SACRAMENTO - Assemblymember Hector De La Torre’s (D-South Gate) Assembly Bill 1324, which will provide consumers with additional protections against retroactive cancellation of health insurance policies, passed the Assembly Floor today with bi-partisan support by a vote of 55-17.

Health Maintenance Organizations (HMOs) have engaged in a practice of dumping policyholders after authorizing medical treatment and then refusing to pay the medical bills. 

“Due to this unscrupulous practice, sick people are being denied benefits that they have paid for, been approved for, and should reasonably expect to receive.”  This bill protects health consumers from becoming victims of a bait-and-switch.  At a time where the focus is on increasing coverage of California’s uninsured, there are scores of Californians who are battling to hold on to coverage they have paid for,” stated De La Torre. 

AB 1324 will protect consumers by making certain that once a health plan authorizes treatment they will not retroactively dump the policyholder.  It will also reaffirm that “authorization” by the HMOs confirms eligibility.  Once treatment is authorized by the HMO, it will have no incentive to “save” money by canceling or rescinding coverage.

“AB 1324 is pro-patient, pro-access, and pro-fairness. Most importantly, it sends a strong, clear consumer message to insurers: you authorize it, you pay for it, and anything you do afterwards isn't going to change that,” said Professor Bryan Liang, Executive Director of the Institute for Health Studies.

“Californians face difficult financial pressures in keeping up with today’s skyrocketing health care costs.  Even after consumers make their payments, some HMOs look for a cheap way out when it comes time to provide coverage.  AB 1324 will ensure that HMOs will no longer leave the sick stranded when they need medical attention the most,” stated De La Torre.

Regulators at the Department of Managed Health Care examined 90 randomly selected cases of policy cancellations — out of about 1,000 a year in California — and found violations in each one.