Only a "small fraction" of patients who lost their health insurance after getting sick received money from settlements negotiated by Insurance Commissioner Steve Poizner and the Schwarzenegger administration's insurance regulator, Assembly researchers say.
Poizner, who is running for governor, and leaders of the state’s Department of Managed Health Care have announced major settlements in recent years with health insurers who cut off the coverage to about 6,000 patients, even though many were dealing with debilitating and costly illnesses.
But Assembly researchers dug further and found that few of the consumers entitled to a portion of the settlement money actually got anything.
Poizner’s office claimed in a 2009 press release that it had reached a settlement with Anthem Blue Cross to reimburse the expenses of 2,330 patients whose coverage was cut off – to a tune of $14 million.
It turns out that consumers have only since recouped 6 percent of the settlement money, about $798,000, according to the report by the staff of the Assembly Committee on Accountability and Administrative Review. The money went to 78 of the 2,330 patients who were eligible to collect from the pool of money.
The results come in stark contrast to Poizner’s statement in February 2009, when the settlement was reached: "I am pleased that through this settlement, we have guaranteed reimbursement and restoration of coverage for the more than 2,300 people whose health care insurance was terminated without their consent," said Poizner.
Poizner’s “guarentee” of restored coverage, though, was only met for a handfull of patients. Less than four percent of the formerly insured went ahead and got new coverage agreements with Anthem Blue Cross, the report says.
The Department of Managed Health Care also went after health insurers for cutting off patients’ coverage. The Assembly committee staff documented similar results for that agency.
The DMHC set up an arbitration process so patients could recoup medical expenses incurred after their care was axed. But only 92 of the rescinded customers – fewer than 3 percent of 3,366 who were eligible – participated in the process, according to the committee’s report.
To their credit, both agencies have taken some credit for an end to rescissions, the practice of insurers cutting off care to patients on the individual health insurance market.
But as the report notes, there are critics of the settlements in Attorney General Jerry Brown's office:
In a September 3, 2008 letter, Deputy Attorney General Carol S. Jimenez wrote that lawyers in the California Attorney General's Office "have consistently expressed significant concerns about fairness to rescinded enrollees in the agreed-upon restitution process," and that the Office was concerned that the letters sent to rescinded enrollees lacked clarity.
And the Assembly staffers noted another finding in their report. The DMHC, the state’s HMO watchdog, went out of its way to weigh in on the Los Angeles City Attorney’s case (much like it's case and Poizner's) against health insurers for rescinding patients' coverage.
The department filed a "friend of the court" brief saying that the city had no standing to sue Blue Cross, a move that put the regulator on the same side of the argument as an entity it regulates.
Department spokeswoman Lynne Randolph did not return a call yesterday afternoon. The agency's assistant deputy director is scheduled to speak at the hearing today, which is likely to be broadcast at 9 a.m. here.
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