California Insurance Lawyer Blog

Anthem Blue Cross submitted new rate increases for as much as 20 percent to the California Department of Insurance less than a week after Aetna Inc. cancelled its plans for an average 19 percent rate increase for individual policyholders because of “miscalculation” errors, reports the Los Angeles Times. See “Anthem Blue Cross Again Seeks Rate Hikes for Californians.” Anthem had previously withdrawn a nearly 40 percent rate increase earlier in the year when independent actuaries discovered errors in its accounting that violated California law. See “Anthem Blue Cross Raises Premiums – and Ire – of Individual Policyholders.”
Anthem’s parent company Wellpoint made $877 million in the first quarter of 2010, a 51 percent increase from the same time last year. Its chief strategy officer Brad Fluegel must have neglected to read the company financials, however. He told the Times, “The rates do not cover our costs and are not going to be sustainable over the long term, but it makes sense to move ahead. Given the environment, it was in the best interest of everyone to get this behind us and move forward.”

Whose best interests is Fluegel contemplating? Certainly not his policyholders’ interests.

“It is clearly time for stricter oversight of the methods health insurance companies use to calculate premium rate increases,” U.S. Sen. Dianne Feinstein said.

We agree, and that’s why we are endorsing Dave Jones for California Insurance Commissioner. As a California Assemblymember Jones introduced legislation designed to help consumers fight insurers who delay and deny benefits or unlawfully rescind coverage. As Insurance Commissioner, Jones will be the advocate policyholders need to keep insurers accountable to their customers. For more information about Dave Jones, log on to www.davejones2010.com.

The California Department of Insurance is doing its job. Insurance regulators announced June 16 that the DOI has ordered independent reviews of proposed rake hikes requested by four of the state’s largest insurers of independent health policyholders. Aetna, Anthem Blue Cross, Blue Shield and Health Net will now have their latest rate proposals scrutinized to ensure the carriers comply with state law, reports the Los Angeles Times, “Health Insurers’ Rate Hike Gets State Scrutiny”

The review is also the second time around for Anthem this year. The company’s earlier attempt at a rate increase – as much as 39 percent for some customers – caused so much controversy that the DOI hired an independent actuary to examine the proposed increase. The actuary found that Anthem’s plan not only failed to meet the state requirement that 70 percent of premiums be spent on medical claims (as opposed to administrative costs) but also that the insurer erred in the way it calculated its rates. Anthem apologized -- and then promptly proposed another, slightly more modest, rate hike.

Spokespeople for the health insurers all told the Times that they’ve learned from Anthem’s mistakes and that they are confident their rates will pass muster. Several even conducted “mock” reviews before submitting their requests to be particularly diligent, they said.

We applaud the DOI for taking rate increases seriously and not merely rubber-stamping proposals, even and especially when the carriers assure the department they’ve complied with state law. The cost of independent review is entirely justified, and consumers have the reassurance the DOI is working in their best interests.

The new federal healthcare legislation could bestow broad new powers on California’s next insurance commissioner, already one of the nation’s most powerful jobs of its kind, reports the Los Angeles Times. “Healthcare reform raises the stakes in California insurance commissioner election.” Four candidates are running for their parties’ nominations in the June 8 primary election -- Democrats Dave Jones and Hector De La Torre, and Republicans Brian D. Fitzgerald and Mike Villines – and the winner of the June 8 primary will face four other minor party candidates in November.

In addition to new authority under federal law, the insurance commissioner may gain the regulatory powers currently under the charge of the California Department of Managed Healthcare, which oversees health maintenance organizations, if the Legislature approves and the governor signs a bill that would shift all regulatory power to the commissioner.

This year’s insurance commissioner race is one of the most important in the state’s history.

We support Democrat Dave Jones, who proved a strong consumer advocate while serving as a California Assemblymember. In addition to supporting the regulatory shift from the Department of Managed Healthcare, Jones wants California lawmakers to give the commissioner the power to approve or reject insurer requests for rate increases, subjecting health insurance rates to the same detailed approval process that applies to automobile, home and other types of property and casualty insurance.

