Or another way to put it? We will now stop poking you in the eye with a sharp stick. Really!
This must qualify as one of the most ridiculous headlines of the year. Insurance companies, surely one of the most maligned industries in the country, have admitted that they do something almost everyone finds repulsive and disgusting -- canceling insurance when a person needs it the most! Instead of waiting until September, when they would have been forced to do it by the federal government, they have decided to nobly end the practice five months ahead of time -- just because they can! And this is supposed to restore trust in their organizations?
How did recission come about in the first place? In the health insurance business, it means canceling a contract, often by claiming that the individual had failed to report a pre-existing condition of some kind. (Note that if you are part of a group insurance plan, this would not apply to you -- only if you are buying individual health insurance.) How do insurers even know what type of diagnosis you have? The Wellpoint situation that started the furor this week was described as the following:
Reuters has a stunner today. The insurance company WellPoint had a policy of targeting its customers with fraud investigations if they were diagnosed with breast cancer, according to federal investigators. The goal: Find a reason to drop their coverage of sick women before big bills started to arrive.
The women all paid their premiums on time. Before they fell ill, none had any problems with their insurance. Initially, they believed their policies had been canceled by mistake. They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.
And Wellpoint's response?
The story . . . misstates the role of what it terms computer algorithms. Contrary to how its use was portrayed in the story, such software is used to look at a series of diagnostic codes meant to capture conditions that applicants would likely have known about at the time they applied for coverage. We do not single out breast cancer or pregnancy.
So we single out ALL conditions and not just breast cancer? Well, that is surely reassuring. There is, as always, more to the story. Behind this practice, common in the insurance industry, is an organization most have never heard of. The way insurers know that a policy holder might be "eligible" for recission is through the use of special software provided by a company called The Medical Information Bureau, Inc. or MIB.
To accomplish its mission, MIB provides member companies to which applicants have applied for coverage with medical and personal information contained in the applicants' respective consumer files in the MIB database. By doing so, MIB alerts its member insurance companies to conditions that are significant to underwriting so they may further investigate or verify them. In theory, MIB is supposed to prevent people who have significant medical conditions (and have been repeatedly rejected when they apply for insurance) from suddenly omitting their conditions from their applications and then getting health and life insurance with low-cost premiums that are reserved for healthy people
But there is more --
MIB isn't supposed to be a medical blacklist. Member insurers are officially forbidden from using the information obtained in MIB's files as the basis for denying insurance. Instead, they are only allowed to use the information as the basis for further investigation. Thus, MIB's files don't contain medical records, test results, or X-rays. Instead, each person's file contains one or more codes that stand for a particular medical condition that has been reported for that person. There are codes that signify diabetes, heart problems, and drug use. Some codes are very detailed; for example, researchers found that MIB had five codes for HIV/AIDS. Consumers who have not applied for individually underwritten life, health, long-term care, disability income and critical illness insurance in the past 7 years, or held group insurance through an insurance company that reports information to MIB, would not have any information in their personal MIB record file.
Not all of the codes at the Medical Information Bureau are medical; for example, MIB has codes that indicate a dangerous lifestyle, including, "adverse driving records, hazardous sports, sexual deviance, sloppy appearance, aviation activity, or homosexual lifestyle." These codes map to similar question on most life insurance forms. Thus, MIB helps ensure that if one life insurance company rejects a person on medical grounds, then other life insurance companies will be made aware of the ailment and reject that person.
Not surprisingly, MIB has been the source of controversy over the years, mainly because of the secrecy of their operation. They have been the target of investigations since the mid 1960s with varying degrees of success in getting the organization to reveal what information they collect and where they get it. Today, you can request a copy of your Consumer File by going to this website.
In the information age, we all know that there is a lot of information out there about every aspect of our lives. But when that information is secret and life and death decisions are made on its basis, it's time for a little sunshine on the issue. Thankfully, the new health reform law makes such recissions illegal. Permanently.
To be absolutely fair and balanced, I should report how the industry, and Wellpoint in particular, has responded to the accusations of recission. Their response is almost more damaging than the story itself. Yes, we do recissions. Every insurance company does them. We don't do very many. We only do them if we think someone has lied to us on their application for insurance. We do them for all conditions not just breast cancer.
Do you feel better now?
Secretary of Health and Human Services Kathleen Sebelius wrote a letter to Wellpoint strongly urging them to cease this practice immediately. And America's Association of Health Plans (AHIP)'s member companies have agreed to stop recission well before the required deadline.
One way you can be sure that this practice is stopped is to report illegal recissions to the newspaper, to the blogs, to your State Insurance Commissioner, to HHS. Insurers can still cancel your insurance for fraud or misrepresentation, however. They just can't poke you in the eye with a sharp stick and call it insurance.
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It was not too long ago that they were admitting that they dropped people with HIV.
http://www.reuters.com/article/idUSTRE62G2DO20100317
http://krugman.blogs.nytimes.com/2010/03/17/demons-and-demonization/
*gasp*
It's almost as if private health insurance were not remotely trustworthy, to the point where spending money on a private health insurance policy is a waste of that money.
As always, a great comment on how the industry has tried to look compassionate. Unfortunately algorithms are not pronouncements from our former vice president, but rather one of those words (and a lame one at that) used by the industry to befuddle the casual reader about how the system works. The problem is someone had to INVENT and program the algorithm in the first place to screen codes and claims in a deliberate attempt to withhold or rescind coverage. The real issue is what else is "out there"...what other algorithms exist that are designed to "catch" stuff that might cost them dollars. I agree with you the industry is maligned....for good reason.
These people make my head hurt.....
The algorithm is programmed with all the rules by which the company does business. Anything the algorithm does, provided it is functioning and it apparently is, is what the business wants to do.
You have breast cancer? The business wants to let you die. Got _anything else_? The business wants to let you die.
Yet now, thanks to reform, these companies have become semi-institutional, with millions of new victims eventually forced to purchase their dubious services by law. We should have cut out these worthless middle-men, but our representatives could not bear to upset them but so far, which is nowhere near far enough.