After last week's very, very bad week for Wellpoint, it seems they've turned a corner with regard to rescissions. Maybe. Their carefully-phrased press release quietly posted yesterday has some hopeful signs.

WellPoint, Inc. (NYSE: WLP), the nation's largest health insurer, announced today that it will implement federal legislation regarding individual market rescissions effective May 1. This is well ahead of the effective date contained in the legislation. WellPoint is the first insurer to implement the provision. This move builds on WellPoint's leadership in the early implementation of reform by extending coverage to dependents up to age 26.

Rescissions, while rarely used, are one process insurers employ to reduce fraud and protect members. The standard contained in the federal legislation requires insurers not to rescind policies except in cases of fraud or intentional misrepresentation of material fact.

Their decision is still limited to individual policies, which is progress, but not complete progress. Rescissions happen in the group market, too. I hope they plan to extend this May 1st effective date to all of their insureds, also well within the effective date contained in the legislation. While they're at it, they could end pre-existing conditions exclusions early, too. That would make them true leaders.

And, just as I was writing this, I received information that United Health has decided to follow Wellpoint's lead.

Still, we're going to have to watch them. This snippet gave me a bit of a start:

Democrats, in letters to seven insurers on Tuesday, said the companies should implement the rescission ban immediately and institute independent, third-party reviews of any decisions to drop coverage.

UnitedHealth "is aggressively seeking outside vendors and will be instituting independent, external third party review in the near term," the company said.

An independent, third-party reviewer who receives payment from a company to conduct a review may not be so independent. I'd feel much more comfortable if these reviews were done by government reviewers. This is, by the way, why it's so critical that financial reform have that consumer agency. People need a pathway that doesn't involve appealing to agencies on corporate payrolls, in my opinion.

Time for Kathleen Sibelius to step in again. This time Wellpoint leads the way by targeting key groups of insureds for fraud investigations. Their first experiment appears to be women diagnosed with breast cancer.

Via Reuters:

The women all paid their premiums on time. Before they fell ill, none had any problems with their insurance. Initially, they believed their policies had been canceled by mistake.

They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.

Once the women were singled out, they say, the insurer then canceled their policies based on either erroneous or flimsy information. WellPoint declined to comment on the women's specific cases without a signed waiver from them, citing privacy laws.

h/t Wonk Room

This type of behavior has been smacked down before and now has the force of the new health care reform law to do it again. You'd think insurers would get the message, right?

Not so much. This morning I received a report of an employer conducting a "dependent eligibility audit." This isn't the first time I've heard of these, but this one is particularly ugly. For obvious reasons, I've removed names and the identity of their employer.

...I am pretty sure my family is currently being targeted by [my spouse's employer] and Aetna because of my child's recent [redacted for privacy] diagnosis. Just a month after his Dx we received a notice in the mail letting us know that we were being "audited" by the health insurance co to make sure that [my child and I] were actually legally related to [my spouse] and eligible for health benefits. We were asked to fax in copies of our marriage certificate and IDs and our child's birth certificate...We did. HR confirmed it.

...Today I got a call saying that we still haven't sent in the requested paperwork and are in immediate danger of being dropped from the health plan. And they claim to have no record of the paperwork we sent in.

This press release from HRAdvance is pretty clear about why these "dependent eligibility audits" are taking place:

[Section 2712] of the PPACA prohibits the rescinding of health insurance for any reason other than ‘fraud' and ‘intentional misrepresentation of material'. Proving that an employee has committed fraud can be extremely difficult, and will only become more challenging in the future. "A dependent eligibility audit provider who can assist in those efforts will be key to success," states Brennan Clipp, Senior Vice President of Sales at HRAdvance.

Simply stated, these audits are intended to build a database of people they can target for fraud or misrepresentation if they should be diagnosed with anything from acne to hives to breast cancer later on. This person's report of the supposed non-receipt of sensitive documents bothers me, too. It makes me wonder why documents faxed from the same machine wouldn't always reach their intended recipient, particularly in light of the specific circumstances.

The good news? They're pushing the limits and the edges early, giving Sec. Sibelius a great foundation to slap them back like she did when they started rumbling about not covering children with pre-existing conditions.

The bad news? We're all going to have to watch out for each other every step of the way, because they're doing this to people through their employers, causing them to fear for their jobs if they get caught in one of the insurance company's "algorithms".

UPDATE: Because of the huge public outcry, Blue Cross has backed off on the policy.

