Company News

May 12, 2010

The new federal health law mandates that health insurers spend at least 80 percent of premiums on medical care for customers buying coverage on their own. But that rule may need to be loosened between now and 2014 to keep companies from quitting the market, according a draft report released Monday by the National Association of Insurance Commissioners. Bloomberg News reported that the group of state regulators is expected to send a final recommendation on the rules to U.S. officials by June 1. The new rule threatens to squeeze profits at WellPoint Inc., which has the largest share of individual customers in the industry.

WellPoint CEO Angela Braly openly objected to President Obama’s weekend criticism of the health insurer for reports that it seeks out breast cancer patients to cancel their policies. Such claims were reported last month by the news service Reuters, but WellPoint called the story “inaccurate and grossly misleading.” In a letter to Obama, Braly wrote, “If we are going to make this law work on behalf of all Americans, the attacks on the health insurance industry—a valued industry that provides coverage for more than 200 million Americans—must end.” She also noted that WellPoint paid for breast cancer coverage for 200,000 women last year and canceled the policies of just four. None of the cancellations were because the women had breast cancer, Braly said, suggesting instead that the women had misrepresented their health status. In response to criticism last month from Obama’s administration, WellPoint changed its rescission policy to match the new health law signed by Obama in March. The new law says health insurers can cancel a customer’s policy only in cases of fraud or intentional lying.

Two uninsured patients have sued the Clarian Health hospital system in Marion Superior Court for charging unreasonably high prices, according to the Associated Press. Abby Allen's bill was about $15,600 for a June 2008 hospital stay—about twice as much as the total bill would have been if she had been insured, the lawsuit claims. Walter Moore, the other plaintiff in the case, was billed $1,138 for treatment he received after an auto accident in May 2009. Clarian said it offers a financial-assistance program for uninsured and low-income patients. Hospitals typical set prices as a starting point for negotiations with health insurers based on their volume of patients. The uninsured are often the only patients charged the full price.

SonarMed, based in West Lafayette, received market approval from the U.S. Food and Drug Administration for its airway monitoring system. SonarMed’s product uses acoustic technology to catch and prevent movement or obstruction of the tube, both of which can harm patients. The technology was developed at Purdue University and licensed to SonarMed by Purdue Research Foundation's Office of Technology Commercialization.