“I’ll be working to impose rate regulation on health insurance and healthcare plans to rein in the excessive rate increases that have afflicted California consumers year after year for the past 10 years,” Jones told the Times.

We believe Jones has the experience, leadership skills and ability to protect consumers as insurance commissioner, as well as hold insurance companies accountable when they break the law or deny benefits their customers rightfully deserve. From what we have seen thus far, he is fully capable of fulfilling the challenges facing the state and the insurance industry during the next four years and of building a bureaucracy that works in the consumers’ interests.

A New York Times editorial documents the next health insurance battleground: medical loss ratios, the amount of premiums spent on patient care as opposed to administrative costs and profits. See “The Gaming Begins.”

The federal health reform legislation mandates that by 2011 health insurers must spend 80 to 85 percent of premiums on medical services or activities that improve the quality of care. The legislation, however, doesn’t specifically define what activity will qualify as an improvement in the "quality of care." That leaves plenty of room for carriers to manipulate the process and circumvent the true intent of the legislation.

According to the article, Sen. Jay Rockefeller, a democrat from West Virginia, has found insurers are already classifying many administrative costs as medical expenses. He wants Congress to impose a rigorous standard. The New York Times is advocating sensible boundaries that exclude technologies and programs that merely streamline operations.

For example, insurers want to include the cost of setting up provider networks and programs that deter fraud and overbilling in the patient care ratio. Most people, however, would consider those administrative activities.

It’s clear to us that someone at the federal or state level must monitor carrier decisions to blur the lines between patient care and administrative costs so health care reform can remain the true reform Americans counted on.

Looking for an interesting book to read? How about the book "Nudge." It was co-authored by Cass Sunstein (Harvard Law School) and Richard Thaler (Univ. of Chicago Business School), and presents various ideas about helping consumers improve decisions about health, wealth and happiness.

Among other things, the book has a brief ERISA discussion. While its focus is on retirement more so than disability, the principles the authors raise are virtually the same. The authors write:

“ERISA sets forth three fiduciary principles for retirement-plan investments: the exclusive benefit rule, requiring that plans be managed exclusively for the benefit of participants; the prudence rule, requiring that plan assets be invested according to a ‘prudent investor’ standard; and the diversification rule, requiring that plan assets be diversified so as to minimize the risk of large losses. Most notably, company stock is exempted from the diversification requirement in defined-contribution plans—largely because, at the time ERISA was passed, large employers with profit-sharing plans lobbied Congress to exempt them from the diversification requirements imposed on defined-benefits plans. Employers are still expected to act prudently, however, in determining whether company stock is a suitable investment.”

The authors go on to explain how perverse this is from a workers’ welfare perspective. Diversification is key to a healthy investment portfolio, yet employers have an interest in seeing that their companies’ stock performs well and those profits are shared, even when this may hurt employees’ retirement funds.

Sunstein and Thaler explain: “The primary incentive problems in this context are possible conflicts of interest between the employer and the employee. The issues regarding company stock are a good example. The ERISA laws already require firms to act in the best interest of the employees. These laws should be enforced.”

Similarly, ERISA requires disability and health plan administrators and/or insurance companies to operate in the best interest of employees. However, often there is a conflict between paying claims for disabled or sick employees, and maximizing profits for shareholders of the insurance companies, which will be affected by payouts on insurance claims. This conflicted fiduciary problem continuously arises in the field of ERISA law. Kantor and Kantor works to enforce ERISA laws on behalf of employees/ consumers generally, by holding insurance companies responsible for their fiduciary duties to their insureds.

You can purchase Nudge online and at major booksellers. It has plenty of worthwhile reading!

-ND

Kantor & Kantor lawyers won an important trial court decision recently on behalf of our client whose employer’s self-funded health plan denied medical benefits for her son. The court determined that the plan administrator had abused her discretion and violated our client’s statutory rights in refusing benefits for her son’s medical expenses. The court instructed the plan to process the claims in accordance with plan terms. Martinez v. The Beverly Hills Hotels and Bungalows Employee Benefit Trust Employee Welfare Plan.

