Giving consumers a second chance at health coverage

Just a few weeks ago, nearly 1,200 California health care consumers, who had previously been stripped of their health coverage under a questionable HMO practice known as “rescission,” gained a significant and first-in-the-nation victory to regain coverage and recoup past medical expenses.  For the first time, not only will consumers who have been rescinded have their coverage restored, they will have any out-of-pocket medical costs repaid without having to go through a costly, lengthy and uncertain court battle.

 Covering formerly rescinded enrollees as quickly as possible is not only the right thing to do, but it follows the Schwarzenegger Administration’s position that all Californians should have access to health insurance regardless of health status.

The agreements between the California Department of Managed Health Care (DMHC), Kaiser and Health Net, are historic for consumers in many respects.  Until now, most consumers have chosen to go to court to recoup medical expenses and to challenge a rescission.  The Administration agreements, however, are the first government effort in the nation to wipe the slate clean and move forward to cover as many people as possible.  

The two health plans are required to offer all previously rescinded consumers coverage without any consideration of pre-existing conditions.  All legitimate out-of-pocket medical expenses will be paid, regardless of the amount.  Consumers with $15,000 or less in expenses will receive an immediate offer of reimbursement and expenses over $15,000 will be reviewed in an independent third party arbitration process.  If the consumer does not agree with the amount offered, they can challenge it through arbitration or court.  Even after a financial offer is accepted, the consumer can still pursue other legal remedies if they so choose.  

I am excited about this opportunity to offer coverage to a large amount of people who today may be uninsured.  It means that someone will not have to delay a necessary surgery due to a lack of health coverage, and the doctors and hospitals will be paid.  It means that someone may no longer have to contemplate bankruptcy because of an outstanding medical bill.  It means that someone’s diabetes can be taken care, so it does not put their life in danger because of a chronic condition.  And it means that a mother can sleep better tonight knowing that her children will now have health coverage.

Not only do the agreements ensure coverage for thousands of Californians, the DMHC is requiring these health plans to have a fair process when considering applicants for individual policies.  Changes include creating clearer applications for coverage, reviewing health histories before issuing coverage, notifying consumers if their application is under investigation by the plan and providing an impartial system for consumers to challenge a rescission decision.

The agreements send a clear message that the Administration wants consumers to have a fair process when being considered for health coverage in the individual market.  The corrections required by the DMHC show definitive action to protect consumers in the future from going through the nightmare of unfairly rescinded health coverage.  One thing is clear through these agreements – it is the goal of the DMHC and the Administration to cover as many people as possible and as quickly as possible.   These agreements advance that goal and are the strongest pro-consumer actions achieved on behalf of rescinded Californians disadvantaged by the unfair practices of health plans.