Health Net set goals, bonuses based on policy cancellations

An investigation by the Los Angeles Times suggests that a California health plan was setting employee goals and paying bonuses partly based on how many individual policyholders they could cancel and how much money was saved by the cancellations. According to documents gathered by the newspaper, Woodland Hills, CA-based Health Net apparently avoided paying $35.5 million in medical expenses from 2000 through 2006 thanks to the cancellation of roughly 1,600 policies. Such results figured into the more than $20,000 for Barbara Fowler, the plan's senior analyst in charge of cancellations. State law forbids insurance companies from tying pay for claims reviewers to claims decisions. However, Health Net argues that since the analyst in question is an underwriter rather than a claims reviewer, the law doesn't apply.

The bonuses were detailed in documents disclosed as part of a lawsuit by Patsy Bates, a California hairdresser whose coverage was rescinded by Health Net during her chemo treatments for breast cancer. The documents outline a scheme under which the plan's senior analysts in charge of rescission reviews had a goal of 15 cancellations a month, and a target of saving multiple millions on care each year.

To learn more about detail about Health Net's pay-for-cancellations practices:
- read this Los Angeles Times article

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Kaiser pushes for policy cancellation rules. Report

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