WellPoint fights back against new rescission allegations

WellPoint Inc. is fighting mad about a news report that the company conducts targeted rescissions of policyholders with breast cancer and has already forced a partial rewrite for factual errors. On April 22 the news organization Reuters broke an exclusive story that federal investigators believe the Indianapolis-based health insurance giant uses computer software to target female policyholders who have breast cancer, with the object of launching fraud investigations to find an excuse to cancel their policies. (The practice of revoking policies is called rescission). The article also alleged that WellPoint heavily lobbied Congress to stop the healthcare reform law from including stronger controls, such as third-party reviews, to monitor industry rescission activity.

This isn't the first time that WellPoint has been accused of unethical conduct, including previous charges of unwarranted rescissions, noted the Reuters article. In fact, the blog Health Care Renewal recently cited multiple instances of probable or documented ethical misconduct by WellPoint in a post discussing the issue of executives reaping financial rewards despite their companies' questionable behavior. For example, in 2007 the California Department of Managed Health Care fined a WellPoint subsidiary $1 million for unjustified rescissions of sick policyholders.

WellPoint was quick to offer a pointed rebuttal, calling the story "inaccurate and grossly misleading" and noting that "last year less than one-tenth of 1 percent of our individual members' policies were rescinded." The original Reuters article, posted just after 9:30 a.m., followed the stories of three women with breast cancer whose WellPoint policies had been canceled. By 11:30 p.m., the article had been rewritten to focus on two women because one of the three cited in the original version wasn't a WellPoint member. Of the two remaining women who were actually WellPoint policyholders, WellPoint challenged one--whose name had been misspelled in the original article--to sign a HIPAA waiver to allow the company to "disclose the facts in her case" in order to dispel "the false implication" that her coverage "was dropped due to breast cancer."

WellPoint refuted multiple aspects of the article, including the lobbying charge. But most importantly, any allegation that WellPoint "singles out women with breast cancer for aggressive investigation with the intent of canceling their insurance...is simply wrong," said the company. "The story also misstates the role of what it terms computer algorithms. [S]uch software is used to look at a series of diagnostic codes meant to capture conditions that applicants would likely have known about at the time they applied for coverage. We do not single out breast cancer or pregnancy."

These latest allegations against WellPoint come at a bad time for the health insurance industry, arriving on the heels of a March 17 report that Milwaukee-based Assurant Health (formerly Fortis) had used a computer algorithm to weed out policyholders with HIV. Last September the South Carolina Supreme Court upheld a $10 million verdict for a man with HIV whose policy had been canceled by Assurant.

In early April, Washington, D.C.-based Consumer Watchdog called on Congress to correct a loophole in the health reform law that provides "no new regulatory oversight" to enforce the requirement, effective this September, that insurers limit rescission for group or individual policyholders to cases of fraud or intentional misrepresentation. With the new charges against WellPoint, Speaker of the House Nancy Pelosi (D-Calif.) spoke out against "these abusive policies." And Kathleen Sebelius, secretary of the Department of Health and Human Services, used a war analogy to indicate that the federal government will not take rescission lightly, according to another Reuters report. Sebelius followed up by issuing a letter to WellPoint urging the insurer to "end the unconscionable practice of deliberately working to deny health insurance coverage to women diagnosed with breast cancer." WellPoint CEO Angela Braly responded with her own letter, expressing disappointment in Sebelius' "erroneous" letter and the "needless anxiety and fear it has raised."

To learn more about the WellPoint rescission and lobbying allegations:
- read the revised Reuters article
- take a look at WellPoint's response to the original Reuters article
- read this Health Care Renewal blog post
- read this Huffington Post article
- read Speaker Pelosi's statement
- read this Reuters report on Sebelius' reaction
- read Sebelius' letter
- read Braly's letter

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