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Stark, Miller urge insurers to ban rescission now

Hours after House leaders including two East Bay members sent a letter calling upon seven major health insurers to immediately end rescission – the practice ending someone’s coverage when he or she gets sick – ahead of new health care reform requirements kicking in soon, the nation’s largest health insurer did just that.

Wellpoint – parent company of Blue Cross and Blue Shield affiliates across the nation, including Anthem Blue Cross in California – issued a statement saying it will end the practice May 1.

“Rescissions, while rarely used, are one process insurers employ to reduce fraud and protect members,” the company said in its news release. “The standard contained in the federal legislation requires insurers not to rescind policies except in cases of fraud or intentional misrepresentation of material fact. WellPoint welcomes greater uniformity among insurers in this area.”

But although Wellpoint already had been the first insurer to embrace another part of the new health care reform bill – extending coverage to policyholders’ dependents up to age 26 – its move on rescission comes just one week after the company was widely berated for what many called an egregious abuse. Reuters reported the company had been using a computer algorithm that automatically targeted every policyholder recently diagnosed with breast cancer, triggering an immediate fraud investigation as the company searched for some pretext to drop their policies.

Among the House leaders who signed the letter to health insurers earlier today were Education and Labor Committee Chairman George Miller, D-Martinez, and Ways and Means Health Subcommittee Chairman Pete Stark, D-Fremont. Stark later issued a statement saying Wellpoint’s rapid response today means “the race is on.”

“WellPoint took the first step, now it’s up to the other insurance companies to show they’re serious about making health reform work,” he said. “They need to end rescissions, and put in place a system where every proposed cancellation is reviewed by an independent third party.”

UPDATE @ 11:19 A.M. WEDNESDAY: UnitedHealthcare announced this morning it’s also ending its use of rescissions immediately, ahead of the new law’s Sept. 23 impelementation date.
“In the spirit of the recently passed health reform legislation, UnitedHealthcare moved quickly to eliminate the practice of rescissions, except in cases of fraud or intentional misrepresentation of material fact,” said President Gail Boudreaux. “We continue to find ways to ensure that the new health care reform law can be implemented effectively for the benefit of all Americans and achieve broader access to quality health care.”

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.