Insurance Commissioner’s Statement on Centene’s Acquisition of Health Net

California Insurance Commissioner Dave Jones issued a statement on Centene’s acquisition of Health Net. The following is a summary of his comments:

This transaction provides an opportunity to bring new capital and resources from a major national health insurer largely outside of California (Centene) to enable a California health insurer (Health Net) to continue to compete and offer consumers additional choices in California’s individual, small group, and large group commercial health insurance market. The conditions for my approval of this merger include the following:

  • Merger costs will not be imposed on California policyholders.
  • Health Net will maintain and grow its commercial line of business. There are growth commitments and investment requirements to ensure that Centene continues to invest substantially in Health Net Life and that both companies seek to expand Health Net Life’s present competitiveness in California’s individual, small group and large group health insurance markets.
  • Health Net Life will continue to offer products through Covered California.
  • Centene and Health Net must provide sufficient networks of medical providers and timely access to medical providers and hospitals.
  • Centene and Health Net must improve the quality of care delivered through their health insurance.
  • Health insurance rates will be developed using the same methodologies used before the merger, but with an agreement that rate increases will be kept to a minimum.
  • An adequate distribution channel for Health Net health insurance must be maintained.
  • Senior management for Health Net’s California operations must remain in California and restrictions are placed on Centene’s ability to re-domesticate or move Health Net out of state.
  • Centene will invest further in California by making a $200 million infrastructure investment by establishing a California call center, bringing new jobs to California.
  • Centene and Health Net will invest an additional $30 million in California’s low and moderate income

Health Net has had declining market share and covered lives in its commercial health insurance business. The merger with Centene gives Health Net access to the capital and resources to compete in a California market that’s dominated by three much larger health insurers (Kaiser, Anthem Blue Cross of California, and Blue Shield of California) and several other national health insurers (United Health Care, Aetna, Cigna).

Multi-Million Dollar Death Master Settlements Reached

Insurance Commissioner Dave Jones announced multi-million dollar settlement agreements with Jackson National and Axa related to the Social Security Administration’s Death Master File database. Created by the Social Security Administration, the database provides insurers with the names of deceased people with Social Security numbers. Until recently, most insurers only used the database to identify deceased annuity holders in order to stop making annuity payments, not to identify deceased policyholders in order to pay life insurance benefits

To date, 22 life insurers have agreed to reforms in using the Death Master database to search for deceased policyholders and make payments to their beneficiaries. Now, life insurers representing over 73% of the market have agreed to reform their practices and search for deceased policyholders in order to pay benefits to their beneficiaries. Under the settlement, Jackson National will pay $2.5 million and Axa $3.28 million to the states participating in the national investigation. Insurers agreed to reform their business practices and use the database to search for policyholder beneficiaries that might be owed benefits from a life insurance policy.

A national investigation by state insurance commissioners led to life insurers returning more than $1 billion to beneficiaries nationwide. In addition to the investigation, the National Association of Insurance Commissioners is drafting a model law that would require all life insurers to use the Death Master File database to identify deceased policyholders in order to facilitate payment of benefits to their beneficiaries. Jackson National and Axa have agreed to compare all company records against the Death Master database to determine whether there are unclaimed death benefits and conduct a thorough search for beneficiaries to whom unclaimed benefits may be owed.

Insurance Commissioner Responds to Insurer Denials of Mental Health Treatment

Insurance commissioner Dave Jones issued the following statement about a 60 Minutes story about insurer denials of coverage denials:

 60 Minutes featured a story last night about Anthem Blue Cross’ denial of coverage for patients needing mental health treatment. I am very pleased to see that 60 Minutes has brought national attention to our disputes with Anthem Blue Cross over their denial of coverage for mental health treatment. Medically necessary mental health treatment, including residential mental health treatment, is required to be covered under mental health parity laws. 

