U.S. to WellPoint: Stop dropping breast cancer patients

U.S. Secretary of Health and Human Services Kathleen Sebelius at the White House in Washington, March 4, 2010.

NEW YORK (Reuters) - Department of Health and Human Services Secretary Kathleen Sebelius has called on health insurer WellPoint to stop dropping coverage for patients recently diagnosed with breast cancer, calling the practice "deplorable."

In a letter dated April 22 to Angela Braly, WellPoint's chief executive, Sebelius said she was "surprised and disappointed" to learn from a Reuters report that the company had targeted women with breast cancer for aggressive investigation with intent to cancel their policies.

"As you know, the practice described in this article will soon be illegal," Sebelius wrote. "The Affordable Care Act specifically prohibits insurance companies from rescinding policies, except in cases of fraud or intentional misrepresentation of material fact."

Reuters reported on Thursday that WellPoint, the largest U.S. health insurer by enrollment, was using a computer algorithm that automatically targeted patients recently diagnosed with breast cancer, among other conditions.

The software triggered an immediate fraud investigation by the company as it searched for excuses to drop coverage, according to government regulators and investigators.

In a statement responding to the Reuters story, WellPoint said it uses software to scan diagnostic codes for conditions that patients would likely have known about when they applied for insurance, but insisted it does not single out women with breast cancer.

The company said it changed its rescission practices to ensure they are handled appropriately after a 2006 review of its policies prompted by public concern.

"WellPoint should not wait to end the unconscionable practice of deliberately working to deny health insurance coverage to women diagnosed with breast cancer," Sebelius wrote in her letter. "I urge you to immediately cease these practices and abandon your efforts to rescind health insurance coverage from patients who need it most."

Breast cancer is the second-leading type of cancer among women, it has touched millions of families, and will affect one in eight American women during their lifetime, Sebelius wrote.

"I hope you will consider these women and their families as you work to end this harmful practice," she wrote.

WellPoint CEO Braly responded to Sebelius in a letter on Friday, saying the Reuters report was inaccurate and grossly misrepresented the insurance company's efforts to help patients detect and treat cancer.

"Breast cancer is a devastating illness and should not be politicized," Braly said, asking to meet with Sebelius to clarify these points.

Reuters stands by its story, a spokesperson for Thomson Reuters said.

The issue of rescission has reemerged in the debate surrounding U.S. healthcare reform, with the new legislation approved last month.

WellPoint shares fell 0.7 percent on Friday to $57.98, compared with a 0.9 percent rise for the Morgan Stanley Healthcare Payor index. The shares are off more than 17 percent from a year-high of $70 in late January, dampened by uncertainty over how deeply the reforms will impact its business.

(Reporting by Michele Gershberg in New York and Toni Clarke in Boston, editing by Dave Zimmerman, Toni Reinhold)