Health plan review may be intensified
The state's top HMO regulator said Monday that health plans should be required to get outside review before dropping a policyholder, a dramatic step up in oversight that probably would face stiff challenges from the industry.
Cindy Ehnes, director of the Department of Managed Health Care, said she hadn't yet developed details on how such a requirement would work. But she said any external input -- possibly by the department or some independent panel -- could significantly enhance policyholders' safeguards against the loss of coverage.
"It is clear to me that we have to have some independent oversight," Ehnes said.
Her call for outside review came after a public meeting she called in Los Angeles to hear from consumers, health plans and providers on what her agency could do to curtail the controversial practice of insurers canceling health coverage after policyholders have submitted claims for care.
Ehnes said the department's position was that the law banned retroactive rescissions unless a health plan could show that a policyholder intentionally lied about his health history on his application for coverage.
That contrasts with the view of the law held by most insurers. They believe that they may rescind coverage even if application discrepancies are inadvertent or innocent mistakes.
But as the Los Angeles Times highlighted in a series of recent articles, that has resulted in insurers routinely and unilaterally revoking coverage based on the health plans' own, often-secret investigations.
"The problem is, right now the companies are the prosecutor, judge, jury and executioner," said Harvey Frey, a physician and consumer advocate.
In lawsuits, hundreds of former policyholders accuse the state's major health plans of scouring their medical records in search of pretexts for dumping them after they submitted expensive claims.
The problem is unique to individual insurance. Unlike the group market, insurers that sell individual coverage are allowed to select policyholders based on medical history. Insurers require applicants to answer detailed health questionnaires, and people with serious and even common health problems, such as asthma and acne, are routinely turned away.
As a result, insurers say, they must be on guard against fraud, such as people lying on applications to obtain coverage after they discover they have a health problem.
