WellPoint gets lashing from Sebelius, again

April 26, 2010

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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