DiagnosticsCMA Commends Dept. Of Insurance Regulations That Will Protect Patients From Losing Their Health Insurance, California
The California Medical Association today praised the state Department of Insurance (DOI) for conducting a public hearing this week on its proposed regulations to prevent private insurers from unjustly canceling health coverage for patients after they get sick and file an expensive claim. The DOI released the proposed regulations last month.
While the DOI is working to address this pervasive problem, the Department of Managed Health Care (DMHC) - which regulates HMOs - has announced it has no plans to pursue regulations to prevent the noxious practice of rescission. Nearly two years ago, the DMHC announced it would jointly craft regulations with DOI to safeguard patients against rescissions but has not followed through on that promise.
Rescission has become a common practice in the health care industry in recent years as insurers and health plans have taken advantage of ambiguity in existing laws to cancel policies. Insurers often accepted a policyholder"s premium payments for years, only to cancel the insurance policy when the person got really sick and up expensive medical bills. This enabled insurers to avoid millions of dollars in medical costs required by their policies.
CMA has responded to this alarming trend by working for the last three years to pass legislation to protect patients. Assembly Bill 2, sponsored by the California Medical Association and authored by Assemblymember Hector De La Torre, D-Southgate, is designed to prevent the outrageous widespread practice of rescission. CMA and De La Torre teamed up during the last legislative session to sponsor/author AB 1945, a similar bill, which was vetoed by Governor Schwarzenegger.
"Rescissions put patients at risk, both financially and medically," said Dr. Dev GnanaDev, president of the California Medical Association. "Health plans and insurers end up leaving patients with large medical bills as plans and insurers rake in the profits. We need to prevent health plans and insurers from stranding their patients at a time they need coverage the most."
Assembly Bill 2, which has passed the Assembly and two Senate policy committees, requires an independent external review of proposed rescissions. The legislation goes a step further than the DOI proposed regulations by mandating that patients keep their coverage until the external review is finished. This ensures patients don"t get stuck with expensive bills - even temporarily - that their insurance should cover.
Without AB 2, consumers unjustly cut off from coverage needlessly suffer emotionally and financially. AB 2, like the proposed DOI regulations, remedies the problem by taking a proactive approach. The legislation addresses all health plans and insurers, not just those regulated by the Department of Insurance or Department of Managed Health Care.
Both the DOI and DHMC have found that many of the insurers they regulate have illegally rescinded health coverage for hundreds of Californians. Many of these patients have been saddled with enormous medical debt, and are unlikely to receive health coverage from other carriers moving forward because they now have a "pre-existing illness" on their health record.
At a DOI hearing on Monday, CMA testified that the department"s regulations represent an excellent starting point but should be strengthened.
"CMA commends DOI for moving forward in the regulatory front and providing protections for PPO patients," Dr. GnanaDev continued. "I urge the Department of Managed Health Care to do the same so that HMO patients have equal protection under the law."
California Medical Association