Saturday, July 25, 2009

Blue Cross praised employees who dropped sick policyholders

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By Lisa Girion

Workers received high marks on performance reviews after policies were rescinded, documents show. The health insurer denies the practice is a factor in evaluations.

Blue Cross of California encouraged employees through performance evaluations to cancel the health insurance policies of individuals with expensive illnesses, Rep. Bart Stupak (D-Mich.) charged at the start of a congressional hearing today on the controversial practice known as rescission.

The state's largest for-profit health insurer told The Times 18 months ago that it did not tie employee performance evaluations to rescission activity. And executives with Blue Cross parent company WellPoint Inc. reiterated that position today.

But documents obtained by the House Committee on Energy and Commerce and released today show that the company's employee performance evaluation program did include a review of rescission activity.

The documents show, for instance, that one Blue Cross employee earned a perfect score of "5" for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.

WellPoint's Blue Cross of California subsidiary and two other insurers saved more than $300 million in medical claims by canceling more than 20,000 sick policyholders over a five-year period, the House committee said.

"When times are good, the insurance company is happy to sign you up and take your money in the form of premiums," Stupak said. "But when times are bad, and you are afflicted with cancer or some other life-threatening disease, it is supposed to honor its commitments and stand by you in your time of need.

"Instead, some insurance companies use a technicality to justify breaking its promise, at a time when most patients are too weak to fight back," he said.

Lawmakers -- Republicans and Democrats alike -- decried the practice of canceling policies of ill policyholders and grilled insurance executives about it.

The hearing began a day after President Obama outlined his proposals for revamping the nation's healthcare system. But any such overhaul would be incomplete without an end to rescission, said Rep. Henry Waxman (D-Calif.).

"It's shocking. It's inexcusable. It's a system we have in place that we have to stop," Waxman said.

The committee investigation uncovered several rescission practices that one lawmaker called egregious, including targeting every policyholder diagnosed with leukemia, breast cancer and 1,400 other serious illnesses. Such investigations involve scouring the policyholder's original application and years' worth of medical and pharmacy records in search of any discrepancies.

"These practices reveal that when an insurance company receives a claim for an expensive, life-saving treatment, some of them will look for a way -- any way -- to avoid having to pay for it," said Stupak, chairman of the commerce committee's Subcommittee on Oversight and Investigations.

Brian Sassi, a WellPoint executive, told committee members that Blue Cross did not have a policy to evaluate employees based on their rescission activity.

In a statement to The Times, WellPoint spokesman Jerry Slowey said WellPoint had "no policy to factor either the number of rescissions or the value of claims not paid in the evaluation of employee performance or when calculating employee salary or bonuses."

Slowey said that late last year two employee reviews from 2003 were discovered "that made reference to savings in a section of the review that contains many other factors.

"Once we discovered this reference, more than a hundred other individuals' reviews were reviewed, and no other such references were found," he said. "WellPoint does not have a policy, nor does it incorporate such savings in any associate bonus plan.

"The fact that two out of more than a hundred individuals handling possible rescissions points to the fact that this was just two associates in the same area recognizing the work done that year to uncover fraud and abuse," he said.

In November 2007, The Times reported that insurer Health Net Inc. paid bonuses to employees based in part on their involvement in rescinding policyholders. According to internal corporate documents disclosed through litigation, Health Net saved $35 million over six years by rescinding policyholders. The disclosures were part of the evidence that led a private arbitration judge to levy $9 million in damages against Health Net in a case involving the company's rescission of a woman diagnosed with breast cancer.

At the time, Blue Cross told The Times that it did not link employee performance reviews to rescission levels. Blue Cross also said at the time that it had conducted audits to ensure that claims reviewers were not given any "carrots" for canceling coverage.

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