WellPoint says to stop dropping patients after May 1

WASHINGTON Tue Apr 27, 2010 6:33pm EDT

Beds lie empty in the emergency room of Tulane University Hospital in New Orleans February 14, 2006. REUTERS/Lee Celano

Beds lie empty in the emergency room of Tulane University Hospital in New Orleans February 14, 2006.

Credit: Reuters/Lee Celano

WASHINGTON (Reuters) - WellPoint Inc said that as of May 1 it would stop dropping healthcare coverage for customers after they get sick, responding to pressure from Democrats in Congress and the Obama administration.

The health insurer announced its decision on Tuesday after Democrats from three House of Representatives committees earlier in the day wrote to health insurance executives urging them to immediately stop the practice, known as rescission. A separate letter from 57 Democrats was directed at WellPoint alone.

"There have been a lot of misrepresentations and inaccuracies in recent days that have caused confusion among our members and among the public generally about our policies in this area," WellPoint's Chief Executive Angela Braly said in a statement. "We think today's announcement will go a long way toward bringing greater clarity."

The company's action and the letters follow a Reuters report on April 22 that WellPoint, the largest health plan in the Blue Cross Blue Shield Association, used computer algorithms to target women with breast cancer for an investigation, with the intent of canceling their healthcare policies.

WellPoint has said its software looks for conditions patients may have had before seeking insurance coverage but that it does not single out breast cancer.

Healthcare reform legislation passed last month makes this practice illegal but gives companies six months to comply.

Democratic lawmakers called on WellPoint, UnitedHealth, Humana, Aetna and other insurers to immediately ban such actions except in cases of fraud or intentional misrepresentation. They also asked the companies to "immediately institute a policy of independent, external third-party review" to confirm fraud.

In the letter to WellPoint, House Democrats backed a call by Representative Rosa DeLauro urging the insurer "to act immediately to end the deplorable practice of canceling health insurance coverage for patients diagnosed with breast cancer or any other illness."

WellPoint's decision "will benefit countless women in the future who will be diagnosed with this disease," DeLauro said in a statement on Tuesday.

WellPoint has called the Reuters report inaccurate, but Reuters has stood by its story.

The Reuters report also sparked a stern rebuke from U.S. Health Secretary Kathleen Sebelius, who on Friday asked WellPoint to end the practice now.

Several lawmakers welcomed WellPoint's decision and urged other insurers to follow suit.

"Now it's up to the other insurance companies to show they're serious about making health reform work," said Representative Pete Stark, chairman of the House Ways and Means health panel.

Under the health reform law, health insurers have until September 23 to halt rescission and a number of other controversial practices such as denial of coverage for pre-existing conditions and life-time caps on payments.

A number of insurers have already moved to implement one reform not due until September -- extension of coverage for young people until age 26 on a parent's plan.

The letter on Tuesday also went to Blue Cross Blue Shield Association, Kaiser Permanente and Assurant Health, part of Assurant.

Humana's CEO Mike McCallister told Reuters the company would comply fully with the law but that it needed to examine whether it could act on the lawmakers' request.

"We can't jump at every thing that they immediately request ... I don't know the implications of that," he said. "We're acting in good faith, and what we're looking for is someone who has not acted on good faith."

Assurant spokeswoman Shawn Kahle said that Assurant Health already has third-party reviews and that it would act as quickly as possible to end rescission.

Aetna said in an emailed statement that it added external reviews in 2008 that allow customers facing policy rescission to obtain a no-cost, independent third-party review that is binding.

Blue Cross and Blue Shield Association spokesman Brett Lieberman said in an emailed statement that the group was reviewing the committees' letter.

Representatives for other insurers either could not be reached or had no comment.

(Reporting by Susan Heavey; Editing by Steve Orlofsky)

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