Guest Author - Nicole Collins

Following grating criticism, Blue Cross of California last week reported it will no longer send letters to physicians requesting them to disclose pre-existing medical conditions of patients. The practice could have potentially resulted in loss of coverage for many Blue Cross customers.

Last week the company began sending out letters with copies of patients’ health insurance applications to doctors requesting them to report any patient’s condition that is not listed. The Los Angeles Times acquired a letter from the company that said it had a right to drop patients who did not disclose “material medical history.” The paper also reported that, “Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately.” Shockingly, one of those conditions is pre-existing pregnancy.

The company cited an effort to keep costs down and fight fraud as the motivation behind the letter. Shannon Troughton is a spokesperson for WellPoint Inc., a company in Indianapolis that operates Blue Cross of California. In response to the findings, she responded, “Enrolling an applicant who did not disclose their true condition (and the condition is chronic or acute), will quickly drive increased utilization of services, which drives up costs for all members.”

She added, “Blue Cross feels it is our responsibility to assure all records are accurate and up to date for HMO providers. We send these letters to identify members early on in the process who may not have been honest in their application.”

This is in fact true. Patients who are not up-front about expensive medical conditions just so they can receive health insurance raise the cost for other members. However, physicians are concerned that patients will now hide life-threatening conditions for fear of losing medical insurance.

On Tuesday, February 13, Blue Cross announced it will no longer send out the letters. Facing criticism from doctors, privacy groups, and government officials, the company vowed to end the practice. It seemed that the insurance provider was placing business interests over patient needs.

Dr. Arthur Feldman is the chairman of medicine at Jefferson Medical School in Philadelphia. “This is outrageous,” he said. “The ‘Blues’ are sitting on billions of dollars while most cannot afford health insurance and 46 million have no insurance.”

Privacy rights advocates also jumped into the ring, stating that the request for doctors to disclose medical conditions violates patient/physician confidentiality.

As always, there are two sides to every story. While it may seem harsh that a multi-billion dollar insurance company would request information to potentially revoke customers’ health insurance, healthcare fraud is prevalent in this country. The Centers for Medicare & Medicaid Services report that national healthcare expenditures reached over $1.3 trillion in the year 2000. Exact numbers of fraud are difficult to determine, but it is estimated that between three and ten percent of that number is lost each year to fraud. This is a staggering statistic at the expense of taxpayers and honest health insurance customers.

Why is health insurance fraud to widespread in this country? Basically, because it benefits nearly every immediate party involved besides the provider. Healthcare providers find it necessary to provide the best care for their patients, at times billing the insurance provider for a service that is covered, even if it is not the one that was rendered. Most patients disapprove of insurance fraud, but when confronted with a condition not covered by their insurance are more willing to accept it.

Of course, the “benefits” of fraud are short-term. Eventually the fraudulent costs must be made up by others, either by raising taxes (for public healthcare) or by raising rates (for private healthcare).