Ana Martinez is employed by Beverly Hills Hotel and Bungalows and is a covered participant in Beverly Hills Hotel and Bungalows’ (“BHH”) self-funded employee benefits plan, which refused to cover medical and nursing care for her son in a “persistent vegetative state” from injuries incurred while he was at school. His care averages $13,000 a month. A special needs trust was created following a settlement with the school.

BHH’s employee benefits plan was previously funded through an insurance policy with Blue Cross. Blue Cross paid for medical care for Ana’s son and never sought reimbursement from the special needs trust.

BHH ended its contract with Blue Cross and went self-funded on Jan. 1, 2008. Immediately upon becoming self-funded, the plan requested that Ana sign a “Right to Reimbursement” agreement that would permit the plan to seek reimbursement for any of her son’s care from his special needs trust. BHH refused to even “process” any of Steve’s claims without the reimbursement agreement signed. The court found no basis for the plan’s request that Ana sign the reimbursement agreement before the plan would process medical claims.

In addition, when BHH went self-funded, the plan asserted for the first time subrogation rights. The plan alleged that theAna’s son’s special needs trust must pay for the medical care and only when the trust funds were depleted would the plan agree to provide medical benefits. The court found that the plan’s language was clear: the hotel was not entitled to subrogation rights from special needs trusts.

The court also found that the plan had a conflict of interest in that the administrator responsible for the plan finances was also the responsible for making benefit determinations. At trial, the plan administrator testified that “she put the plans interests ahead of the participants’ interests,” a violation of ERISA law. Plan administrators are charged with a standard of care that mandates discharge of their duties solely in the interests of plan beneficiaries.

This lawsuit is only one example of the ways benefits plans attempt to deny coverage for legitimate claims. As health insurance premiums rise, more and more employers are self-funding plans with provisions that could interrupt your benefits under previous plans or deny ongoing coverage. If you are involved in a disability benefits dispute with your employer’s self-funded plan, we can help.

Although it’s much too soon to tell how the federal healthcare overhaul will affect the way the insurance industry conducts business, the bill may have done a few things right. “Immediate Effects of Health Reform Bill.” A few provisions go into effect in six months; others won’t be enforceable until 2014.

• People whose policies are rescinded through no fault of their own are now protected under federal law. Even though rescission is regulated under the law of most states, carriers tend to ignore the laws and do as they please until they are caught, then pay moderate fines. How the federal government will enforce this provision remains to be seen.
• People with pre-existing conditions can no longer be denied coverage; however, because the bill doesn’t regulate caps and increases, insurers can change as much as they want and increase when they feel like it. The federal plan does provide a government program for people whose health problems make them uninsurable now.
• Insurers can no longer place lifetime caps on benefits and annual limits on coverage.

If insurers don’t find a way to wriggle out of these three reforms, the bill imposes important measures that are necessary to rein in abusive industry practices. But we don’t expect the industry to embrace reform without a fight.

Rather than criticizing the bill for its flaws, which many say include an inability to contain costs, industry and enterprise could turn this into an opportunity to provide products and services both affordable and sustainable for this century.

While President Obama took his health reform to the American people this week, Health and Human Services Secretary Kathleen Sebelius sent an open letter to the CEOs of UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Health Care Service Corporation and CIGNA HealthCare Inc. asking them to publicly justify proposed health insurance premium increases. “If insurance companies are going to raise rates, the least they can do is tell us why,” she said.

Sebelius referred to a recent Goldman Sachs analyst report that upgraded most insurance company stocks because the industry has so little competition. Even if they raise their rates, existing customers won’t be able to find less-expensive options. And if the plans lose customers, premium increases will more than make up the loss.

“Not only is price competition down from year ago ... but trend or (healthcare) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes,” Steve Lewis (of the employer benefit consulting firm Willis) stated in the Goldman Sachs report.

