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Health Insurers Will Implement New Rescission Standards in May

Janice Simmons, for HealthLeaders Media, April 29, 2010

Health insurers, feeling pressure from Congress and the Department of Health and Human Services (HHS), said late Wednesday that they will accelerate by almost five months implementation of the provision of the healthcare reform law that stops the practice of rescission.

Karen Ignagni, CEO and president of America's Health Insurance Plans (AHIP), announced in letters to HHS and Congress that its member plans are "committed to implementing the new standard in May 2010 to ensure that individuals and families will have greater peace of mind when purchasing coverage on their own." The initial rescission provision was to go into effect Sept. 23.

"While data from the National Association of Insurance Commissioners show that rescissions are exceptionally rare, we recognize the significant hardship that rescissions of coverage have on individuals and families," Ignagni said.

"A number of health insurance plans already provide this valuable service to their individual market policyholders," she added. "Other plans are in the process of reaching out to state officials and third-party review organizations to explore ways to make independent review available to consumers."

The announcement came after insurance giants WellPoint and UnitedHealthcare announced on Tuesday and Wednesday, respectively, that they would end any use of rescissions effective May 1—except when cases of cases of "fraud or intentional misrepresentation of material fact" were evident.

In a letter sent on Tuesday by the heads of the House Ways and Means, Energy and Commerce, and Education and Labor committees, seven major insurers—WellPoint, Kaiser Permanente, Assurant Health, UnitedHealth Group, Humana, Blue Cross Blue Shield Association, and Aetna—were asked to immediately end their efforts to rescind health insurance coverage.

The rescission issue came up on the congressional and HHS radar screens late last week following a media report that several women with breast cancer had their coverage cancelled by WellPoint. The report received a strong denial in a letter from WellPoint CEO and President Angela Braly to HHS Secretary Kathleen Sebelius, but the issue of rescission appeared to take on a life of its own as public interest increased.

After UnitedHealthcare made its announcement on Wednesday, Sebelius said in a statement that "the days when insurers can drop coverage when patients get sick are coming to an end—but insurers don’t need to wait to do the right thing.”

Sebelius said she had hoped that insurers would follow the precedent they set earlier in the month by implementing policies before the September healthcare reform law target date that would permit parents to keep adult children on their policies if needed through age 26.

House Speaker Nancy Pelosi (D-CA) had more of a political response to the AHIP announcement: "The decision by the insurance companies is another sign that Republicans calling for repeal are out of touch—as the companies that fought reform are now backing away from the shocking practices they once employed," she said.

"Moving forward, Congress will . . . continue to support independent, external, third party reviews to ensure that rescissions only occur in cases of fraud," she added.

Nancy Ann DeParle, director of the White House Office of Health Reform, said in a statement that "it’s heartening to see that the insurance companies who employed these terrible practices—and fought reform—are coming around doing the right thing by instituting the ban right away. We’ll be watching closely and holding them to their word."


Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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