Blue Cross of California said Tuesday that it would change some of its procedures for canceling individual health insurance policies, after allegations that it illegally dumped sick policyholders to avoid expensive claims.
The state's largest health insurer said it would make the changes -- including creating an ombudsman and revising its appeal process -- but maintained that it had done nothing wrong.
"The vast majority of rescissions to date are unquestionably proper under any criteria," said Blue Cross Chief Executive Dave Helwig. "But we are taking these major steps to minimize the possibility of errors."
Regulators who have launched investigations into the company's practices said they were eager to review the company's changes.
Consumer advocates and legal experts were skeptical that the company's plans would improve policyholder protections.
"I'm underwhelmed," said Bryan Liang, executive director of the Health Law Institute at California Western School of Law in San Diego. "The fundamental issue still is that they are not addressing these policies according to California law. Once they issue the policy, unless there is actual fraud, they cannot rescind. So despite whatever window dressing they put in place, they are still violating the law."
The moves come in the wake of several lawsuits filed by consumers against Blue Cross and its rival Blue Shield of California. The consumers bought individual policies that were later canceled because of what they say were innocent mistakes -- or errors on the company's part.
The moves also come after the state's top HMO regulator said she was prepared to take action against Blue Cross -- possibly as early as today or Thursday -- after an investigation found that the company had violated a state law prohibiting health plans from canceling coverage unless they showed that policyholders willfully lied on their applications.
Blue Cross has 1 million California members on individual policies -- almost half the market. Insurers can decline individual coverage or charge higher premiums based on a person's medical condition and history, unlike with most workplace-sponsored group plans, which are open to all qualifying employees regardless of history.
The company reiterated Tuesday that it needed the ability to revoke policies to guard against consumers lying about their health to obtain coverage. But the issue of fraud was noticeably absent from the changes Blue Cross announced.
