Protect Californians' Choice of Doctors: A Public Appeal to the California Insurance Commissioner and the Executive Director of Covered California

Dear Mr. Jones and Mr. Lee,

I am writing to request your immediate attention and intervention to assure the promise of the Affordable Care Act does not become a nightmare of deeply angry and horrified Californians cut off from the doctors who have cared for them for many years.

Many Californians are about to find themselves locked out of the anticipated benefits of health reform's new individual guaranteed acceptance health plans. Insurers are developing new restrictive provider networks--the list of doctors and medical facilities where policyholders can receive medical care. New buyers, which will include all individual buyers who purchased coverage after the passage of the Patient Protection and Affordable Care Act in March 2010, will find that their policies drastically restrict their choice of doctors.

The full extent of the network limitations is not yet public. Your organizations are likely to be the only agencies with complete information. I am listing here the network limitations that have come to my attention. While these concern Blue Shield, I am certain that other carriers are engaging in similar practices. All carriers need to be investigated.

Blue Shield will offer only limited network Preferred Provider Organization (PPO) and Exclusive Provider Organization(EPO)plans to all new individual buyers. All new customers who have been anticipating purchasing guaranteed issue individual insurance for themselves and their families, will have access to a network that excludes 65% of current Blue Shield doctors and all the University of California Medical Centers.

Network access will be determined by county of residence. In Marin and Alameda counties, for example, Blue Shield plans to use an Exclusive Provider Organization (EPO). Buyers will find their access to medical services restricted to the doctors and medical facilities within the EPO in their county or an EPO doctor in another county. If the policyholder crosses the Golden Gate Bridge or Bay Bridge to consult with a San Francisco PPO doctor, s/he will have no insurance. If a San Francisco resident moves to Alameda, s/he will not be able to keep her San Francisco doctors.

It appears that carriers are also able to exclude residents of specific zip codes from access to their insurance plans. If one carrier can exclude residents in certain zip codes, what is the rationale to require other carriers to cover residents in that same zip code? The ACA requires insurers to accept all applicants regardless of health conditions. But California is allowing exclusion by residence location.

At this time there is one unsatisfactory option that will enable some policyholders to retain the complete Blue Shield provider network. Grandfathered policyholders, people who purchased their coverage before March, 2010, will be able to keep their current insurance with their current wide choice of health care providers. However, they will continue to be locked into their current plans with escalating premiums. Before reform, they were forced to remain in unsatisfactory plans because they could no longer pass stringent medical underwriting requirements. Now they will be locked into these plans if they want to continue to see doctors and use medical facilities that will be excluded from the new limited PPO and EPO networks.

Mr. Lee and Mr. Jones, I urge you to take action immediately to guarantee that Californians have a choice of plans with access to different networks of physicians and medical facilities.

1. Every major insurer should be required to offer current and future buyers a choice of provider network options.

2. Non-exchange buyers should be guaranteed a choice of full network and limited network plans, priced accordingly.

3. Price sensitive Covered Ca buyers must at least have a choice of a limited network PPO plan as well as an EPO plan, regardless of their county of residence.

4. All Californians must be able to purchase insurance from companies insuring other residents of their county.

You can assure that the promise of health reform becomes a reality.


Susan Shargel, President
Shargel & Co. Insurance Services

Peter Lee, Executive Director
Covered California

560 J Street, Suite 290
Sacramento, CA 95814
Phone: (888) 975-1142

Dave Jones, Insurance Commissioner
California Department of Insurance
Sacramento Office

300 Capitol Mall, Suite 1700
Sacramento, CA 95814
916-445-5280 (fax)