Sebelius, Pelosi React To Rescission Story

Top officials have blasted a large health insurer in response to what the insurer says is a press report that misrepresents one of its fraud-detection programs.

In an article that first appeared Thursday, a team of journalists at Reuters Thomson Inc., quotes several women who say WellPoint Inc., Indianapolis (NYSE:WLP), rescinded their health insurance coverage after they filed claims for breast cancer.

WellPoint had a program to target women with breast cancer for aggressive application investigations, with intent to cancel their policies, the team writes, citing comments from federal investigators.

U.S. Department of Health and Human Services Secretary Kathleen Sebelius has written a letter to WellPoint Chairman Angela Braly urging the company to “immediately cease these practices and abandon your efforts to rescind health insurance coverage from patients who need it most.”

The new federal Patient Protection and Affordable Care Act “specifically prohibits insurance companies from rescinding policies, except in cases of fraud or intentional misrepresentation of material fact,” Sebelius writes. House Speaker Nancy Pelosi, D-Calif., says in a statement that “WellPoint’s practice of dropping anyone’s coverage when they get sick” is “exactly the kind of insurance company abuse our new health care law prohibits.”

“When Republican leaders call for repeal of the health reform law, they are endorsing a return to these abusive policies that have no place in our medical system,” Pelosi says.

A WellPoint representative says in a statement that the Reuters article is “inaccurate and grossly misleading.”

WellPoint has used software 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,” the representative says. “We do not single out breast cancer or pregnancy.”