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By HOWARD FINE

Staff Reporter

HMOs, the latest whipping boy in Sacramento, are once again the center of attention as lawmakers convene for the 1998 session.

More than 50 bills to further regulate health maintenance organizations are already in the hopper, and more reform legislation is being drafted based on a recent report from a blue-ribbon panel on HMO reform.

The key reform battles this year will be over what type of body should replace the Department of Corporations as regulator of the HMO industry, the extent to which HMOs should be held liable for medical malpractice, the ways in which the HMO arbitration process could be improved, and how much access patients should have to specialists.

Unlike in past years when reform efforts fell short, substantial reforms will likely pass the Legislature this year, Sacramento observers predicted, and some of those bills will be signed into law by Gov. Pete Wilson.

The main factors fueling this legislative avalanche are surveys conveying widespread public dissatisfaction with HMOs and the threat of a November ballot initiative to remove liability caps on HMOs, observers said.

"(HMO reform) is one of the most crucial issues if not the most crucial issue before the Legislature this year," said Fred Main, executive vice president of the California Chamber of Commerce. "It will be a hard-fought battle. In the end, I'm sure some reform will emerge, if for no other reason than this is an election year and legislators see that this issue hits home with voters."

Just in case legislators don't act, a pair of consumer group-backed initiatives are being pushed for the November ballot.

One initiative sponsored by Assemblyman Martin Gallegos, D-Irwindale, and Consumers for Quality Care, an L.A.-based consumer health care group would remove the $250,000 liability cap on pain and suffering damages against HMOs, reform HMO arbitration procedures and set up a new HMO oversight agency.

Gallegos opted against mounting a costly signature drive to place it on the November ballot. Instead, he will seek to garner the required two-thirds approval of the state Legislature (but not the signature of Gov. Pete Wilson) to qualify the initiative for the November ballot.

"This initiative is the hammer that will force the Legislature and the Governor to act," said Jamie Court, executive director of Californians for Quality Care.

The other initiative is sponsored by a coalition of consumers, small businesses, physicians and senior-citizen advocates, headed by San Francisco-based consumer consultant John Metz. It goes further than the Gallegos initiative: It could dramatically alter the practice of capitation (whereby providers are paid a flat per-patient fee) by banning financial incentives for providers who withhold care.

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