I noted this in last night’s roundup, but WellPoint – accused last week of systematically dropping breast cancer patients from their insurance rolls – agreed to implement a ban on rescissions early after pressure from Democratic lawmakers.
WellPoint, Inc. (NYSE: WLP), the nation’s largest health insurer, announced
today that it will implement federal legislation regarding individual market rescissions effective May 1. This is well ahead of the effective date contained in the legislation. WellPoint is the first insurer to implement the provision. This move builds on WellPoint’s leadership in the early implementation of reform by extending coverage to dependents up to age 26.
Rescissions, while rarely used, are one process insurers employ to reduce fraud and protect members. The standard contained in the federal legislation requires insurers not to rescind policies except in cases of fraud or intentional misrepresentation of material fact.
Now, the one additional fact here that must be stated is that fraud or intentional misrepresentation is the standard CURRENTLY used by WellPoint and other insurers to justify rescissions. They never canceled a policy because they felt like it, nor was that ever legal; they always claimed that they were reacting to intentional fraud on the patient’s medical history form. They merely had a broader definition of fraud than, well, something fraudulent.
So I’m not totally seeing the difference here, other than the good PR WellPoint thinks it might get out of this. Certainly Nancy Pelosi is taking a victory lap, praising the Affordable Care Act for leading to this outcome:
“WellPoint’s announcement that it will move more quickly than the law requires to halt the shameful practice of dropping people when they get sick is a clear indication that the health insurance reform legislation passed by Democrats in Congress was the right thing to do and is making a difference for families nationwide.
“As our Congressional committee and subcommittee chairs wrote today to our country’s largest insurers: ‘These rescissions hurt patients who need coverage the most.’ It is time for all insurance companies to end this practice immediately.
Of course it is. I just don’t know for sure if the federal ban, which was technically already in place, will do that. You can argue that the guaranteed issue provisions in the health care bill will obviate the need for insurers to rescind policies, since the affected patient can always re-up and get coverage. Of course, that won’t happen for four years, so it won’t affect WellPoint claiming “fraud” tomorrow.
I suppose it’s progress that WellPoint feels it has to say in public that they’ll end rescissions. You may remember that last year, in a hearing before the now-infamous Bart Stupak, none of the top insurance CEOs would commit to doing so.