Consumer Group Charges Anthem With ‘Bait And Switch’

Nov. 01--Calling it a classic "bait and switch," a California consumer group on Tuesday lashed out at Anthem Blue Cross of California, claiming it failed to adequately warn customers they were being shifted in 2017 to brand-new, stripped-down plans.

Santa Monica-based Consumer Watchdog announced it has filed a class action lawsuit against the health insurance giant after Anthem moved hundreds of thousands of its Preferred Provider Organization customers to Exclusive Provider Organization plans for 2017 -- all the while calling the new plans "similar coverage."

PPO plans cover a portion of out-of-network costs, while EPO plans cover none of them.

The change is significant, according to the advocacy group, and may not be immediately evident to consumers as they review their re-enrollment notices.

As a result, the non-profit group alleges, Anthem customers could potentially face thousands of dollars or more in medical bills next year that their existing plans covered.

"They have received a misleading message in the mail that promises they will be automatically enrolled in similar coverage for 2017, if they do nothing," Jerry Flanagan, lead attorney at Consumer Watchdog, said during a news conference Tuesday.

If consumers rely on that information, he said, they may not realize their PPO plan is not actually being renewed "and you will not know to shop around to get coverage before Dec. 15," he said.

The change does not apply to employer plans, only those individuals who buy private health plans.

Tuesday's announcement of the lawsuit came on the first day of open enrollment for 2017 health care plans under the Affordable Care Act, also known as Obamacare. Enrollment continues through Jan. 31.

However, in order for consumers to have health insurance on Jan. 1, they must either re-enroll or change health insurance plans by Dec. 15.

Sherman Oaks stock trader Paul Simon, 42, the lead plaintiff in the case, said he received his renewal notification in September.

But he did not realize that a change from a PPO to an EPO plan meant that the same doctor who has treated his ulcerative colitis for decades, and the dermatologist who diagnosed his melanoma -- both out of network -- will no longer be partially paid by Anthem in 2017.

Under the new EPO plan, if he wants to keep either doctor, he will now have to pay 100 percent out of pocket, or investigate whether those doctors are included in a Blue Shield PPO plan.

"My premium is going up from $491 to $655 next year, for what? I'm getting shafted, basically," said Simon.

Anthem spokesman Darrel Ng acknowledged that Anthem is moving its California Anthem PPO customers enrolled in 14 of 19 regions of the state's health insurance exchange, called Covered California, to EPO plans.

Mostly, he said, that's due to increased use of medical services and added costs of drugs and medical therapies that "put upward pressure on rates."

For 2017, Anthem premiums in the individual market have increased by an average 17 percent, one of the highest in the state.

But Ng said the company believes the lawsuit is without merit.

"The benefit package being offered in 2017 was approved by the Department of Managed Health Care and Covered California, and is consistent with federal guidance," said Ng.

Spokeswomen with both entities confirmed that their organizations reviewed and approved the Anthem notifications.

"We believe the notices were very clear about a consumer's option," said Lizelda Lopez of Covered California. "There was a specific bullet in the notices that spoke to the plan change from PPO to EPO."

Ng said that affected members have been mailed written notices about the change so they can make an informed decision on their health care needs during the open enrollment period for the coming year.

But Consumer Watchdog said whether or not a state regulator approved the conversion, the company has violated both federal and state laws by breaching its insurance contracts with its 2016 members by failing to provide "guaranteed renewal" of existing coverage that is required under the contract.

Anthem, said Flanagan, is legally obligated to notify customers when a plan is being cancelled, which it did not do.

The lawsuit seeks to require Anthem to renew the PPO health plans for the 2017 calendar year and demands reimbursement of money paid by consumers that will result from Anthem's acts.

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