Reuters and Murray Waas are at it again with another great health-care investigation.
It shows how WellPoint, the second-largest health insurer in the country by market cap, systematically targeted customers with breast cancer to find excuses to drop their coverage, something called rescission. A month ago, Reuters exposed how Assurant Health similarly targeted HIV patients.
I suppose if these health-care insurers were actually finding past misrepresentation by patients that this kind of targeting would just be yucky. But Waas reports that it’s something much worse than that:
But state regulators, congressional investigators and consumer advocates say that in only a tiny percentage of canceled health insurance cases was there a legitimate reason.
A 2007 investigation by the California Department of Managed Health Care bore this out. The agency randomly selected 90 instances in which Anthem Blue Cross of California dropped the insurance of policyholders after diagnoses with costly or life-threatening illnesses to determine how many were legally justified.
None were. “In all 90 files, there was no evidence (that Blue Cross), before rescinding coverage, investigated or established that the applicant’s omission/misrepresentation was willful,” the DMHC report said.
And this:
The investigation last year by the House Energy and Commerce Committee determined that WellPoint and two of the nation’s other largest insurance companies — UnitedHealth Group Inc and Assurant Health, part of Assurant Inc — made at least $300 million by improperly rescinding more than 19,000 policyholders over one five-year period.
WellPoint itself profited by more than $128 million from the practice, and the committee suggested that the figure might be largely understated because the company refused to provide information about cancellations by several subsidiaries.
Why didn’t Congress force WellPoint to fork over the information with subpoenas?
(UPDATE: Reuters has since corrected this anecdote, reporting that Beaton was not in fact a WellPoint patient.) Waas has a heck of an anecdote here: It just turns your stomach and shows why targeting people with serious diseases can’t be justified. Even if a company found patient fraud in most of the cases (which, as we see above, they don’t), you run the risk of doing this to somebody who’s done nothing wrong:
Beaton’s insurance problems stemmed from a visit to the dermatologist’s office just before her breast cancer diagnosis. A word written on her chart was mistakenly determined to be precancerous, she said in testimony last year before the congressional committee. In fact, she was being treated for acne…
Five months elapsed between the time her surgery was originally scheduled and the time WellPoint agreed to pay for it. During that delay, the cancerous mass in her breast had more than tripled. She had to undergo a radical double mastectomy and her survival rate is a fraction of what it would have been had she been allowed to have the surgery earlier.
Here’s another:
Technically, rescission was not the reason Relling lost her health insurance, according to correspondences with the company she provided to Reuters. Rather, it was canceled because she did not answer letters from her insurance company requesting information about her employment history.
Relling says the letter was sent to an address which she hadn’t lived at it for some time, and she never even saw it until recently. When she brought this information to WellPoint’s attention, she said, the company ignored her.
And the kicker is just great:
Deb Moessner, the company’s president and general manager, wrote Relling last July 13: “Ms. Relling, please know that is never pleasant to deliver unfavorable news to our members. However, there are situations that occur, such as yours, that leave us with no alternatives. Because you or your agent did not provide this vital information, your … health coverage terminated effective July 1, 2009.”
In the letter, Moessner added: “Please know that we wish you the best in regaining the healthy lifestyle you described prior to your recent illnesses.”
Reuters is on the right track with these investigative stories, an area where it had been hitting far below its weight for too long. It announced a few months ago that it was beefing up its enterprise reporting, and it looks like it’s working. This kind of series shows why it matters.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.