CA agency mulls review of policy cancellations

The state of California's top health plan regulator, the Department of Managed Health Care (DMHC), is considering rules that might require health plans to get outside input before canceling an individual policy holder's coverage. The DMHC is already investigating policy cancellation practices of Blue Cross of California, Blue Shield of California and Kaiser Permanente, which have been accused of gaming the system by removing policyholders for innocent, unintentional mistakes in their coverage application. The DMHC's position has been that the law would not allow retroactive "rescissions" of coverage unless the plan could prove that a policy intentionally lied about their health history on a coverage application, but plans have tried to sell the argument that even inadvertent omissions count.

DMHC director Cindy Ehnes said she wasn't yet sure how such a requirement might work, but said that she's confident that some form of external review would be helpful in avoiding abuses in the individual insurance system. "It is clear to me that we have to have some independent oversight," she said. Meanwhile, members of consumer advocate firm Foundation for Taxpayer and Consumer Rights say that the complaints that are being investigated represent just a small fraction of the questionable cancellations.

To get up to date on the review proposals:
- read this Los Angeles Times piece

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