Beds lie empty in the emergency room of Tulane University Hospital in New Orleans February 14, 2006. Credit: Reuters/Lee Celano

The health insurer announced its decision on Tuesday after Democrats from three U.S. House of Representatives committees earlier in the day wrote to seven health insurance executives urging them to immediately stop the practice, known as rescission. A separate letter from 57 Democrats was directed at WellPoint alone.

Healthcare reform legislation passed last month makes rescission illegal except in cases involving fraud or intentional misrepresentation, allowing six months to comply. But Democrats pushed for action sooner following a Reuters report on April 22 that WellPoint used computer algorithms to target women with breast cancer for an investigation, with the intent of canceling their healthcare policies.

There have been a lot of misrepresentations and inaccuracies in recent days that have caused confusion among our members and among the public generally about our policies in this area, WellPoint's Chief Executive Angela Braly said in a statement.

It will still rescind policies in fraudulent and other similar cases, company spokeswoman Kristin Binns told Reuters.

Democratic lawmakers called on WellPoint, UnitedHealth, Humana, Aetna and other insurers to immediately ban such actions except in cases of fraud or intentional misrepresentations and to institute third-party reviews of any decision to drop coverage. The letter also went to the Blue Cross Blue Shield Association, Kaiser Permanente and Assurant Health, part of Assurant.

In the letter to WellPoint, House Democrats backed a call by Representative Rosa DeLauro urging the insurer to end the deplorable practice of canceling health insurance coverage for patients diagnosed with breast cancer or any other illness.

WellPoint's decision will benefit countless women in the future who will be diagnosed with this disease, DeLauro said in a statement later on Tuesday.

WellPoint, the largest health plan in the Blue Cross Blue Shield Association, has said its software looks for conditions patients may have had before seeking insurance coverage but that it does not single out breast cancer. It has called the Reuters report inaccurate, but Reuters has stood by its story.

The Reuters report also sparked a stern rebuke from U.S. Health Secretary Kathleen Sebelius, who last week urged WellPoint and others to step up compliance. After WellPoint's decision, Sebelius said she was encouraged and that companies should not wait until September to do the right thing.

Several Democratic lawmakers also welcomed WellPoint's decision and urged other insurers to follow suit.

Now it's up to the other insurance companies to show they're serious about making health reform work, said Representative Pete Stark, chairman of the House Ways and Means Committee's health panel.

Under the health reform law, health insurers have until September 23 to halt rescission and a number of other controversial practices such as denial of coverage for pre-existing conditions and life-time caps on payments.

A number of insurers have already moved to implement one reform not due until September -- extension of coverage for young people until age 26 on a parent's plan.

Humana's CEO Mike McCallister told Reuters the insurer would comply fully with the law but that it needed to examine whether it could act on the lawmakers' request.

We can't jump at every thing that they immediately request ... I don't know the implications of that, he said. We're acting in good faith, and what we're looking for is someone who has not acted on good faith.

Assurant spokeswoman Shawn Kahle said that Assurant Health already has third-party reviews and that it would act as quickly as possible to end rescission.

Aetna said in an e-mailed statement that it began external reviews in 2008 to allow customers facing rescission to obtain a no-cost, third-party review.

Blue Cross and Blue Shield Association spokesman Brett Lieberman said in an e-mailed statement that the group was reviewing the committees' letter.

Representatives for other insurers either could not be reached or had no comment.