WellPoint Inc. just can’t stop butting heads with Kathleen Sebelius.
The Indianapolis-based health insurer traded barbs with the secretary of the U.S. Department of Health and Human Services
late last week after the Reuters news service published a story saying that WellPoint targets breast cancer patients for cancellation
of insurance coverage.
WellPoint condemned the story as “inaccurate and grossly misleading.” But Sebelius seized on it. She wrote a
letter to WellPoint CEO Angela Braly, calling WellPoint’s alleged practice “deplorable” and “unconscionable.”
“I urge you to immediately cease these practices and abandon your efforts to rescind health insurance coverage from
patients who need it most,” Sebelius wrote.
Earlier this year, Sebelius hammered WellPoint for seeking to raise rates for its some individual customers by 39 percent
in California, 25 percent in Indiana and by similarly high rates in other states.
But the history between the two goes back to 2002, when WellPoint was called Anthem Inc. The company was trying to acquire
the Blue Cross and Blue Shield insurance plan in Kansas, where Sebelius was insurance commissioner and a candidate for governor.
Sebelius blocked Anthem’s acquisition, arguing the deal would drive up costs. She ultimately convinced the Kansas Supreme
Court to uphold her ruling, and then used the victory prominently in her gubernatorial campaign.
Sebelius used the recent Reuters story to claim that the recently passed health law would make the cancellation of policies
illegal except in cases of fraud or intentional lying by customers. But the Reuters story actually claimed the new law will
make little difference in health insurers' practices of canceling policies.
The story claimed that Anthem uses computer software to flag medical conditions such as breast cancer and then initiates
an investigation on them. If that investigation can find an omission on the customer’s application form or if the customer
refuses to provide certain information, WellPoint will cancel the policy, according to Reuters’ story.
WellPoint’s response acknowledged using the software to flag medical conditions its customers likely would have known
about when they applied for coverage. But it said an investigation is only launched if “something appears that it may
be associated with a material misrepresentation.”
WellPoint defends the practice of canceling policies due to customer misrepresentations, which is known as rescission. The
company says the practice is necessary to prevent fraud. WellPoint noted that less than one-tenth of 1 percent of its 33.7
million customers’ policies were rescinded last year.
“To be absolutely clear,” Braly wrote in a Friday letter to Sebelius, “WellPoint does not single out women
with breast cancer for rescission. Period.”

















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This is corporate behavior that is very hard to police, since it relies on the policyholder to complain for discovery of the practice to occur. This type of deplorable business practice (and others like it) are the reason we need insurance coverage reform as a part of health care reform. In the not too distant future all of these various insurance underwriting and administrative practices will be outlawed. Insurance companies can get back to the business of managing insurance risk, not avoiding it!
It is annoying to see people so determined to look like they are doing something that they forget to do what's right for the people.
Jeff Isaacs, chief assistant Los Angeles County attorney and head of the office's criminal division, said, "It's not like these companies don't like women because they are women. But there are two things that really scare them, and they are breast cancer and pregnancy," conditions that are costly for insurers. Isaacs added that insurers' "worst-case scenario is that a child will be born with some disability, and they will have to pay for that child's treatment over the course of a lifetime."
Isaacs sought information from the company about its use of algorithms to single out pregnant women and women diagnosed with breast cancer, but the company fought the investigation and refused to release data, Reuters reports.
In February 2009, Anthem agreed to pay a $1 million fine and $14 million in restitution to settle a suit brought by the California Department of Insurance alleging that the company illegally rescinded 2,330 policies. A year earlier, it agreed to pay a $10 million fine to settle charges from the California Department of Managed Health Care that it illegally rescinded more than 1,100 policies.
The company also is involved in an ongoing investigation related to a July 2008 suit from Isaacs' office that alleges the company illegally rescinded the policies of more than 6,000 state residents.
WellPoint denies any wrongdoing. HHS Secretary Kathleen Sebelius on Thursday sent Braly a letter in response to the Reuters story, which Sebelius called "disturbing" and "deplorable" and urged WellPoint "to immediately cease these practices and abandon [its] efforts to rescind health insurance coverage from patients who need it most."
A recent Reuters report has stated that government regulators and investigators have discovered WellPoint is, in fact, dropping the policies of breast cancer patients. The largest health plan company in the Blue Cross and Blue Shield Association, WellPoint is also the largest health benefits company in America by membership according to information available on the company website. The company is making news again today because it is believed they have been using a computer algorithm to target members who have breast cancer or have recently been diagnosed with breast cancer. Allegedly this process then triggers an immediate fraud investigation which later results in the members policy being dropped.
The Reuters report goes on to mention that this practice known as rescission has been going on for years and is well documented by law enforcement agencies and state regulators. According to a congressional committee last year, WellPoint is one of the worst offenders using this practice to drop the insurance policies of recently diagnosed members.