As I think I've pointed out before, most of the Blues are considered to be "non-profit" in order to get certain privileges. But they are usually just parent companies for dozens of for-profit subsidiaries - with whom they contract over-priced services to earn nice, hefty profits.

We can expect more abuses (and more price inflation) if the insurance exchange makes the same mistake and treats them as actual non-profits:

One of the worst abuses of the private insurance industry is known as recission, where insurers decide to revoke the coverage of their customers for frivolous reasons. The Los Angeles Times reports today that one of the nation’s largest insurers, Blue Cross of California, has “notified [its] policyholders” that their coverage could be “immediately dropped” if they miss even a single payment:

Amid a national debate on how to make the healthcare system friendlier and more accessible, and as millions of people grapple with the loss of jobs and homes, what does insurance heavyweight Blue Shield of California do? It decides to take a key benefit away.

The company has notified individual policyholders that their coverage could be immediately dropped if they miss a single payment — or so it seems. Blue Shield says in a letter to customers that they can reapply for insurance, but with potentially higher premiums and stricter conditions.

Thankfully, a California law that mandates minimum grace periods and a decision by the company that will allow for a 28-day grace period will keep Blue Cross from immediately dropping people from coverage, as their letter threatens. The LA Times goes on to note that the the company’s pronouncement comes “after last year’s announcement that Blue Shield and Anthem Blue Cross agreed to pay a total of $13 million in fines after cancelling the policies of more than 2,000 Californians after they became ill.”

As a Californian, one of the enduring takeaways of the Schwarzenegger era is just how much latitude he is given on the national level as some kind of transformative post-partisan leader, when those same reporters know that California is crumbling into dust under, and in many cases because of, his leadership. We witnessed this again today as national media types heaped praise on the Governor issuing a letter about the Obama health care reform plan:

“As Governor, I have made significant efforts to advance health reform in California. As the Obama Administration was launching the current debate on health care reform, I hosted a bipartisan forum in our state because I believe in the vital importance of this issue, and that it should be addressed through bipartisan cooperation.

“Our principal goals, slowing the growth in costs, enhancing the quality of care delivered, improving the lives of individuals, and helping to ensure a strong economic recovery, are the same goals that the president is trying to achieve. I appreciate his partnership with the states and encourage our colleagues on both sides of the political aisle at the national level to move forward and accomplish these vital goals for the American people.”

I love the phrase "significant efforts," by the way. Others might call them "failed efforts," but YMMV.

But this "praise" for health care reform is just a piece of paper. One would think that the national media would seek to know the actions of the Governor on health care - one would be wrong, but one would still think that. And it would take about 10 seconds of Googling to figure out that the Governor has vetoed key elements of the legislation working through Congress. Last year he vetoed AB1945, which would have banned rescission, the insurance industry practice of dumping sick customers for technical violations on their applications like typos the moment that they try to use their policies for treatment. He vetoed SB840, the universal health care bill, on multiple occasions in the past. He vetoed SB1440, which would have mandated that insurance companies spend 85% of premiums on medical care. He vetoed SB973, which would have created a public insurance option by linking local and regional measures. He vetoed AB2, expanding the state's high-risk pool for people with pre-existing conditions.

He basically has vetoed many of the same provisions to be found in the current health care bill. And he is threatening to veto every bill on his desk this year, including another bill to ban rescissions so that customers who have paid insurance premiums for years aren't left to die when they want to use their policies. Anthony Wright notes some of the other bills:

* AB 119 (Jones): GENDER RATING, to prohibit insurers from charging different premium rates based on gender.

* AB 2 (De La Torre): INDEPENDENT REVIEW, to create an independent review process when an insurer wishes to rescind a consumer's health policy, create new standards and requirements for medical underwriting, and requires state review before plan approval. Also raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history.

* AB 98 (De La Torre): MATERNITY COVERAGE, to require all individual insurance policies to cover maternity services.

* AB 244 (Beall): MENTAL HEALTH PARITY, to require most health plans to provide coverage for all diagnosable mental illnesses.

Dan Walters, one of the few pundits left in the state, calls these bills "nothing of cosmic importance". Well sure, he's not going to have a kid, and women are charged more than men by insurance companies anyway! To an entitled white man with a good-paying job, he doesn't have to worry about losing his policy or not getting comprehensive medical coverage. But to a woman who can't afford to lose her job to have a baby, or someone with a mental health problem who can't get relief for his suffering, or someone with an individual policy living constantly in fear that his or her insurance will get revoked precisely when they need it, these are issues of "cosmic importance." Anyone saying otherwise is ignorant.

