Health Plans Will Re-examine Denials Of Coverage

Attorney General Spitzer today announced that two health plans have agreed to re-examine their decisions to deny coverage to thousands of New Yorkers.

Under the terms of the settlement, two divisions of Excellus Blue Cross Blue Shield in Central New York and Utica-Watertown, will review 16,621 claims, and Mutual of Omaha will review 156 claims, that were denied since 1997 primarily due to alleged pre-existing medical conditions.

"State and federal law require that a pre-existing condition be covered unless diagnosis or treatment of the condition was actually recommended or received six months prior to enrollment in a plan," Spitzer said. "This agreement will help ensure coverage for pre-existing conditions for those who are entitled to it."

The plans' review of their denials is necessary because their contracts and/or denial notices contained incorrect or incomplete pre-existing condition definitions, and omitted or incorrectly stated the members' right to be credited with covered days under previous health insurance.

Spitzer's Health Care Bureau began an investigation of Excellus and Mutual of Omaha after receiving complaints that the plans wrongly denied coverage due to alleged pre-existing conditions. In one instance, the widow of a Mutual of Omaha member called the Health Care Bureau's hotline after the plan billed her over $200,000 for medical services provided to her late husband. Her husband had twisted his knee several weeks before he joined Mutual of Omaha. Diagnostic tests conducted after his enrollment, however, revealed that, in addition to the sprain, a malignant tumor in his knee had spread throughout his body. The plan refused to cover her husband's care, arguing that his cancer existed before his enrollment.

A review of the plan's contract revealed that it had incorrectly defined pre-existing condition as that "which manifests itself in symptoms which would cause an ordinarily prudent person to seek medical advice, diagnosis, care or treatment." After the Attorney General's office contacted the plan, it reversed its decision and paid for the care.

In addition, the Attorney General's office found that both plans' member contracts and/or denial notices omitted or failed to accurately state the members' right to be credited with prior health insurance coverage. Generally, a consumer has "creditable coverage" if he or she was previously covered under another health plan and had a break in coverage of 63 consecutive days or less between leaving the prior plan and starting with the current plan.

"This action by Attorney General Spitzer sends a clear message that health care consumers will be afforded the protection guaranteed by federal and state law," said Mark Scherzer, Counsel to New Yorkers for Accessible Health Coverage. "New York's mandated pre-existing condition definition prevents insurance companies from denying coverage for conditions that consumers did not perhaps even know they had before they got their insurance. That's only fair."

Spitzer offered the following advice for consumers:

  • You cannot be denied coverage for a pre-existing condition unless you had a physical or mental disease, ailment or other condition, regardless of the cause of the condition, for which you actually received medical advice, diagnosis, care or treatment within six months before the enrollment date of your plan. So, if you are diagnosed with cancer after you enroll in a new plan the cancer is not a pre-existing condition.

  • If you have a pre-existing condition for which you actually received medical advice, diagnosis, care or treatment, your health plan may impose a waiting period for coverage of that condition only. Generally, the waiting period may not exceed twelve months after your enrollment date.

  • If you have a waiting period due to a pre-existing condition, your health plan must reduce the waiting period by the amount of time you were previously covered under another health plan as long as you had a break in coverage of 63 consecutive days or less between the end of that plan and the start date of your current plan. So, if you have a twelve month waiting period under your current plan, but were previously enrolled in another health plan for eight months (with a break in coverage of less than 63 days), your waiting period will be reduced to four months.

  • If you believe that you were wrongfully denied coverage for an alleged pre-existing condition, you generally have the right to appeal the health plan's decision.

Excellus, based in Rochester, NY, and Mutual of Omaha, based in Omaha, Nebraska, serve over 1.6 million people in New York State and will pay the Attorney General's Office $75,000 and $10,000 respectively for the costs of the investigation.

The case was handled by Assistant Attorney General Susan Kirchheimer under the supervision of Health Care Bureau Chief Joe Baker and Albany Section Chief Troy Oechsner.

Consumers may contact the Health Care Bureau's toll-free Health Care Helpline at (800) 771-7755 (option #3 on the automated voice menu).