Individual health plans come under scrutiny in California

The insurers allegedly dropped policyholders in violation of state law. Physicians and others say such problems occur throughout the country.

By Jonathan G. Bethely, AMNews staff. Nov. 6, 2006.

Kevin Booth, MD, a spinal surgeon in Pleasanton, Calif., didn't think twice about performing a lumbar spinal fusion on his patient after going through the necessary authorization process with the patient's insurer, Blue Cross of California.

"We went ahead and performed the procedure and he did fine," said Dr. Booth, one of four physicians at the Northern California Spine Institute.

What happened next to Dr. Booth highlights a long-standing battle that physicians say they are fighting with not just WellPoint-owned Blue Cross of California, but also with insurers across the country after they try to collect payment from patients with individual health plans. He said Blue Cross, after surgery, refused to pay for treatment, citing "misstatements" on the patient's application for insurance.

In California, state regulators and plaintiffs' attorneys have accused at least five insurers of violating state law by finding loopholes or otherwise petty reasons to drop individual members who require large claim payouts. That law states that members can be dropped only for fraudulently or "willfully" misrepresenting their health history and that insurers must do their own investigation of a potential member's health history before providing coverage.

On Sept. 21, the Dept. of Managed Care fined Blue Cross $200,000 for dropping a patient in violation of that law. WellPoint has not admitted guilt, nor has it announced whether it would pay the fine or contest it. In October, the department also ordered Kaiser Permanente to reinstate a member who was dropped, the first time it had made such an order.