And yet the Governor will have no problem holding these bills, and these people, hostage. His buddies at the Chamber of Commerce probably don't want him to sign them at all. So he writes a pretty letter supporting health care reform, while denying the very same measures to his own constituents. And national media types call him a "bold leader."

Lovely. This is why we can't stop fighting:

(CN) - An insurance company's "reprehensible" decision to rescind a South Carolina man's coverage after he tested positive for HIV warrants a $10 million punitive damage award, the state Supreme Court ruled.

Jerome Mitchell applied for health insurance with Fortis Insurance Co. in 2001 at the age of 17. Fortis issued him a policy after he stated that he had never been treated for an immune deficiency.

One year later, Mitchell tried to donate blood to the Red Cross, which informed Mitchell that he was HIV-positive. Mitchell's doctor confirmed this finding.

Fortis investigated Mitchell's medical history and rescinded his policy, stating that Mitchell had misrepresented his HIV-positive status.

Mitchell sued for breach of contract and bad faith and presented evidence that he would die of AIDS within four years without medical treatment.

The trial court ruled in Mitchell's favor, awarding him $186,000 in actual damages and $15 million in punitive damages.

The state high court upheld the awards, but reduced the punitive damage award to $10 million based on the ratio of the projected $1 million cost of Mitchell's treatment.

"We find ample support in the record that Fortis' conduct was reprehensible ... Fortis demonstrated an indifference to Mitchell's life and a reckless disregard to his health and safety," Justice Toal wrote.

(I have been doing some work as a blogger fellow with Brave New Films on their Sick For Profit campaign. Visit us on Facebook.)

Today Brave New Films released their second installment in the Sick For Profit series, taking a look at the corrupt practices of CIGNA, denying care to their customers while their lead executives rake in millions and lead lavish lifestyles.

Meet Jo Joshua Godfrey. She had cancer without knowing for over a year.

"I would go to CIGNA and they would tell me I had bronchitis and give me medicine and send me home. No matter what medicine they gave me I wouldn't get better. Then the CIGNA Director called me up and she told me that there was nothing wrong with me at all. I called the doctor, and I came with my film and my CAT scan and he just put it in, it took exactly thirty seconds. He told me, 'You have cancer,' and he said the reason CIGNA did not want to give you your records is they've known right way back for years that you have cancer and they're not going to treat you."

CIGNA took in $19.1 billion dollars in revenue last year, with a $292 million dollar income. That doesn't include the salaries given to people like CEO Ed Hanway. He made a cool $12 million last year, and over the past five years he took in $120 million. Hanway has $28 million in unexcercised stock options. The company corporate jets, also not seen in profit statements, cost $68 million. This money is gained, as former communications director Wendell Potter says in this video, through denying claims and dumping the sick, enhancing the value of the company for Wall Street investors. The effect on people's lives, meanwhile, is tragic. Nataline Sarkysian, featured in the Americans United For Change advertisement, lost her life after CIGNA repeated denied her a liver transplant, despite the family having full coverage.

Meet Stephen Coddington, the wife of Marian, a stroke victim:

The case manager at the nursing home called me in and was really upset, and she said, "CIGNA is wanting to discontinue therapy with her. The doctors called and appeals were denied." It has been a day-in and day-out fight. Every talk that I've had with them, it's been, how can we wiggle off this hook.

This is the human cost for an insurance company's existence, for the record profits and supreme lifestyle of their executives. Welcome to the American health insurance industry. Instead of helping policyholders attain the health security they need for their families, big insurance companies get rich by denying coverage to patients. Now they're sending lobbyists to Washington, DC to twist the arms of lawmakers to oppose reform of the status quo. Why? Because the status quo pays.

CIGNA is not a special case in the insurance industry. It's perfectly normal and expected for a corporation to maximize profits. The difference with insurance is that the profit comes at the expense of your well-being, and frankly, all the regulations in the world won't substantively change that. The best way to fight back is through exposure, a juxtaposition of the human luxury paid for by human misery.

So help us shine this spotlight. CIGNA's advertising tagline is 'A Business of Caring.' We think they ought to come up with something more appropriate for their actual practices. If you come up with one, post it on our Facebook page. Here are some examples. We'll send the best over to CIGNA. In addition, Jo Joshua Godfrey will join SEIU Healthcare 775NW outside the CIGNA corporate offices in Seattle, Washington today as they demand quality and affordable health care for every American as a fundamental right and not a privilege.

And send this video to your friends. Everyone needs to know what's at stake in health care reform. This kind of denial of coverage can happen to anyone under the current system.