Something has to change.

February wasn’t a good month for Anthem Blue Cross. While the health insurer was defending itself in Los Angeles Superior Court for refusing to allow a policyholder to receive a liver transplant at an out-of-state/out-of network hospital because it cost too much, a Los Angeles Times analysis of the company’s regulatory findings revealed that since 2004 Anthem increased it’s parent company’s profitability by $4.2 billion. See Lawsuit Targets Anthem Denial Policy, Los Angeles Times,and “Anthem Profit Shifts Scrutinized,” Los Angeles Times.

Anthem is also being investigated by the California Department of Insurance for more than 700 violations in the past three years for failing to pay medical claims on time and misrepresenting policy provisions to its policyholders. And to top it off, President Obama’s revised healthcare overhaul proposal, which includes federal authority to regulate premium increases, appears to be in response to Anthem’s decision to raise premiums for individual policyholders up to 40 percent. See “Anthem is Accused of Breaking Laws,” Los Angeles Times, http://www.latimes.com/business/la-fi-anthem-claims23-2010feb23,0,186309.storyand “Obama Plan Would Curb Health Insurers on Rate Hikes,” Los Angeles Times.

Hmmmm... if the Department of Insurance proves that Anthem violated state law 700 times, and the insurer were have to pay up to $10,000 per violation. That’s $7,000,000, but when you make a $4.2 billion profit, that merely amounts to part of the cost of doing business, not a punishment for ignoring the law. Toyota is probably wishing it had gone into the health insurance business.

Suppose you are dying from cancer, but instead of putting all your energy into fighting the disease, your biggest battle is with your health insurer for treatment to keep you alive. That’s what Westlake Village resident Bob Iritano is up against, reports Los Angeles Times business columnist David Lazarus.Click- “Fighting Cancer and His Insurer."

After a round of chemotherapy that almost killed him because of an allergic reaction, Iritano’s doctors recommended a procedure called radio frequency ablation that, while it won’t cure his cancer, will temporarily eliminate his tumors and decrease the painful symptoms of his disease. The procedure, which Iritano much undergo every time his tumors grow back, was initially covered by his health insurer Health Net. But when he scheduled treatment again six months later, coverage was denied.

Iritano found out about the denial only minutes before the procedure was scheduled to begin. He was already robed in a surgical gown when he was told Health Net had deemed the procedure “experimental” and would no longer pay for it. Iritano’s physicians scoff at the notion, asserting that the treatment has been proven effective for more than 10 years.

Lazarus contacted Health Net to inform the company he was writing about Iritano’s case. A few days later, Iritano received a letter authorizing the procedure just one more time. But he wasn’t to expect the company had changed its policy about the experimental nature of the treatment.

“My best guess is that they want me dead as soon as possible,” Iritano told Lazarus. “They know that the premiums I pay will never cover how much they’ll spend on me.”

Wow.

Just as Congress applies the brakes to healthcare overhaul, California’s largest for-profit insurer, Anthem Blue Cross, reminds us why the federal government needed to get into the driver’s seat in the first place. The Los Angeles Times reports the health insurer will raise its prices March 1 for its 800,000 individual-coverage policyholders. See “Anthem Blue Cross dramatically raises rates for Californians with individual health policies.”

These premium adjustments, some customers say, amount to as much as a 39 percent increase. A San Rafael family, after doing the math, determined their health premiums will surpass their monthly mortgage payment. And that’s not all. Anthem informed its policyholders they could expect such adjustments at least every 12 months, or “more frequently in accordance with the terms of your health benefit plan.”

Under California law, health insurers can increase premiums whenever they want if they notify the state Department of Insurance and prove they are spending at least 70 percent of the premiums on health care. California Insurance Commission and Republican gubernatorial candidate Steve Poizner is “very concerned” about the rate increases, reports the Times, and is planning an independent investigation to ensure Anthem complies with state law. But as usual, this may be too little and too late.

