Aetna Vs. Health-Insurance Rescission?

(MoneyWatch)  Health-insurance companies have gotten kicked around pretty good for the seemingly common practice of "rescission" -- essentially the post-hoc cancellation of individual insurance policies, often enough after a health-plan member falls ill and begins to rack up some serious medical bills. In a recent California scandal, for instance, health plans Kaiser Permanente, Health Net, WellPoint and UnitedHealth Group paid fines in the tens of millions and reinstated coverage for thousands of beneficiaries whose coverage was improperly dropped.

Now Aetna, as part of its ongoing effort to cast itself as the good guy in the health-insurance biz, has announced new measures aimed at curbing unfair rescissions. According to the Hartford Courant, Aetna will now let members appeal rescission decisions to an independent panel of doctors either before or after contesting them via its own internal-review process.

Aetna's name hasn't come up in any of the rescission scandals of the past several years, at least to the best of my knowledge. In fact, the company says it's revoked only 165 of the 570,000 individual-insurance policies it's issued since 2005. Most of those policy cancellations involved fraud, Aetna VP for public affairs Mohit Ghose told the Courant.

As plans of this sort go, Aetna's sounds pretty reasonable. The company hired healthcare consultant MCMC of Boston to set up the external panels, which will involve three "independent doctors" and whose decisions will be binding on Aetna.

Given the industry's blinkered record on this issue, though, it's difficult to muster much more than qualified enthusiasm for the move. The real significance of external review will depend heavily on exactly how doctor "independence" is defined and implemented, as well as the rules that govern the reviews -- details not explored in the Courant story, and which Aetna may not even have officially resolved yet. (Update: Consumer Watchdog also argues that the legal standard for rescissions needs to be tightened to cases where policyholders intentionally misrepresented application information, not simply made inadvertent mistakes.)

But it's also worth noting that officials in Connecticut, which last year adopted a new law to curb improper rescissions, seem to be pretty happy with Aetna:

"It is a very good development for consumers to have these options," said Vicki Veltri, general counsel in Connecticut's Office of the Healthcare Advocate. "Aetna is definitely ahead of the curve on this issue."