Blue Cross withdraws questioned letter

 

LOS ANGELES (AP) — Blue Cross of California quickly halted its practice of asking doctors to report conditions it could use to cancel new patients’ medical coverage after a widespread wave of criticism.

In a statement issued late Feb. 12, 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.

“As a result, we are discontinuing the dissemination of this letter going forward.” Blue Cross said it would stop sending letters that asked doctors to immediately report “any condition not listed on the application that is discovered to be pre-existing.”

 

The move came after a report on the practice in the Los Angeles Times prompted blistering rebukes by physicians, patients, privacy experts and officials, including Gov. Arnold Schwarzenegger and Sen. Hillary Rodham Clinton, D-N.Y.

Schwarzenegger called the letter “outrageous” and described the practice as asking doctors to “rat out the patients.”

Democratic presidential candidate Sen. Hillary Rodham 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.”

On its web site Feb. 12, the Los Angeles Times reported that Blue Cross, citing an effort to hold down costs, wanted doctors in California to report conditions it could use to cancel new patients’ medical coverage.

The Times said the health insurer sent physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose “material medical history.”

 

“Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately,” according to the letter obtained by the newspaper.

One of the conditions noted in the letter that could force a new patient to be dropped by Blue Cross — pre-existing pregnancies.

WellPoint Inc., the Indianapolis-based company that operates Blue Cross of California, said it was sending out the letters in an effort to keep costs at a minimum.

“Enrolling an applicant who did not disclose their true condition (and the condition is chronic or acute), will quickly drive increased utilization of services, which drives up costs for all members,” WellPoint spokeswoman Shannon Troughton said in an e-mail to the newspaper.

“Blue Cross feels it is our responsibility to assure all records are accurate and up to date for HMO providers,” she said.

 

“We send these letters to identify members early on in the process who may not have been honest in their application.”

Troughton added that doctors are not required, but, rather, can volunteer patients’ information to Blue Cross.

Doctors were unhappy about the letter, warning that some patients might hide any medical history that could affect their prospects of receiving health insurance.

“We’re outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality,” said Dr. Richard Frankenstein, president of the California Medical Association.

Blue Cross is one of several California insurers that have been criticized for issuing policies without checking applications and then canceling coverage after individuals incur major medical costs. The practice of canceling coverage is under scrutiny by state regulators, lawmakers and the courts.

 

Troughton said the request of doctors has been in place for several years and Blue Cross has not received any complaints about it.

The health insurance company doesn’t always cancel the policies of patients with discrepancies in their applications and occasionally offers them another plan, she said.

Lynne Randolph, a spokeswoman for the state Department of Managed Health Care, said the agency would review the letter.

Blue Cross is fighting a $1 million fine the department imposed in March over alleged systemic problems the agency identified in the way the company rescinds coverage.

“They are playing a game of ‘gotcha’ where they are trying to use their doctors against their patients’ health interests,” said Anthony Wright, executive director of HealthAccess California, a healthcare advocacy organization.

“That’s about as ugly as it gets.”