Facing a torrent of criticism Tuesday, Blue Cross of California abruptly halted its practice of asking physicians in a letter to look for medical conditions that could be used to cancel patients' insurance coverage.
In a statement issued about 6 p.m., the state's largest for-profit insurer said, "Today we reached out to our provider partners and California regulators and determined this letter is no longer necessary and, in fact, was creating a misimpression and causing some members and providers undue concern.
FOR THE RECORD:
Health insurance: A story Wednesday in the Business section about Blue Cross of California ceasing to ask physicians to alert them to preexisting conditions in patients mentioned the practices of other insurers. The story said UnitedHealth Group Inc.'s PacifiCare, Blue Shield of California and Health Net Inc. also asked physicians. It should have said they do not ask physicians. —
"As a result, we are discontinuing the dissemination of this letter going forward."
The announcement came after blistering rebukes Tuesday by physicians, patients, privacy experts and officials including Gov. Arnold Schwarzenegger and Sen. Hillary Clinton (D-N.Y.) after The Times disclosed the practice.
The letter had been sharply criticized Monday by the California Medical Assn., and Tuesday night its president, Richard Frankenstein, said: "This letter was part of Blue Cross' pattern of unfairly canceling policies when people need coverage most. We're relieved that Blue Cross is ending this particular tactic but continue to have serious concerns about this company's practices looking forward."
Earlier in the day, Shannon Troughton, a spokeswoman for Blue Cross parent WellPoint Inc., said the company had been sending as many as 1,000 letters a month for years and had received no complaints.
Blue Cross sent physicians copies of insurance applications filled out by new patients, along with the letter advising them the company had a right to drop members who failed to disclose "material medical history." That could include "preexisting pregnancies."
The letter asked physicians to "immediately" report any discrepancies between their patients' medical condition and the information in the applications.
Other major insurers in California said Tuesday that they had not asked physicians to do anything like what Blue Cross was seeking.
Schwarzenegger sharply criticized the practice, which he described as akin to telling physicians to "rat out the patients and to give the patients' medical history to the insurance company so they have a reason to cancel the policy."
The governor said the practice should be banned.
"That is outrageous," he said, and "one more reason why it is so important to have comprehensive healthcare reform."
Democratic presidential contender Clinton said the Blue Cross effort was another "example of how insurance companies spend tens of billions of dollars a year figuring out how to avoid covering people with health insurance."
California insurers, including Blue Cross, are under fire for issuing individual policies without checking applications and then canceling them after patients get sick. The practice, known in the industry as rescission, is under scrutiny by state regulators, lawmakers and the courts.
In scores of lawsuits, patients contend that the insurers dropped them over honest mistakes and minor inconsistencies on applications that they allege are purposely confusing. People ailing with cancer or other diseases often are unable to get new coverage once their insurance has been rescinded, and they may go without treatment. Swamped with medical debt, people have lost homes and businesses.
Insurers say the cancellations are an important weapon against fraud and occur rarely.
Several physicians and medical groups said they were troubled by the letters. Robert Margolis, a physician and the chief executive of one of the state's largest medical groups, described the letters as "an obnoxious intrusion" on the relationship between physicians and patients.
"Asking us to be the application police is inappropriate," said Margolis, who heads HealthCare Partners Medical Group in Los Angeles.
Troughton said the company believed the letters complied with state and federal privacy and health practice laws. She said Blue Cross "highly values the trust of its members and understands the personal relationship members have with their physicians."
But, she said, "it is our responsibility to assure that all members' records are accurate and up to date both for the benefit of our members and the providers in our HMO network."
Sending applications to physicians for review is an important tool, Troughton said, to "ensure that it mirrors what is reflected in the physician's notes for that member."
But privacy experts said that may violate privacy laws.
"They don't have a right to contact someone that you hired and you employed to take care of your health and to release data about you without your permission," said Deborah Peel, a Texas physician who founded Patient Privacy Rights, a nonprofit advocacy organization. "What's the point of paying for insurance if they are going to look for every reason to deny what you think you paid for, which is access to services to help you?"
Jamie Court, president of the Foundation for Taxpayer and Consumer Rights, said information exchange also might violate state laws aimed at ensuring that physicians do not allow financial considerations to interfere with medical judgments.
"The real issue here is the doctor acting as a double agent," Court said.
Other large health insurers, including UnitedHealth Group Inc. -- which operates PacifiCare in California -- Blue Shield of California and Health Net Inc., said Tuesday that they did ask doctors to look for or alert them to possible preexisting medical conditions.
Margita Thompson, a spokeswoman for Health Net, said the company asks physicians for medical records when it suspects patients may have omitted preexisting conditions on applications.
"But the doctor is not asked to review the records at all," she said. "And we do not send the doctor a copy of the application for his review."
Girion reported from Los Angeles and Rau from Sacramento. Times staff writer Marc Lifsher in Sacramento contributed to this report.