Regulations To Prevent Improper Cancellations Of California Health Insurance Policies

The California Department of Managed Health Care and Department of Insuranceon Tuesday proposed new regulations intended to prevent insurers fromimproperly canceling individual health insurance policies, the Sacramento Bee reports (Chan, Sacramento Bee,10/24). The agencies said the new rules reinforce existing lawsprohibiting insurers from rescinding coverage unless they can provepolicyholders intentionally omitted information or lied on a medicalquestionnaire (Girion, Los Angeles Times, 10/24).

Underthe proposed regulations, advance notice would be required before anypolicy cancellations; coverage could not be suspended during aninvestigation of a policyholder; coverage could not be canceled for anentire group if only one person is responsible for submitting falseinformation on a medical questionnaire; and the DMHC director couldreview policy cancellations (Sacramento Bee, 10/24). Inaddition, insurers would be required to simplify their applications toavoid confusing questions about medical history (Colliver, San Francisco Chronicle, 10/24).

The proposal will be reviewed during a public hearing sometime after mid-November (Sacramento Bee, 10/24). DMHC has fined Blue Cross of California and Kaiser Permanente for improper cancellations, and the agency is continuing investigations of Blue Shield of California, Health Net, Kaiser Permanente and PacifiCare (San Francisco Chronicle, 10/24).

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