The California Department of Insurance has taken aggressive action to enforce state mental health parity law. The department has initiated enforcement actions against major health insurers in California, filed legal arguments on behalf of patients denied mental health treatment in state and federal court, issued new regulations and directly assisted policyholders who were denied coverage by their health insurer for mental health care. We have been fighting to protect consumers from this type of discrimination for years, said Jones. 60 Minutes highlights Anthem Blue Cross’ history of denying coverage for vital mental health treatment despite mental health parity laws, but they are not the only insurer that has denied coverage for lifesaving care to those who suffer from mental illness. If a patient is denied medically necessary care, such as residential care for an eating disorder or behavioral health treatment for autism, the Department of Insurance is here to help the policyholder get the coverage they are entitled to under the law. This 60 Minutes feature puts a national spotlight on the all too common practice of denying people with severe mental illness the medical care to which they are entitled, continued Jones.

Jones filed amicus briefs on behalf of the patients in two recent cases where coverage for mental health treatment is at issue. In Harlick vs. Blue Shield, the department submitted an amicus brief to the Ninth Circuit Court of Appeals on behalf of a policyholder who sued to get coverage for treatment for anorexia after her insurer denied her claims. The department then submitted an amicus brief to the California Court of Appeal on behalf of the plaintiff in the Rea vs. Blue Shield case. The plaintiff in Rea was also seeking coverage for medically necessary treatment for anorexia 

Additionally, the Department has required health insurers to make changes to their policies to comply with mental health parity law.

Another example of Commissioner Jones’ efforts to protect consumers with mental illness involved recent regulations he issued to make sure policyholders obtain coverage for medically necessary treatment for autism. 

The mental health parity regulations will help end improper insurer delays and denials of medically necessary treatments for people with autism, said Insurance Commissioner Dave Jones. This regulation provides clear guidance to the industry, stakeholders and consumers on the requirements of the Mental Health Parity Act.

Prior to these new regulations it was not uncommon for health insurers to delay or deny medically necessary treatment for individuals with autism. The regulations further define the circumstances in which insurers must cover behavioral health treatments for autism. 

State and federal mental health parity laws are in place to prevent health insurers from denying coverage for mental health care. State law (Insurance Code 10144.5) requires health insurance policies to cover diagnosis and medically necessary treatment of severe mental illnesses for patients of all ages and of serious emotional disturbances of a child under the same terms and conditions applied to other medical conditions. Bipolar disorder and bulimia, the conditions suffered by the two women featured in the 60 Minutes segment, are among the severe mental illnesses for which treatment must be covered.

Insurers Spend Big on Anti-Prop 45 Campaign

Six health insurance companies have donated $37.3 million, through June 30, to fight Proposition 45. The ballot measure would require health insurance companies to get permission before raising rates, as is the rule in 35 other states. Prop 45 would also give the insurance commissioner the right to prevent health insurance companies from passing on lobbying costs, civil fines, bad faith judgments, campaign contributions, or excessive executive compensation. Top contributors were the three health insurance companies controlling 75% of the private insurance market in California. Kaiser gave $14.3 million; WellPoint gave $12.5 million; and Blue Shield gave $9.5 million, according to a report by Consumer Watchdog. The No on 45 campaign has hired consultant Rick Claussen, creator of the 1994 Harry and Louise advertising campaign against federal health care reform. The $37 million advertising campaign is set to begin as early as mid August according to media buyers.

Rate Review, Alone, Has Lowered Insurance Rates

graphwrestleCalifornia insurance commissioner Dave Jones often says that simply having health insurance rate reviews won’t rein in excessive premium hikes – hence his support for a public initiative to let the state decide the rates for health insurance carriers. But a study by the California Public Research Interest Group (CALPIRG) finds that rate review has been effective in moderating costs.

Under Calif.’s rate review law established in 2011, health insurance carriers must publicly justify any proposed rate increase on individual or small group plans. Health insurance carriers must submit rate filings to state officials for review, and the public can access the filings online and comment on them.

