Wellpoint Halts Attempts to Have Doctors "Rat Out Patients"

We just discussed the sorry state of Merck Inc, whose founder once said, "Medicine is for people, not for profits," but now seems to be run by people who think otherwise, to the detriment not only of patients, but of the company and most of its employees.

Here is another example of a company that seems to put short-term financial gain ahead of its stated commitment to "improving ... lives."

Lisa Girion, writing in the Los Angeles Times, reported yesterday that Blue Cross of California, a subsidiary of for-profit Wellpoint Inc, has been "asking California physicians to look for conditions it can use to cancel their new patients' medical coverage." In particular,

Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose 'material medical history,' including 'pre-existing pregnancies.'

'Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately,' the letters say.


Please keep in mind that insurance companies usually request copies of medical records of people who apply for individual health insurance. However, Blue Cross of California was not simply requesting copies of records. It was asking the physicians to actively look through patients' records for information that could be used to cancel the patients' insurance. It was no wonder that physicians were
'outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality,' said Dr. Richard Frankenstein, president of the California Medical Assn.

Patients 'will stop telling their doctors anything they think might be a problem for their insurance and they don't think matters for their current health situation,' he said.

The California Medical Assn. sent a letter to state regulators Friday urging them to order Blue Cross to stop asking doctors for the patient information, saying it was 'deeply disturbing, unlawful, and interferes with the physician-patient relationship.'

Blue Cross' explanation frankly made no sense: "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,"

Today, Ms Girion reported even more outrage, starting with physicians:

Robert Margolis, a physician and the chief executive of one of the state's largest medical groups, described the letters as "an obnoxious intrusion" on the relationship between physicians and patients.

"Asking us to be the application police is inappropriate," said Margolis, who heads HealthCare Partners Medical Group in Los Angeles.

Some famous politicians got into the act.

[California Governor Arnold] Schwarzenegger sharply criticized the practice, which he described as akin to telling physicians to "rat out the patients and to give the patients' medical history to the insurance company so they have a reason to cancel the policy."

The governor said the practice should be banned.

"That is outrageous," he said, and "one more reason why it is so important to have comprehensive healthcare reform."

Democratic presidential contender [NY Senator Hillary] Clinton said the Blue Cross effort was another "example of how insurance companies spend tens of billions of dollars a year figuring out how to avoid covering people with health insurance."

Somehow, one day after it was revealed that Blue Cross was sending the letters, the company decided to stop, with this burst of business-speak [highlighted in red],

Today we reached out to our provider partners and California regulators and determined this letter is no longer necessary and, in fact, was creating a misimpression and causing some members and providers undue concern.

As a result, we are discontinuing the dissemination of this letter going forward


You just can't make this stuff up. On one hand, underlying the sending of these letters is the irrational system the US has for providing health insurance based on employment status.

On the other hand, Blue Cross' aggressive attempts to cancel peoples' policies contradicts Wellpoint's pledged "commitments."

At WellPoint, we are dedicated to improving the lives of the people we serve and the health of our communities. From the boardroom to the mailroom, every associate is expected to honor the company's commitments to our diverse customers, fellow associates, shareholders and the communities we serve - helping us become the most trusted choice among consumers.

Our business strategies mirror our commitment to providing affordable quality care to our members and the public.

Wellpoint is becoming an amazing example of a health care company whose management seems completely hostile to its stated warm and fuzzy mission of "improving the lives of the people we serve." In the past, we have discussed how Wellpoint (and/or its units)
  • misplaced a computer disc containing confidential information on 75,000 policy-holders (see post here)
  • settled a RICO (racketeer influenced corrupt organization) law-suit in California over its alleged systematic attempts to withhold payments from physicians (see post here).
  • was fined for cancelling individual insurance policies (again in California) after their holders filed claims (see post here)
  • was found to have mis-handled at least half of its revocations of individual policies (see post here)

This sort of corporate culture and corporate leadership within health care has to be responsible for a good measure of the rising costs, poor access, and stagnant quality that are repeatedly lamented, yet seem resistant to conventional policy solutions.

Fixing this problem will require changes in the education of health care leaders, the culture of health care organizations (starting with public and enforceable commitments to ethical leadership), and unavoidably some imposition of the heavy hand of government regulation.

Such changes will provoke considerable opposition from those in the power elite of health care who have become rich and powerful under the current system. This opposition will doubtless be noisy and intimidating, given that health care's power elite has plenty of money to finance it. (Perhaps to overcome it, Governor Schwartznegger would be willing to put on his "Terminator" costume and visit a few health care CEOs to persuade them not to seek the "ratting out" of more patients.)

But as long as health care organizations' leaders are more interested in acquiring power and money than in serving patients, patients will remain at the bottom of the heap.

ADDENDUM (15 February, 2008) - On the Covert Rationing blog, DrRich noted that the first LA Times story (see above) included an assertion by Blue Cross that for a long time it had been sending many letters to doctors asking them to help the company find patients who had medical conditions not revealed on their applications for individual policies. DrRich thought that these letters had gone to physicians who were paid by capitation, and that therefore might have been motivated to have sicker patients leave their practice. If that was the case, this would suggest how perverse incentives could influence physicians to betray their core values, including making care of their individual patients their first priority, and protecting the confidentiality of patients and their medical records. However, the article noted that many physicians said they had never seen such letters before. Perhaps Blue Cross enlarged the population of physicians receiving letters. Perhaps who really got what letters when is not yet clear. In any case, it appeared that the letters asked, if not demanded physicians betray their core values. I can only hope that not too many physicians let the letters influence them to do so.