Health insurers agree to end controversial drop-off practice

Four months before the enactment of a mandate set by the new healthcare law, the nation’s largest health insurers have agreed to stop canceling sick people’s coverage. 

Karen Ignagni, president and CEO of America’s Health Insurance Plans (AHIP), was expected to send a letter to Health and Human Services Secretary Kathleen Sebelius by the end of Wednesday making the announcement official, an insurance industry source told The Hill.

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The industry had come under pressure from the White House and congressional Democrats, who jumped on press reports that some companies were dumping women with breast cancer from coverage. Three House committee chairmen wrote the CEOs of several major insurers on Tuesday asking that they end the practice.

The healthcare law mandates that insurance companies end the practice of rescissions, except in clear-cut cases of fraud and intentional misrepresentation, as of Sept. 23. Ignagni will announce that companies have voluntarily agreed to end rescissions by the end of May, the industry source said. 

The move by insurers is intended to show they are committed to working with the new healthcare law even after the White House cast the industry as a villain during the healthcare debate. 

“We want to send a strong signal that we’re committed to making this work,” the industry source said.

It represents concession by the industry since the bill became law. Several health plans agreed earlier this month to immediately allow children to stay on their parents’ plan until the age 26, though the new law only mandates them to do so starting Sept. 23.

Insurers last month, likewise under pressure from the White House, agreed to cover children with pre-existing conditions starting this year. The industry initially argued that the new law does not require them to do so until 2014.

The expected announcement represents a political victory for Democrats eager to showcase the immediate benefits of their signature health reform law before the midterm elections. 

In a Wednesday statement issued before Ignagni’s letter, Speaker Nancy Pelosi (D-Calif.) looked to score political points by highlighting UnitedHealthcare’s decision to abandon rescissions. 

“This announcement is further evidence that congressional Republicans who are calling for repeal are out of touch because they are against ending abuses by insurance companies that even the companies themselves are beginning to address,” the statement said.

AHIP’s move comes a day after Democratic leaders of three House committees with jurisdiction over healthcare — Energy and Commerce, Ways and Means and Education and Labor — asked heads of seven major health insurers to stop rescissions immediately.

“These rescissions hurt patients who need coverage the most, such as women diagnosed with breast cancer,” said the letter sent to CEOs of WellPoint, Kaiser Permanente, Assurant Health, UnitedHealth Group, Humana, the Blue Cross Blue Shield Association and Aetna. 

“We are writing to ask all of your companies to end any such abusive practices immediately,” it said.

The letter also called for companies to institute third-party reviews to ensure  rescissions only occur in cases of fraud or intentional misrepresentation of material fact. The industry source said insurers have agreed to third-party review,  but that may take more time to set up. The source also said rescissions are a minor issue that affected fewer than one-fifth of 1 percent of individual policies in 2006. Democrats have shown a willingness to jump on stories about people seeing their insurance dropped. 

Sebelius wrote a letter to WellPoint President and CEO Angela Braly on April 22, after Reuters published a story accusing WellPoint of dropping women recently diagnosed with breast cancer. 

Sebelius asked that the company “immediately cease these practices and abandon your efforts to rescind health insurance coverage from patients who need it most.” 

WellPoint, which denied the allegation in the Reuters story, agreed on Tuesday to end the practice starting May 1.