Insurance brokers say that this increase is the largest they have seen so far. Mark Weiss, a Century City podiatrist and Anthem member for 30 years thinks “it’s just unconscionable.”

We agree.

Federal Healthcare Legislation Could Erode California’s Consumer Protections

Lisa Girion of the Los Angeles Times reports that a provision of federal healthcare legislation under consideration could harm consumer protections in states that have strong laws that both protect policyholders’ rights to insurance coverage for certain health treatments and the ability to appeal coverage denials. “State Health Laws at Risk,” Los Angeles Times, November 16, 2009. http://www.latimes.com/business/la-fi-mandates16-2009nov16,0,2437457.story. Healthcare overhaul bills in both houses allow insurers from other states to sell insurance in California without being subject to the state’s tougher enforcement mechanisms.

“California mandates require insurers to cover home healthcare, bone density screening for osteoporosis, in vitro fertilization and mastectomy. Mandates also cover certain providers, such as chiropractors, and conditions, such as autism. If insurers are allowed to sell under the laws of other states, they might be able to offer policies that do not include those benefits,” Girion writes.

Other California protections potentially at risk include prompt claims payment laws. In California, a policyholder has the right to appeal an insurer’s refusal to pay for a particular treatment. Other states may not offer the same protections.

Proposed federal healthcare legislation remains controversial. While on one hand it offers more competition and lower premiums for California consumers, on the other hand it could undermine gains consumers have achieved in California.

It’s always a good idea to read a policy before purchasing any kind of insurance. If something seems questionable or you don’t understand certain provisions, ask for explanations and help. Don’t sign any policy until you are convinced you will get what you pay for or are afforded the right to appeal when you don’t.

California Law Displays Understanding of Eating Disorders
That Insurers Should Emulate

Insurance companies that routinely misunderstand eating disorders should pay attention to California Health and Safety Code Section 1254.5, which provides a refreshing perspective on the nature and treatment of eating disorders. In its findings under Section 1254.5, the California Legislature states, “[T]he disease of eating disorders is not simply medical or psychiatric but involves biological, sociological, psychological, family, medical, and spiritual components. . . . the treatment of eating disorders is multifaceted, and like the treatment of chemical dependency, does not fall neatly into either the traditional medical or psychiatric milieu.”

This legislative comment reflects what we find in our law practice representing clients suffering from eating disorders whose treatment should be covered by their health insurance. We often explain to insurance companies, mediators, and judges how residential treatment for an eating disorder involves intensive treatment of the psychological mindset that perpetuates the eating disorder. Treatment is not limited to the mental aspects; it also involves frequent monitoring of the disorder’s physical symptoms through blood work and weight gain. Education on nutrition and exercise also gives patients the tools to stay in recovery when discharged from treatment facilities.

Combined with Mental Health Parity Acts, such as California’s codified in Insurance Code Section 10144.5, the Section 1254.5 language supports our arguments that treatment for an eating disorder is truly multi-faceted and often residential treatment is the only means for conquering an eating disorder.

Section 1254.5 will not create coverage where it didn’t exist or force an insurance company to pay a claim. But it can increase awareness and recognition in the legal forum when presented to courts and insurance companies.

-- Elizabeth Green

A new study published last week in Science magazine announced that a retrovirus called XMRV may cause Chronic Fatigue Syndrome (CFS). The virus' actual name is xenotropic murine leukemia virus-related virus,and it was found in nearly 98 percent of about 300 patients with the syndrome. See, NY Times, Virus Is Found in Many With Chronic Fatigue Syndrome by Denise Grady.

This discovery provides hope for researchers because if the retrovirus – part of the same family as the HIV virus that causes AIDS – definitively proves to cause chronic fatigue, the disease might be effectively treated with antiretroviral drugs. Currently, no treatment or cure is available for chronic fatigue syndrome. Researchers also believe that they can create a blood test to determine if a patient is infected with XMRV virus, much the same way a blood test can determine HIV.

