Facing blistering criticism, Blue Cross stops doctor letters
The Associated Press
Article Launched: 02/13/2008 05:40:29 AM PST


LOS ANGELES—Blue Cross of California quickly halted its practice of sending letters to doctors asking them to report conditions it could use to cancel new patients' medical coverage after a widespread wave of criticism.
The move announced Tuesday by the state's largest for-profit health insurer came just hours after revelations in the Los Angeles Times that the company was sending the letters, prompting outcry from doctors, patients, the governor and even presidential candidates.

"Today we reached out to our provider partners and California regulators and determined this letter is no longer necessary and, in fact, was creating a misimpression and causing some members and providers undue concern," Blue Cross said in a statement. "As a result, we are discontinuing the dissemination of this letter going forward."

Gov. Arnold Schwarzenegger called the letter "outrageous" and described the practice as asking doctors to "rat out the patients."

Democratic presidential candidate Hilary Clinton said the Blue Cross effort was another "example of how insurance companies spend tens of billions of dollars a year figuring out how to avoid covering people with health insurance."

Blue Cross had for years been sending physicians copies of health insurance applications filled out by new patients, along with a letter telling the doctors that the company has a right to drop members who fail to disclose "material medical history," including a pre-existing
pregnancy.
"Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately," according to the letter obtained by the Times.

Blue Cross is one of several California insurers that have been criticized for issuing policies without checking applications and then canceling coverage after patients run up major medical costs. The practice of canceling coverage is under scrutiny by state regulators, lawmakers and the courts.

"This letter was part of Blue Cross' pattern of unfairly canceling policies when people need coverage most," said Richard Frankenstein, president of the California Medical Association. "We're relieved that Blue Cross is ending this particular tactic but continue to have serious concerns about this company's practices."

WellPoint Inc., the Indianapolis-based company that operates Blue Cross of California, said it was sending out the letters in an effort to keep costs at a minimum and guard against fraud.

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Information from: Los Angeles Times, http://www.latimes.com
http://www.mercurynews.com/news/ci_8249092