Bowing to pressure, Blue Cross of California decided not to ask doctors to identify patients who fail to disclose medical conditions that could make them ineligible for coverage.
In a statement issued Tuesday evening, the insurer said it "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," Blue Cross officials said.
The announcement came in the wake of criticism from patients, doctors and privacy experts.
The California Medical Association claimed the Blue Cross request interfered with the doctor-patient relationship.
"Asking a physician to divulge information for the purposes of underwriting (an insurance) policy is totally unacceptable," Dr. Anmol S. Mahal, a Fremont gastroenterologist and past president of the California Medical Association, said Tuesday.
Health insurers had argued they were only asking doctors to look for discrepancies in their patients' medical records to ensure a patient's application for coverage is accurate and complete.
And they stressed that unless applicants whose costly pre-existing medical conditions are weeded out, the insurers could not afford to cover others.
"The fundamental principle is that a whole lot of healthy people are needed to pay for the few who are sick," said Chris Ohman, CEO of the Sacramento-based California Association of Health Plans.
But a Sacramento doctor said Tuesday before Blue Cross retreated that the insurer had missed the point.
Dr. Michael Wilkes, a professor of medicine at UC Davis Medical Center, said the insurer's request would have put the doctor in an untenable position where he needed to choose between the people paying his salary – the health insurance companies – and the people he works for – the patients.
"In this situation, the doctor will always choose the side of the patient," Wilkes said.
"One of the core principles of the doctor-patient relationship involves patient confidentiality and trust in their doctors. The fact that Blue Cross fails to understand this guiding principle shows its total disregard for the art of medicine."
He said the practice would have encouraged patients to hide critical information from their doctors, which would endanger their lives.
Blue Cross' request had come to light in a Los Angeles Times report Tuesday. Apparently written for members of large physician groups, letters were sent with copies of health insurance applications from new patients.
The letters stated that Blue Cross has the right to cancel members' policies if they have failed "to disclose material medical history."
"This is part of a pattern of disputes over the practice of insurers to rescind coverage," said Larry Levitt, vice president of the Kaiser Family Foundation, a leading nonprofit health policy organization.
He said that because California rules allow insurers to deny people coverage based on pre-existing conditions, insurers will look for ways to exclude those who are sick, even after they have accepted them under their coverage umbrella.
"Blue Cross is a for-profit insurance company and they are in the business to make a profit," he said.
"So they are going to work within whatever system the Legislature creates for them."
In a broader sense, he said the outrage over the Blue Cross letters reflected long-standing frustration among doctors over what they consider unethical efforts by health plans to control escalating costs.
Levitt cited attempts in the 1990s to legislate protection against care denials with established patient bills of rights.
Levitt noted that the issue is particularly complicated in California, where giant health insurance companies are not the only ones assuming financial risk when they agree to cover a patient.
Organized groups of doctors operating as medical groups negotiate contracts to provide medical care to health maintenance organization members, and also take on financial risk. That means that they, too, would have a stake in controlling costs by keeping a lid on members' health care use.
Even so, Levitt said, physicians don't like wearing that hat.
"Even when doctors have a financial interest," he said, "they tend to lead with their white coats."
Call The Bee's Dorsey Griffith, (916) 321-1089.
