April 28, 2010

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.

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