Earlier this week Assemblyman Hector Hector De La Torre agreed to four key amendments to his bill, AB 1945, which would bar health insurers from retroactively canceling health care policies unless they can show that a patient lied about a past medical condition when applying for coverage.
Following several years of public and media scrutiny over retroactive policy cancellations — so called “rescissions” — that often leave patients uninsured and hundreds of thousands of dollars in medical debt, insurers recently proposed a model policy solution designed to shield them from future legal liability and make it difficult for patients to recover unpaid medical bills.
Consumer Watchdog has said that De La Torre’s commitment to strong patient protections is critical to counter industry friendly proposals.
We are encouraged by Assemblyman De La Torre’s promise to rework key sections of his bill and look forward to working with his staff to draft the amendments. The precise wording of the amendments is crucial and insurers will certainly try to water down the strong commitments made in the Senate Judiciary Committee. If companies are required to prove a patient committed fraud in every case before canceling coverage, then the rescission problem would be largely self-regulating. Insurers will no longer bring ‘gotcha’ cancellations against patients who never knew of, failed to appreciate the significance of, or forgot some detail of, a past medical condition.
The four amendments agreed to in the Senate Judiciary Committee are:
1. Prior to any rescission being carried out, health insurers must show a patient “willfully misrepresented” or “intended to deceive” the insurer about a material health fact that effected the insurer’s decision to provide coverage.
2. Insurers must request that regulators, not third-party companies with financial ties to insurance companies, review rescissions and approve them before they are carried out.
3. Regulatory reviews do not cut off access to the courts and if a patient does sue their insurer to recover past medical bills, the regulator’s decision cannot be used against the patient in a court of law.
4. If insurers attempt to overwhelm regulators with rescission requests, insurers would be fined $50,000 for each wrongly requested rescission.
A settlement announced Friday by the Schwarzenegger Administration’s Department of Managed Health Care (DMHC) would allow insurers in many cases to evade any payment of unpaid medical bills resulting from policy cancellations. Under the settlement, insurers could use closed-door arbitration proceedings where patients would likely not be able to afford legal representation to evade paying up to tens of thousands of dollars in medical bills racked up by patients both before and after the policy rescission, no matter how illegal it was. Patients would also be fighting the insurer about the necessity of their medical care in front of arbitration judges with financial ties to the health insurers, not before doctors or medical experts.
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