Assembly panel presses health regulators for answers

March 10, 2010

A bipartisan majority on an Assembly committee that oversees the state bureaucracy is turning up the heat on California’s insurance and health plan regulators to explain what they’ve done to help people who have been kicked off their insurance coverage after filing claims. The members of the Assembly committee on Accountability and Administrative Review also want the departments to do more to make sure that a recent drop in the number of coverage rescissions is not temporary.

The hearing looked into what has happened since the state took well publicized action against several companies for wrongfully terminating their customers. Some customers lost their coverage after filing claims for the treatment of serious diseases, only to learn that their insurer accused them of misrepresenting their health condition or providing incorrect information about themselves.

After hearing testimony from industry critics and department officials, the committee voted to ask for full reports on the issue from the departments of Insurance and Managed Health Care. There was also bipartisan support for a request that the Department of Managed Health Care require all five major health plans in California to offer an independent review to anyone whose coverage is terminated after they have been enrolled and have been paying premiums. Finally, the committee members will ask the managed care regulator to adopt formal regulations governing rescissions rather than relying on settlement agreements reached separately with each of the health plans.

There also seemed to be bipartisan backing for the idea of asking the departments to use tax or employment records to track down each of more than 6,000 people whose coverage was rescinded before the state started cracking down on the practice in recent years. Settlements with the companies require a variety of actions to help those consumers, from restoring their coverage to reimbursing them for lost costs, but only a handful of the 6,000 have taken advantage of those benefits. State officials said they did not know why that was the case, and the committee pressed them to find out more.

Both departments, meanwhile, said the number of rescissions has plummeted to almost nothing since the crackdown began. In 2008 and 2009, according to the Department of Managed Health Care, the health plans reported only 9 rescissions. The Department of Insurance, which regulates a different set of plans, said they believe the numbers were similar among plans they regulate but did not have the official numbers.

–Daniel Weintraub

Note: An earlier version of this item incorrectly reported the number rescissions in 2008 and 09.

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