Depending on the type of health insurance, filings are reviewed by the Calif. Department of Insurance (CDI) or the Department of Managed Health Care (DMHC). Regulators post rate-filing documents and give the public the opportunity to review and comment. The regulators then meet with the carriers to clarify or challenge the assumptions driving projected cost increases, or request any missing information. They can request that the carriers modify or reduce rate increases if they find that they are unjustified but the insurance company can decide whether to comply with the request. If they do not, the regulator can make an official determination that the rate filing is “unreasonable.”

Health insurance carriers have filed 369 proposed rate changes in the individual and small group markets. As a result of objections raised in the rate review process, carriers have voluntarily reduced or withdrawn 44 rate hikes. Rate review has saved California consumers and small businesses $349 million in health insurance premiums since 2011, according state regulators.

But in order to fully protect consumers and small businesses from unreasonable rate hikes, rate review must be strengthened, according to CALPRIG.  CALPRIG recommends extending rate review to large groups. The adoption of SB 1182 (Leno) would extend the scope of rate review to the large group market. Despite its finding that rate review, alone, is effective in moderating rate hikes, CALPRIG says that regulators must have the authority to reject or modify rates. CALPRIG says that insurers should have to itemize their administrative expenses, and justify any increase exceeding the rate of inflation. Insurance companies should be required to report what strategies they are using to improve care and cut waste. For more information, visit www.calpirg.org.

Covered California Sticks to Plan Cancellations

CancelledThe Covered California board ruled that insurers will not be allowed to continue selling policies in 2014 that don’t meet the Affordable Care Act’s minimum coverage requirements. Insurance Commissioner Jones called Covered California’s decision a disservice to policyholders. Jones made the following comments:

Over a million Californians have received cancellation notices from their health insurer. On behalf of these policyholders, I am disappointed in Covered California’s action, which denies people and families the opportunity to keep their existing health insurance as President Obama promised.

Covered California rejected what President Obama and I asked for-that individual policyholders be allowed to keep their existing health insurance through all of 2014. Covered California’s decision denies Californians the same opportunity health insurers are giving to its small business customers who are being allowed to renew current policies throughout 2014. Covered California could have honored President Obama’s request, without causing damage to the implementation of the Affordable Care Act or the Exchange.

The preferred and more equitable course of action for California consumers is for Covered California’s unnecessary cancellation to be rescinded. Allowing existing policyholders to keep their health insurance for the duration of 2014 will not undermine the implementation of the ACA, but rather will give consumers more time to figure out what makes sense for their families.

Jones also stressed that allowing existing policyholders to renew for a full year will not undermine the risk pool since the ACA has robust features which mitigate the risk of health insurers having a disproportionate share of sick people in their risk pool in 2014. Additionally, it is estimated that 400,000 existing policyholders are eligible for subsidies.

Jamie Court, president of Consumer Watchdog said, “It’s outrageous that this board would acknowledge that half the Californians facing cancellations will pay more money for the same or worse health coverage, then block them from continuing their existing policies for another year. Shame on Covered California for representing the insurance companies, not the policyholders, and standing in the way of President Obama’s call for relief. Covered California showed why we need elected officials, accountable directly to the public, to oversee how much health insurance companies charge.”

In a prepared statement, the Covered California board said that extending the deadline does not benefit consumers and may create confusion about accessing affordable health care coverage through Covered California. The board said that maintaining the original deadline confirms Covered California’s commitment to transitioning Californians into plans that are compliant with the reforms of the Patient Protection and Affordable Care Act, protecting consumers from double deductibles, and stabilizing the risk pool to control costs for consumers beginning in 2014.

Additionally, Covered California is implementing these strategies to boost enrollment:
• Extending the deadline for enrollment for coverage taking effect on Jan. 1, 2014, from Dec. 15, 2013, to Dec. 23, 2013, and extending the deadline for payments due from Dec. 26, 2013, to Jan. 5, 2014.
• Establishing a telephone hotline for consumers to resolve enrollment questions at 855-857-0445.
• Sending information directly to nearly 1.13 million affected people, which provides clear options for coverage. The information will be sent from Covered California and the individual’s current insurance provider.
• Regularly collecting and reporting data showing the affects of conversion for people.
• Engaging consumers in their communities through the thousands of Certified insurance agents, certified enrollment counselors and certified educators now deployed statewide.

