the committee obtained documents that showed Blue Cross supervisors praised employees in performance reviews for rescinding policies.
One employee received a perfect 5 for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 Million worth of medical care the insurance company would have had to pay for.
Rep. John Dingell (D-Mich.) said, "This is precisely why we need a public option," adding that a public insurance plan should be a part of any overhaul because the market competition would force private companies to treat consumers fairly or risk losing them.
"I think a company does have a right to make sure there's no fraudulent information," said Rep. Joe Barton (R-Tex.). "But if a citizen acts in good faith, we should expect the insurance company that takes their money to act in good faith also."