Chronic fatigue patients are also hopeful that their symptoms – severe fatigue and body aches – will now be taken seriously by doctors and insurers. Because chronic fatigue can only be diagnosed by ruling out other illnesses, some in the medical community refuse to treat chronic fatigue as a legitimate disease or attribute it to a psychiatric disorder. As a result, most health and disability insurers are skeptical about providing benefits for chronic fatigue sufferers who are too ill to work. Many are accused of “malingering,” that is, lying about or exaggerating their symptoms. Now the medical community may have valid research to back up a diagnosis of chronic fatigue.

The study is considered significant for two other reasons: First, the XMRV virus has been linked to prostate cancer. Second, about 4 percent of healthy people studied were carriers of the XMRV virus. According to the Wall Street Journal, that means that “10 million people in the U.S. and hundreds of million people around the world are infected with a virus that is already strongly associated with two diseases.”

The National Cancer Institute has authorized more research to find out if the virus is linked to any other diseases.

Dr. Judy Mikovits, one of the lead authors of the XMRV paper, told the Wall Street Journal, “Just like you cannot have AIDS without HIV, I believe you won’t be able to find a case of chronic-fatigue syndrome without XMRV.”

We have seen it time and time again… insurers downplaying the symptoms of CFS and even accusing our clients of being untruthful about their inability to function normally, all because there was no “objective evidence” of their Chronic Fatigue. Hopefully, this will all change soon as more is learned about XMRV. Has your insurer refused to consider your diagnosis of chronic fatigue seriously? Kantor & Kantor can help.

"Tort Reform, Tort Reform, Tort Reform," the phrase has almost become a song. Nobody likes to see undeserving people win huge, unjustified damage awards, but the fact is, it doesn't really happen in California, except on maybe on TV. Los Angeles Times business columnist Michael Hiltzik couldn’t be more correct when he writes that one of the biggest fans of so-called tort reform is the insurance industry, “because the less money they pay out to plaintiffs, the more they get to keep.” See “Why Tort Reform Is a Frivolous Diversion.”

While that statement is enough to make sensible people wary of the deep pockets behind tort reform movements, Hiltzik clears the confusion and makes a very good case about why limiting an injured victim’s ability to use the legal system to be made whole is not the great fix for rising medical costs insurers and many politicians claim.

The argument for tort reform, as Hiltzik explains, is that plaintiff lawyers are filing too many “frivolous” lawsuits and claiming millions of undeserved dollars. Doctors are ordering unnecessary tests to ensure they don’t misdiagnose or fail to diagnose something that could end up in court. As a result, medical costs escalate.

“The truth is that medical liability isn’t a big driver of health costs overall,” Hiltzik writes. “[T]he cost of malpractice litigation, in court and through defensive medicine, [is] roughly 2% to 3% of all U.S. healthcare spending.”

In California, since 1975, the Medical Injury Compensation Reform Act (MICRA) has capped recovery for pain and suffering to $250,000. That’s next to nothing when to compared to what plaintiffs can receive in other types of cases. Lawyers’ fees are also limited.

But did MICRA help consumers? According to a 2004 Rand study, the MICRA caps don’t amount to a fair distribution of justice. Victims of medical errors who had small economic losses but suffered major damage to their quality of life are unfairly compensated. Women are disproportionately affected. The MICRA cap isn’t adjusted for inflation. In today’s dollars, the award has the same purchasing power as $62,000 did in 1975. And the most unsettling result of all is that may unjustly injured people won’t even pursue a case because the award may not even cover the litigation cost.

The big MICRA winners are insurers, who last year paid out only 17 cents of every dollar they collected on medical malpractice insurance. And carriers don’t even have the good sense to be humble about it.

“At American Physicians Capital,” writes Hiltzik, “claims were falling so fast in 2007 that its chief executive publicly compared his underemployed claims managers to ‘the Maytag repairman.’ The next time you find yourself nodding in assent while some politician carries on about tort reform, remember that its benefits will go to characters like this.”

Clearly, this only reinforces what we’ve been saying all along: If you want real reform, start with the perpetrators, not the victims.

