Senate Health Care Bill Does Not Have "Independent Third Party Review" That Would Protect Breast Cancer Patients

Reuters reports that Wellpoint is under federal investigation for singling out breast cancer patients and dropping their coverage "based on either erroneous or flimsy information." They also report that language in the House bill would have protected these women, but it was removed in the Senate version of the bill because "lobbyists for WellPoint and other top insurance companies successfully fought proposed provisions of the legislation."

Max Baucus, head of the Senate Finance Committee, credits former Wellpoint VP Liz Fowler with writing the "blueuprint" of the bill, and her name appears as "author" on the bill PDF released by the committee.

Here is a look at the language in the House and Senate bills. The important thing to note that the House bill specifically providers for an "independent external third party review" before a policy can be cancelled.

From the House health care bill (HR 3200 PDF)

SEC. 162. ENDING HEALTH INSURANCE RESCISSION ABUSE.

(a) Clarification Regarding Application of Guaranteed Renewability of Individual Health Insurance Coverage- Section 2742 of the Public Health Service Act (42 U.S.C. 300gg-42) is amended--

(1) in its heading, by inserting `and continuation in force, including prohibition of rescission,' after `guaranteed renewability'; and

(2) in subsection (a), by inserting `, including without rescission,' after `continue in force'.

(b) Secretarial Guidance Regarding Rescissions- Section 2742 of such Act (42 U.S.C. 300gg-42) is amended by adding at the end the following:

`(f) Rescission- A health insurance issuer may rescind health insurance coverage only upon clear and convincing evidence of fraud described in subsection (b)(2). The Secretary, no later than July 1, 2010, shall issue guidance implementing this requirement, including procedures for independent, external third party review.'.

(c) Opportunity for Independent, External Third Party Review in Certain Cases- Subpart 1 of part B of title XXVII of such Act (42 U.S.C. 300gg-41 et seq.) is amended by adding at the end the following:

`SEC. 2746. OPPORTUNITY FOR INDEPENDENT, EXTERNAL THIRD PARTY REVIEW IN CASES OF RESCISSION.

`(a) Notice and Review Right- If a health insurance issuer determines to rescind health insurance coverage for an individual in the individual market, before such rescission may take effect the issuer shall provide the individual with notice of such proposed rescission and an opportunity for a review of such determination by an independent, external third party under procedures specified by the Secretary under section 2742(f).

`(b) Independent Determination- If the individual requests such review by an independent, external third party of a rescission of health insurance coverage, the coverage shall remain in effect until such third party determines that the coverage may be rescinded under the guidance issued by the Secretary under section 2742(f).'.

(d) Effective Date- The amendments made by this section shall apply on and after October 1, 2010, with respect to health insurance coverage issued before, on, or after such date.

Note that the House bill also says that justification for recession must be "clear and convincing evidence of fraud."

From the Senate bill which is the new law (HR 3950 PDF)

`SEC. 2712. PROHIBITION ON RESCISSIONS.

`A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not rescind such plan or coverage with respect to an enrollee once the enrollee is covered under such plan or coverage involved, except that this section shall not apply to a covered individual who has performed an act or practice that constitutes fraud or makes an intentional misrepresentation of material fact as prohibited by the terms of the plan or coverage. Such plan or coverage may not be cancelled except with prior notice to the enrollee, and only as permitted under section 2702(c) or 2742(b).

[ed note: referencing the Public Health Service Act]

The House clearly stated that people would have the right to an independent, external third party review of any rescission. Critically it also mandates that a person's coverage must remain in effect until the external third party review has made a determination that the rescission is justified. The Secretary of Health and Human Services would have been required to issue guidelines for such review by July 1 of this year, to be implemented by October 1, 2010.

These two requirements should work in tandem to reduce unjustified rescission. Even with the right to third party review, if insurance companies were allowed to stop covering people while waiting for a ruling, it could still produce an incentive for unjustifiably rescinding policies and slow-walking the independent review process.

As you can see, the Senate bill does not mandate either independent third party review or the continuation of coverage while the review is taking place. Theoretically it's possible for the Secretary of HHS to require a similar independent third party review framework for rescission, but unlike the House bill, the Senate bill which ultimately passed does not require her to do so -- something Wellpoint actively lobbied for.