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Wednesday, June 24, 2009

Managing the risk: Blue Cross Blue Shield of Texas' rescission of a breast cancer patient's coverage

Robin Beaton worked as a nurse for 30 years, and had retired by age 59. She had insurance coverage in an individual policy through Blue Cross Blue Shield of Texas. Though she had had acne, and a rapid heartbeat, she didn't mention them on her insurance application. However, Blue Cross accepted her application, and she paid premiums regularly. Then, when she was diagnosed with an aggressive form of breast cancer, her doctor told her she needed a double mastectomy. At that time, Blue Cross retroactively canceled ("rescinded") her policy, as she recently testified to the US Congress.

The insurance company said the fact that she had seen a dermatologist for acne, who mistakenly entered a notation on her chart that suggested her simple acne was a precancerous condition, allowed Blue Cross to leave her in the lurch.

Such a practice by insurers, of reviewing the person's health questionnaire, and rescinding policies, upon learning of an expensive condition like cancer, is quite common, said the three insurance CEOs who testified. The congressional panel reported that three insurers had done this almost 20,000 times in a five-year period.

I spoke with a senior spokesperson for Blue Cross Blue Shield of Texas, and asked these questions:

1. What are the steps of the review process routinely used by BCBS of Texas to consider whether current insureds have pre-existing conditions that would affect their eligibility for covered services?

2. Which diagnoses and conditions of an insured do NOT trigger an electronic review of pre-existing conditions?

3. Which diagnoses and conditions of an insured do NOT trigger a review of pre-existing conditions that uses phone calls, manual chart review, or other ways of collecting information?

4. Were BCBSTX employees rewarded financially based on the rescissions they identify?

5. Will your CEO commit to limiting rescissions to only policyholders who intentionally lie or commit fraud to obtain coverage? If not, why not?

This was the formal answer by the BCBS of Texas spokesperson:
"If an applicant for individual health insurance does not disclose noteworthy medical conditions during the application process, coverage may have been offered that cannot be properly supported by the premiums received for that individual's coverage. During our review of such cases, every effort is taken to retain the member's coverage, while still appropriately managing the risk and maintaining affordable rates for all individuals covered by such plans. In fact, Blue Cross and Blue Shield of Texas often allows members to retain their coverage by applying an increased premium rate, adding a specific coverage exclusion rider or removing the individual's coverage rather than the entire family's coverage. As such, a very small percentage of individual members actually lose coverage when compared to the 300,000 members covered by individual plans in Texas.

It is also worth noting that BCBSTX supports health care reform that guarantees insurance for any individual who applies for it regardless of health status as long as all individuals participate in a health insurance pool."

Advice: Share this story, and support a public insurance option as an alternative to private insurance.

Read another story about insurers’ rescissions.

Thanks to Paul Begala for the source article in CNN.com on June 19.

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