States say exchanges will move forward as planned

California and Minnesota officials say the federal decision to delay the Affordable Care Act employer health insurance mandate will not have a major effect on their online health insurance marketplaces because they are targeting smaller firms and individuals. California Insurance Commissioner Dave Jones said some 1.5 million uninsured state residents are employed by larger companies affected by the delay. However, some experts said it’s not yet clear what the overall effect will be on consumers. “It’s not a big deal because it doesn’t affect many people, but it’s a big deal if it affects you,” said Paul Fronstin of the Employee Benefit Research Institute. The Sacramento Bee (Calif.) (free registration) (7/4) , Minnesota Public Radio (7/2) , The New York Times (tiered subscription model) (7/3)

Essential Benefits Regulation Approved

Insurance Commissioner Dave Jones approved an emergency regulation requiring health insurers to cover all essential health benefits for new policies in effect after January 1, 2014. The emergency regulation is a critical element of Affordable Care Act implementation. The Affordable Care Act requires non-grandfathered health insurance policies in the individual and small group markets (inside and outside of the Health Benefits Exchange) to provide coverage for a comprehensive package of healthcare benefits, known as “essential health benefits.” In the past, some policies have included very limited or no coverage for important healthcare services. Plans must cover the following essential benefits in 2014:
1. Ambulatory patient services (outpatient services).
2. Emergency services.
3. Hospitalization.
4. Maternity and newborn care.
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs.
7. Rehabilitative and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices.
8. Laboratory services.
9. Preventive and wellness services and chronic disease management.
10. Pediatric services, including oral and vision care

For more information, visit www.insurance.ca.gov.

Insurance Commissioner Urges Consumers to Challenge Treatment Denials

Insurance Commissioner, Dave Jones, issued a statement urging policyholders to challenge their insurer if the company denies their claims for treatment. He reminds policyholders they have a right to appeal to the company and ask CDI to review the denial. There is also a fair chance a review of the decision could go in their favor.

According to the California Insurance Code, when insurers deny requested treatment as not a covered benefit they are required to give policyholders the specific provisions in their policy that exclude coverage. In addition, if companies deny coverage for a treatment as not medically necessary, they are required to outline the facts and law on which they based their denial.

Jones said, “If your health insurer won’t initially cover your treatment, that’s not the end of it. As a consumer, you have options. You may file a request for assistance with my department whenever you have problems with an insurer involving a claim. Denial by an insurance company is not the final word. If your claim was denied because the insurer determined the treatment is not medically necessary or was experimental, you may request an independent medical review (IMR) from the Department at no cost to you. However, you must first file an appeal of the denial with your insurance company, using the company’s internal appeals/grievance process.”  For more information, visithttp://www.insurance.ca.gov/0100-consumers/0020-health-related/0020-imr/upload/

HCB002IMR.pdf

Seniors Warned of Medicare Marketing Scams

Insurance Commissioner Dave Jones warned seniors and their advocates to beware of shady sales practices during the 2012 annual open enrollment period for Medicare Advantage Plans and the Medicare Prescription Drug Program. Open enrollment begins October 15 and runs through December 7. Jones offers these tips:

• Medicare has no official sales representatives so the program doesn’t send people to solicit your business.

• Federal regulations prohibit unsolicited sales calls or marketing in educational or care settings.

• Guard your personal information. Never give out your social security number, bank account numbers, or credit card information over the telephone.

• Verify that the person you are dealing with has proper authority to act on behalf of the plan.

• Federal Regulations also prohibit offers of free meals for listening to sales presentations or for signing up in a particular plan.

Jones urges the public to report deceptive practices to the Department at 1-800-927-HELP (4357). Consumers can also visit our web site at www.insurance.ca.gov

Last Updated 12/01/2021

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