The Los Angeles Times health section this week ran dueling articles about life with and without health insurance. Both articles exposed a few of the most egregious problems consumers face dealing with their health insurance companies.

In “Uninsured, Unafraid,” health insurance reporter J. Duncan Moore Jr., listed the many reasons he opts to remain uninsured. Moore has written about the insurance industry long enough, he says, to learn “to love the delectable insurance lingo … that makes normal people feel as if they’re stirring concrete with their eyelashes.”

Moore’s most compelling argument about why he’s uninsured, and the one he describes as “the single most terrifying aspect of health insurance,” is the practice of rescission, that is, carriers revoking coverage after the policyholders gets sick and incurs medical expenses.

Moore writes: “The industry’s continued use of rescissions to evade bills that companies don’t wish to honor eviscerates the value of health insurance. To a person like me, who is on the margin, rescissions are the deciding factor between purchasing and not purchasing insurance. … [A]s long as the insurers can use medical underwriting to exclude poor risks and redline preexisting conditions -- sometimes retroactively -- insurance isn’t worth what we’re being asked to pay.”

The second article, “When a Policy is Clear as Mud,” by Harris Meyer, follows the saga of Anthem Blue Cross policyholder Neil Dukas as he attempts to receive treatment for a knee injury. His difficulties arose because he couldn’t get clear, reliable information from his insurer about pre-authorization for procedures and tests and reimbursements for his out-of-pocket costs for an MRI. Eight months after his injury, Anthem Blue Cross approved his MRI, but Dukas is still waiting for reimbursement.

Meyer quotes former health insurance communications executive Wendell Potter: “There are many ways insurers keep their customers in the dark and purposely mislead them,” he said. “Insurers make it nearly impossible to understand -- or even to obtain -- information [consumers] need.”

Some insurers insist they are attempting to “step up” their communications efforts so their customers can better understand insurance jargon, writes Meyer in a companion article “Goodbye, ‘Insurancespeak’ – Hello, Clear Language.” http://www.latimes.com/features/health/la-hew-insurance-jargon-changes21-2009sep21,0,893422.story.

We would not advocate remaining uninsured. A catastrophic injury to you or family member would either bankrupt you, or keep you from getting the medical services you need. On the other hand, paying premiums only to find the coverage rug pulled out from under you could have the very same effect. THESE are the issues Congress should be tackling, instead of the noisy, wholly ineffective debate about whether a “public option” is going to turn our Country into a socialist regime.

“Most Americans do have insurance and have never had less security and stability than they do right now because they’re subject to the whims of health insurance companies,” President Obama told a group of nurses, speaking from the White House the morning after his Sept. 10 address to a joint session of Congress about his plan to overhaul the nation’s healthcare system. “Obama Keeps Up Health Care Push, Citing Uninsured,” New York Times.

As part of his Wednesday night speech, the president said the legislation he seeks would guarantee insurance to consumers, regardless of pre-existing medical conditions, as well as other protections. “As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most," he added. Obama: Time for Bickering Is Over,” Associated Press.

Even though the bulk of the healthcare debate tends to focus on the issue of whether our country could support both private and public health insurance options – we believe it can – the real truth about the way the insurance industry does business cannot be over-emphasized.

The president has it right when he says health insurers must be held accountable. At the very least, any federal health care legislation should mandate that sick people get the coverage they pay for without delays or denials, time-consuming procedures, and claims adjusters forced to be more concerned with limiting benefits than caring for their customers.

Although legislators are showing concern that the debate has become “uncivil,” real progress toward insurance reform necessarily requires a vigorous airing of the issues. We applaud those lawmakers who refuse to bend to the insurance industry’s “whims.”

Just when the California Legislature shows some backbone and passes legislation to end the insurance industry practice of canceling some policyholders’ coverage after they get sick and incur medical expenses, the measure could reach a dead end in the governor’s office. Gov. Arnold Schwarzenegger has threatened not to sign any bills until the Legislature makes progress on the state’s water crisis issues, prison overcrowding or confirmation of the governor’s key appointees. See “Health Bill Heads to Governor,” Los Angeles Times.

