WASHINGTON BUREAU — The leaders of three House committees today asked health insurers for an immediate end to most coverage rescissions.
The new “Affordable Care Act” – the package that includes the new Patient Protection and Affordable Care Act and the new Health Care and Education Reconciliation Act – will ban rescissions of health coverage 6 months after plan years starting after Sept. 23.
A rescission is an act to rescind, or terminate, an in-force health insurance policy.
If health insurers were to stick to the letter of ACA when implementing the rescission ban, most rescission bans would take effect Jan. 1, 2011, because most plans have calendar-year plan years, a health insurance industry official says.
Key House committee leaders have sent a letter asking major carriers to implement the ban 6 months ahead of schedule.
The letter has gone out to the chief executives of Aetna Inc., Hartford (NYSE:AET); Assurant Inc., New York (NYSE:AIZ); Humana Inc., Louisville, Ky. (NYSE:HUM); Kaiser Permanente, Oakland, Calif.; UnitedHealth Inc., Minnetonka, Minn. (NYSE:UNH); WellPoint Inc., Indianapolis (NYSE:WLP); and the Blue Cross and Blue Shield Association, Chicago.
The letter was signed by Rep. Sander Levin, D-Mich., chairman of the House Ways and Means Committee; Rep. Henry Waxman, D-Calif.; chairman of the House Energy and Commerce Committee; and Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee.
The chairman of the health subcommittees of the committees also signed the letter.
In the letter, lawmakers urge carriers to end use of rescissions except in cases involving cases of fraud or material misrepresentation.
Lawmakers ask that carriers submit any decisions to rescind or cancel a policy to reviews by independent, outside parties.
“Under such a procedure, no individual health insurance policy should be rescinded until the review confirms that fraud or material misrepresentation has in fact occurred,” lawmakers write.
Implementing the rescission component would ACA early would be consistent with carriers’ announcement that they will act early to give graduating college students the ability to stay on their parents’ health coverage up to age 26, lawmakers write.
Aetna has responded with a statement noting that it updated its rescission policy in 2008.
“At that time, we added an independent external review feature to our individual health plans, allowing Aetna members who face policy rescission to obtain, at no cost to them, an independent third-party review of Aetna’s decision, which is binding on Aetna,” the company says.
“Review of our records shows that our total overall rescission rate since 2006 is .029%,” Aetna says.
But “rescission can be an important tool in combating fraud,” Aetna says.
The Blue Cross and Blue Shield Association has “just received the committee request and will review the letter and respond to the committee,” association representative Brett Lieberman says.
But association members “have long supported third-party reviews of a company’s decision to rescind a customer’s policy,” Lieberman says.
WellPoint plans to implement the new federal rescission rules May 1.
WellPoint has been submitting rescission decisions to binding reviews by independent, outside parties since 2008, and the company says it believes it will be the first health insurer to implement the ACA rescission provision.
“Our goal is to make reform work for our members and for the country,” WellPoint Chief Executive Officer Angela Braly says in a statement. “There have been a lot of misrepresentations and inaccuracies in recent days that have caused confusion among our members and among the public generally about our policies in this area. We think today’s announcement will go a long way toward bringing greater clarity.”
Levin and Stark issued a statement welcoming WellPoint’s announcement and encouraging other carriers to follow WellPoint’s example.