American Medical Association Condemns Insurance 'Purging'

Doctors say policy of arbitrarily increasing rates is unfair.

ByABC News
June 15, 2010, 1:11 PM

June 16, 2010 -- The American Medical Association said it took an important step today to protect the rights of patients and ensure they have access to health care.

At its annual policy-making meeting, the association voted to include in its health care agenda a policy against "purging," a practice that includes charging certain subscribers much higher premiums with no financial data to back up the need for such increases as a way to get them off the subscriber rolls. .

"Health plans charge fees for health insurance above what the actuaries say they should be charging with the intent to discourage or price certain people out of the market," said Dr. Steven Stack, a member of the AMA's board of trustees.

The AMA's policy on purging is just one part of what it calls a health insurer code of conduct to safeguard the rights of patients and physicians whenever they deal with insurance companies. It's also just one of about 200 policy proposals under consideration at its annual meeting.

Differing Opinions on Purging

The AMA said the purging practice came to its attention when former health insurance company executives testified before Congress.

One of those former executives, Wendell Potter, who was a vice president at Cigna, told ABC News that purging "absolutely" occurs.

"It is widespread, although I know of no studies that have been undertaken to determine just how widespread it is," Potter said.

A congressional committee headed by Rep. Bart Stupak, D-Michigan, and Rep. Henry Waxman, R-California, is investigating purging, a practice Potter said has saved insurance companies a lot of money.

"Purging accounts that have become less profitable because of higher-than-anticipated-medical-claim activity saves them millions of dollars," he said.

America's Health Insurance Plans, a national association representing more than 1,300 health insurance companies, emphatically denied that purging occurs.