Two powerful state regulators have come together in California to propose rules limiting health plans' ability to retroactively cancel policies. The state's Department of Managed Health Care (DMHC) has come together with the Department of Insurance to issue rules which would forbid rescission of individual policies unless health plans could show that a policyholder made a "willful misrepresentation" (e.g, they lied) on their application. The rules would also require health insurers to do a medical underwriting investigation of potential beneficiaries rather than relying strictly on information provided in applications. The proposed regs will undergo a formal public comment period prior to approval.
The new rules are just the latest shots in the DMHC's battle with health plans over policy cancellations. In March of this year, for example, the DMHC fined Blue Cross of California $1 million after the agency concluded that it systematically and illegally canceled policies held by chronically ill and pregnant policyholders.
To learn more about the new proposed regs:
- read this Los Angeles Times article
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