Bill Implementing Ban on Rescissions Passes Assembly

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Andrew LaMar

Jun 2, 2010, Sacramento - Legislation mandating an independent review of any decisions by insurers to cancel coverage for patients who get very sick - a vital safeguard to ensure the federal ban on rescissions is followed - passed the Assembly today.

AB 2470, authored by Assemblyman Hector De La Torre, D-South Gate, and sponsored by CMA, means plans cannot act as judge and jury whenever they want to rescind a policy. The measure requires health plans and insurers to obtain approval from an independent entity before canceling coverage.

"For years, California's physicians have fought the outrageous practice of health insurance policy cancellations when the policy needs to be used," said Brennan Cassidy, M.D., president of CMA. "This legislation makes sure that patients are protected and insurers quit playing games with their insurance."

A 2009 congressional investigation concluded that three insurers used rescissions to systematically cancel more than 20,000 policies over five years, saving the companies $300 million in claims. Rescissions pull the rug out from under patients, ending their insurance coverage and saddling them with huge medical bills when they are at their most vulnerable.

CMA sought to outlaw the conduct since it first came to light, pushing bills each of the last three years. But while the governor refused to sign the legislation, Congress used the same legal standard advocated by CMA and put a provision in health care reform that prohibits policy cancellation unless the patient commits fraud or intentional misrepresentation.

This issue first received widespread attention through an investigative series by the Los Angeles Times about California insurers' practices. AB 2470 follows AB 1945 and AB 2, similar bills authored by De La Torre and sponsored by CMA, in 2008 and 2009, respectively.

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The California Medical Association represents more than 35,000 physicians in all modes of practice and specialties. CMA is dedicated to the health of all patients in California.

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