Last year, the governor vetoed a similar bill, but that was before reporting, led by the LA Times, documented how widespread the practice, known as rescission, really is. The Department of Insurance, responding with outrage over the unethical practice, is proposing its own solution to the problem.

In any event, we think it is unsavory to use sick people as political bargaining chips. Our state needs lots of work and another stalemate in Sacramento won’t help consumers. The insurance industry is likely out celebrating once again.

[090909]

California Attorney General Jerry Brown announced he will begin scrutinizing how health plans in California pay insurance claims, reports the Los Angeles Times. This move was based in part on a recent analysis published by the California Nurses Association that found six of the state’s largest plans rejected one in five claims during the past seven years - “State to Probe Insurer Denials.”

“These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved,” Brown told reporter Lisa Girion.

Brown joins other state regulators, most notably the California Department of Managed Health Care, responsible for policing the health plans. The DMHC, however, reacted defensively to the nursing association’s analysis, claiming it has “been very active in ensuring that providers of care should be paid fairly and on time.”

The insurance industry asserts that the analysis “mischaracterizes” claims data and “does not accurately reflect denials of care for insurers,” even though the numbers the association used to compile its report came directly from the companies own filings with the DMHC.

Although we and many others have frequently accused health plans of improperly denying claims, the Nurses’ Association analysis is the first-of-its-kind report to provide such concrete evidence.

We urge Attorney General Brown to use the powers of his office to conduct more than a cursory examination of this issue, perhaps resulting in something more than the usual slap on the wrist and innocuous fines typically imposed on the industry. Now is the time to institute structural reforms that could revolutionize health care in California, particularly since federal attempts to hold the insurance industry accountable have been compromised by the industry’s unprecedented lobbying. (090904)

According to the California Nurses Association, California HMOs rejected one out of every five claims for medical care between 2002 and June 2009, reports Lisa Girion of the Los Angeles Times. That’s 31.2 million claims, or 21 percent of all claims during that period.

For the first half of this year, Aetna had the lowest denial rate -- 6.5 percent; PacifiCare the highest -- 39.6 percent. Anthem Blue Cross and Kaiser each rejected 28 percent of claims, and Cigna denied 33 percent.

Although such high denial rates aren’t news to us, it’s rewarding to see empirical data that supports our assertions that health insurers tend to delay and deny claims until policyholders are forced to sue them to receive the coverage they pay for. Sure many denials are justified due to actual misunderstandings about coverage, but far too many denials are improper, and even oppressive.

The nurses association used public data from the health plans’ financial reports posted on the California Department of Managed Care’s website to conduct its analysis. “Every claim that is denied represents a real patient enduring pain and suffering,” Deborah Burger, co-president of the California Nurses Association, told the Times.

Typically, the health plans denied the association’s analysis of their reports, stating that “claim rejections reported to regulators do not always reflect actual denials of treatment to patients.” Maybe not always…but often!

DMHC spokeswoman Lynn Randolph told the Times, “It’s important to point out that a denied claim means that the patient received the medically necessary services, but the doctor or hospital was not paid for that care.”

But what’s the difference? Doctors and hospitals are going to bill someone. If the health plan won’t pay claims, policyholders are then forced to pay out of their own pockets. People don’t buy health insurance for the benefit of hospitals and doctors; they purchase coverage so that in the unfortunate event they face catastrophic health challenges, they can get the medical care they need without going bankrupt!

Both the insurance industry and the California Department of Managed Healthcare fail to appreciate the pain and suffering endured by those whose claims are denied. Try being seriously ill, enduring the stress and indignity of life-saving treatment, then finding out your insurer won’t cover your bills. Now that’s real suffering.

For a copy of the California Nurses Association analysis, go to http://www.calnurses.org/media-center/press-releases/2009/september/california-s-real-death-panels-insurers-deny-21-of-claims.html.