Assemblyman Hector De La Torre said he normally doesn’t get his legislative ideas from the morning paper. But a short item he read several months ago detailing how insurance companies have retroactively canceled policies set his blood boiling.
Health insurers cancel policies when they believe patients have deliberately hidden pre-existing conditions in their insurance applications. But critics say insurers have seized on honest application mistakes to cancel coverage for patients who need expensive treatments for cancer and other serious conditions.
Assembly Bill 1324, which Gov. Schwarzenegger signed and goes into effect in January, sets a higher bar for insurers to prove that a patient knowingly misled the insurer about a pre-existing condition. And it requires insurers to pay hospitals and physicians for authorized care even if insurers later revoke coverage.
“The plans fought this very hard and threw out a lot of red herrings about what it did or didn’t do,” said De La Torre, who rallied bipartisan support for the measure, which was backed by consumer groups. “But there were a number of my Republican colleagues who felt as I did that this was not a credible practice. Booting patients from your plan after they get sick is just abhorrent to me.”
Despite concessions aimed at meeting insurers’ concerns, the California Association of Health Plans trade group opposed the bill, claiming it would open plans to a broad range of lawsuits.
“We still feel that the scope of this legislation is much broader than the issue of rescissions,” said association spokeswoman Nicole Kasabian Evans.
The California Department of Managed Health Care recently fined both Blue Cross of California and Kaiser Permanente for refusing to cover previously authorized procedures and rescinding policies without adequate evidence of fraud. The department also has moved tightened its own regulations to limit insurers’ ability to cancel medical coverage after patients get sick.
Xencor Staffs Up for Trials
A 15-year drug-development veteran, Dr. Jeffrey Bloss, is getting his first opportunity to build a small company’s clinical team from the ground up. Bloss is joining Xencor as the Monrovia-based biotech’s first chief medical officer.
Chief Executive Bassil Dahiyat announced Bloss’ appointment last week, along with news that it had raised an additional $15 million to help take its first drug candidate into early stage, Phase 1 clinical trials set to begin next month.
The company has a biologically altered antibody that it believes will be an effective treatment for Hodgkin’s disease, T-cell lymphoma and other cancers. Antibodies encourage the body’s immune system to kill cancer cells by identifying and flagging which cells to attack. Xencor’s technology supercharges the antibody to decrease damage to nearby healthy cells.
If all goes well, the company could be ready to apply the U.S. Food and Drug Administration for permission to sell the antibody, XmAb 2513, in around four years.
Bloss was most recently vice president of clinical development at Emeryville-based Onyx Pharmaceuticals Inc. where he led development of a kidney cancer treatment called sorafenib. He’s also lead teams at Genentech and Eli Lilly and Co.
“Clearly what lured me away from Onyx was the technology platform that has been put together by Bassil and his team,” Bloss said. “It’s really one of the most exciting advances I’ve seen and this is a great time to get involved.”
The company has raised $60 million to date in its Series E funding round from venture firms and strategic partners. In this $15 million extension of that round, new investors Oxford Bioscience partners and Merlin Nexus joined one of the company’s existing investors, Danish drug maker Novo Nordisk.
Hospital Sale Clears Hurdle
AHMC Inc., which scooped up four former Tenet Healthcare Corp. hospitals in the San Gabriel Valley in 2004, is closer to adding another hospital to the group this one a Catholic Healthcare West property.
Attorney General Jerry Brown has signed off on AHMC’s purchase of San Gabriel Valley Medical Center with a few conditions to ensure community interests will be protected. Brown has power over the deal since it involves a for-profit entity buying a hospital from a not-for-profit company.
AHMC and CHW are required to provide more than $1.5 million in funds and benefits to the community, including making the hospital’s large community health center more available for outreach programs. AHMC also is required to continue operating San Gabriel Valley Medical as an acute care hospital for at least the next five years. The companies have not announced when the deal may close.
AHMC is controlled by Dr. Jonathan Wu, who serves as board chairman. San Marino Mayor Matthew Lin, also a physician, is vice chairman. It owns Garfield Medical Center, Monterey Park Hospital, Whittier Medical Center and Greater El Monte Community Hospital. The group also is affiliated with Alhambra Hospital Medical Center and the Doctors’ Hospital Medical Center in Montclair.
Staff reporter Deborah Crowe can be reached at (323) 549-5225, ext. 232, or at [email protected].
