WellPoint gets lashing from Sebelius, again

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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.”


  • Dysfunctional WellPoint
    I am a physician and a former medical director for WellPoint/Anthem. I left the company in disgust years ago after being asked to withhold information from physicians necessary for them to adequately take care of their patients covered by Anthem. The business of insurance, for which WellPoint is licensed by the state of Indiana, is the business of assuming and managing risk. WellPoint no longer appears to be following that business model--they are following the model of avoiding risk. Although I have seen a few cases of fraud during my career, most of the recissions issued by WellPoint are based on honest mistakes by applicants or their health care providers (someone can't remember a date accurately or an incorrect diagnostic code was entered by a physician's office staff). WellPoint (and other insurers , as well) then seize on these mistakes and oversights as the basis to cancel an individual's coverage just when they need it most. After all, WellPoint doesn't bother to search for errors for a policyholder who had paid their premiums but submitted no claiims--WellPoint is making a sizable profit on that insurance contract!

    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!
  • Dose of Reality
    Sebelius is making the current administration look terrible. She is doing very little to actually impact the long-term cost of healthcare and might be costing the President future votes at this rate.

    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.
  • Angela Braly should be fired
    I've lived in Indiana a long time. My family has been here since the 1860's. I was raised to be honest and to do no harm. But I can't stomach what this Angela Braly woman has done. New York may tolerate its investment banks stealing investor money with a wink, but I am disinclined to extend that sort of carte blanche to Wellpoint Anthem. This woman has rescinded tens of thousands of health insurance policies of women entering the most difficult challenge of their lives. Breast cancer. My mother went through it. I think the good people of Indiana should not have to tolerate her presence in this State any longer and I call on all shareholders to demand her firing. How in the world can any employee of this company sleep at night now knowing what they know about their CEO and what she's done. This has to end. I don't care whether its the dept of insurance or the state's attorney general or the board of directors of Wellpoint, but Angela Brady has, in my opinion, committed a kind of crime against humanity. An intentional hurting. Against thousands of sick women just like my mother. I am literally sickened that she remains at the helm of a once, fine company.
    • "Disturbing" and "Deplorable"
      Federal investigators told Reuters that WellPoint specifically targeted women diagnosed with breast cancer. After WellPoint launched fraud investigations against the women, it "searched for some pretext to drop their polices," according to Reuters. Women whose insurance was rescinded say the company used small errors in their medical files or insurance documents as a justification to cancel their policies or deny them coverage for potentially lifesaving procedures and treatments.
      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."
    • Wellpoint
      I totally agree. The sooner we get these people out of office the better off we will ALL be!!!
    • Be Real
      As if the govt health care plan that would replace Anthem (should all you people who are complaining drive them out of the business of insuring women with breasts) is never going to deny a claim!! Get real! No insurer, even Medicare and Medicaid, pays every claim. To say a fine company like Anthem is doing a disservice to the community and the people it insures is overlooking the 99% of people it insures every year that don't have a fraud investigation or get rescinded for some reason. The world will never be perfect and to jump on a company regarding a tiny percentage of its customers who are unhappy is absurd. I can pretty much tell you much worse is going to go on when the government takes over our health care. Be careful what you wish for!!!!
      • Did you not read the article? Are you a Wellpoint employee?
        It's not about LYING it is about a company trying to weasle out of paying. It's not someone lying on their application.... Geez!
      • Did you not read the article? Are you a Wellpoint employee?
        It's not about LYING it is about a company trying to weasle out of paying. It's not someone lying on their application.... Geez!
      • Read the book next time
        Ok so you have never read Atlas Shrugged its obvious. the book was about government intervening into the free market place until it came to the point where it was no longer profitable to be in business - which prompted business owners to "shrug" and simply withdraw from business entirely. If you had read the book and agreed with its principles, you would not be asking people to boycott Anthem, you would be railing against Obamacare which is designed to bankrupt many health insurance companies out of the business entirely - leaving the consumer with even fewer free market choices.
      • Anthem
        If you lied on an employment application that you were never convicted of felony theft, rape etc but in fact was. What about if you say you are a US citizens but in fact an illegal should the employer be allowed to fire you? What about bank loans? What's the difference? You are playing on emotion. What about life insurance...you have 3 months to live, youbuy $100,000 and die. Had the company know the illness they would not have issued the coverage. What a bunch of BS from the bleeding liberals.
        • "Lying" is subjective
          Just to be clear, while Wellpoint might be rescinding policies for "lying" - what they are doing is looking for anything on an application that can let them out of the policy. In one example in the Reuters article, a woman's dermatologist used a code that Wellpoint said meant she was possibly being treated for skin cancer, and rescinded her policy. She was actually being treated for acne.
        • Fraud?
          There is a difference between actual fraud and an insurance company looking for an excuse to cancel a policy because it will be expensive for them. Fraud hurts everyone, but WellPoint seems to be looking for any excuse to get out of paying legitimate claims.
        • It's called FRAUD
          Are you serious? You do realize that what this is referring to is people that LIED ON THEIR APPLICATION that they did not have Cancer when in fact they KNOWINGLY had Cancer. Why is this such a shock? If you LIED and your LIE caused the policy to be issued, then why would you not think it would be in the company's right to not pay?
        • They will continue to deny the truth
          The absolute truth to the matter is that they will do ANYTHING to cut having to pay claims, and will outright lie to the public to defend their actions.
        • Please, sell your Wellpoint stock
          Investors. Please sell your Wellpoint stock. (NYSE: WLP) A message must be sent that the good people of Indiana will simply not tolerate the revolting, disgusting business practices of this company. Wellpoint's actions have shamed our fair State and shocked our very sense of right and wrong. I am making a personal appeal to you to sell your stock. No matter what your politics, I do not believe that any Hoosiers can stomach the practice of canceling insurance coverage for women newly diagnosed with breast cancer. Just saying it aloud is enough to make you sick to your stomach. I simply can't rest knowing this is taking place based on board room decisions made right here in our fair city of Indianapolis.
          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.

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