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WellPoint to adhere to new rescission rules early

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WellPoint Inc., after being painted by the Obama administration as the bad boy of a bad industry, now is trying to win gold stars for good behavior.

The Indianapolis-based health insurer announced Tuesday afternoon it will be the first company to adopt stricter standards on canceling policies, as called for in the health reform bill passed in March.

The new law says health insurers can cancel a customer’s policy only in cases of fraud or intentional lying. Currently, health insurers sometimes cancel policies if a customer omits or misconstrues information, even unwittingly.

WellPoint will adopt the stricter standard on May 1—nearly five months ahead of schedule.

The move comes after Obama’s health secretary, Kathleen Sebelius, chastised WellPoint for doing targeted investigations and cancellations on breast cancer patients following such allegations in a Reuters story last week. WellPoint said the story was riddled with errors and was “grossly misleading.”

“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" WellPoint CEO Angela Braly said in Tuesday’s statement. "We think today’s announcement will go a long way toward bringing greater clarity.”

Last week, WellPoint and its rival UnitedHealthcare said they would immediately start covering children of policyholders until age 26. That provision was scheduled by the new law to take effect at the end of September.

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  • Senator Feinstein acuses Wellpoint's Braly of greed
    The only reason Wellpoint is making these concessions this afternoon is because this morning Congress demanded that Wellpoint cease and desist its recission practices. California Senator Dianne Feinstein expressed outrage. "If a CEO thinks it is okay to deprive women of their health coverage when they become seriously ill with breast cancer, we can't trust them to do the right thing, period. Left to their own devices, companies like WellPoint will throw paying customers to the sharks for the sake of profit." Feinstein called for strong enforcement of the new law so that companies won't find creative ways to continue this unconscionable practice. "We must clearly be vigilant in order to assure that the law has teeth and is heavily enforced," she said. "We can't turn our backs for one minute."WellPoint and two of the nation's other largest insurance companies -- UnitedHealth Group Inc and Assurant Health, part of Assurant Inc -- made at least $300 million by improperly rescinding more than 19,000 policyholders over one five-year period. WellPoint earned a $4.7 billion profit in 2009. Angela Braly, the CEO of WellPoint, received $13.1 million in total compensation in 2009. This was a 51-percent increase in her salary over the prior year.
    The California Senator also called for Congress to take urgent action to close the Rate Hike Loophole that will allow health insurance corporations to dramatically hike premium rates between now and 2014, when health insurance exchanges go online. Wellpoint has frozen rate increases in Indiana, but has jacked them up 39% in California and Colorado. "If there was any doubt about whether corporate greed has anything to do with WellPoint's plans to jack up premium rates on its customers, I think today's Reuters story answers the question definitively," said Feinstein. "It's time for Congress to step in and fix the rate hike loophole in the health insurance reform law. We must put patients before profits, and protect the American people from this kind of unchecked greed."
     

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