Los Angeles Times Staff Writer
August 29, 2007
Cindy Ehnes, director of the California Department of Managed Health Care, pledged in December to introduce regulations aimed at stopping most retroactive cancellations of individual coverage.
The department held a public hearing Jan. 29 and later indicated that draft rules would be unveiled in the spring.
Department spokeswoman Lynne Randolph said the new rules were nearing completion and would be pursued regardless of whether any healthcare reform measures were enacted this year.
"These regulations need to get out in a timely way, but we also feel that consumers deserve to have regulations that will be able to be quickly adopted so that thousands of people who are now being denied health insurance or are afraid of obtaining health insurance because of possible rescission can get relief," she said.
The reforms sought by Gov. Arnold Schwarzenegger would require individuals to carry health insurance and would require insurers to sell it to everyone regardless of preexisting medical conditions.
Such a mandate would seem to solve the rescission problem by taking away insurers' ability to drop members for failing to disclose any medical history at the time of application.
The mandate's prospects this legislative session are in question. But even if it were to pass, Randolph said, the department would still pursue rescission regulations because broader reforms would take time to implement and could be challenged in court.
Once proposed, new rescission rules could take as long as a year to be publicly aired and then revised and adopted or dropped.
An industry trade group has long opposed new rules, saying they are unnecessary. But if healthcare reform passes, rescission rules would be silly, said Chris Ohman, executive director of the California Assn. of Health Plans.
"If we are going to have regulations that are irrelevant, we might as well have air bags in model Ts," Ohman said. "It's kind of silly. Let's focus on issues that are going to be relevant after healthcare reform."
Randolph said the delay in issuing new rules had nothing to do with the reform debate. Instead, she said, it took longer than expected to survey the practices of the five major health plans so that the rules would fit all of them.
The survey of Blue Cross of California was the first to be completed in March. It led to a $1-million fine for rescissions that the department said routinely violated state law.
The health insurer disagreed with the finding, as well as the department's view of the law, and is disputing both.
Surveys of the other plans -- Blue Shield of California, Kaiser, Health Net and PacifiCare -- are ongoing.
"This has been a very, very complex investigation, one that has a few moving parts," Randolph said.
Her comments came after a letter from a Santa Monica-based consumer advocacy organization accused the department of dragging its feet.
"Patients cannot afford for you to allow another company's rescission policy to leave more Californians uninsured, uninsurable and facing unpayable medical bills," Jerry Flanagan, a patient advocate for the Foundation for Taxpayer and Consumer Rights, wrote in a letter submitted to the department Tuesday.
The foundation filed a petition demanding regulations nearly a year ago.
In its letter, the foundation reiterated its demand that the rules require an independent review by the department before any rescission could be carried out.
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