California’s Health Insurance Rescissions: Hospitals Get Their Pound of Flesh

Yesterday, I asked the quasi-rhetorical question: “Why did California’s campaign against Anthem Blue Cross collapse?”, addressing state regulators’ failure to collect a $1 million fine for Anthem Blue Cross’ allegedly illegal rescission of individuals’ policies.

Well, it looks like it didn’t collapse: the hospitals have just wrangled over $11 million from Anthem Blue Cross because they treated the patients before the health plan dropped them, and never got paid.

Some of the (few) folks who read this blog have told me I’m too soft on the health plans and too hard on the hospitals. So, this time I’m going to switch horses: the hospitals confirm coverage before admitting a patient, so if they send a bill to Anthem Blue Cross in good faith, there’s no way the health plan should be able to renege on it.

However, that ignores the big picture: the whole payment mechanism is way too complicated, with its networks (which I’ve previously described as absurd) and chargemasters and Relative Value Based Payment System. Indeed, I have also previously discussed situations where the health plan can verify a patient’s eligibility incorrectly, but in good faith (for example, if the patient is no longer an employee of the covered group, but the firm did not tell the health plan).

The real problem is that the status quo ropes providers into coverage disputes between health plans and beneficiaries. The solution, it seems to me, is that health plans should pay patients, and patients pay providers. Unfortunately, providers don’t see it this way. In fact, the California Medical Association would like to outlaw such payments (even though doctors still have not settled with Anthem Blue Cross for services that they rendered to rescinded policyholders).

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top