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Monday, Oct 2, 2023


Since practically his first day in office, Keith Paul Bishop has been called a wimp by critics of the HMO industry he is charged with regulating.

Even supporters say the 40-year-old commissioner of the Department of Corporations is too easily swayed by the opinions of others.

“I think Keith Bishop’s heart is in the right place, but he’s being battered so much that he’s just trying to act tough,” said Malik Hasan, chief executive of Foundation Health Systems.

Now bolstered by a likely doubling of his enforcement budget, Bishop says he plans to really get tough on HMOs, with far more investigations and fines likely in the coming months.

But officials of locally based HMOs say they aren’t overly concerned with the possibility of a stronger DOC, and critics say they have little faith in Bishop making good on his promises anyway.

Said Ross Goldberg, spokeman for CareAmerica Health Plans in Woodland Hills: “Our motivation to operate as we do is not driven by the threat of DOC oversight, but by our own integrity.”

The DOC is the state agency that oversees HMOs and fines them for regulatory violations. Gov. Pete Wilson proposed last month to increase the DOC’s budget by 73 percent, which would translate primarily into more staff members to investigate consumer complaints against HMOs.

Wilson’s proposal was passed by a Senate subcommittee and awaits full legislative approval.

DOC spokeswoman Julie Stewart said a beefed-up department will initiate more investigations of HMOs as well as deter HMOs from breaking the law.

“If they know we’re watching them, they’re not going to do it,” Stewart said.

But HMOs deny that more DOC investigators beating the bushes will affect the way they do business.

“We’re not going to hire more attorneys to respond to (the state’s increase in investigators) or anything like that,” said Cynthia Coulter, a spokeswoman for WellPoint Health Systems, also based in Woodland Hills, which operates the Blue Cross of California HMO. “I really don’t even know that it’s going to impact us at all.”

If anything, HMO officials say they welcome the further oversight their industry would receive if the budget increase is approved.

“I guess the philosophy we have is that the better the industry is regulated and the cleaner it is, the better it will be for the industry in terms of its image and reputation,” said Kurt Davis, a spokesman for Foundation Health Systems, which operates Health Net HMO.

Assemblyman Martin Gallegos, D-San Gabriel, who chairs the Assembly Health Committee, said he, too, believes the budget increase will have little impact on how HMOs operate but his viewpoint is altogether different.

Based on what he considers to be minimal fines the department has levied to date, “the relationship (between the DOC and HMOs) has been a pretty cozy, warm one,” he said. “HMOs, at this point, don’t have much to fear (from the department and Bishop), and it would be a terrible P.R. move for them to oppose this (increased budget) openly.”

Wilson’s proposal would add $6.5 million to the DOC’s budget to oversee California’s 115 medical, dental and vision health care plans. That would roughly double funding for the DOC’s enforcement wing, responsible for investigating consumer complaints. The money would come from a general surplus in California’s budget this year.

Each of the area’s so-called “big four” HMOs Blue Cross, CareAmerica, Health Net and Prudential HealthCare has been stung by the DOC in recent months.

The four companies, and dozens of others throughout the state, were cited or failing to adequately inform enrollees about a toll-free DOC hot line set to field consumer complaints. The fines ranged between $10,000 and $40,000.

In addition, Blue Cross was fined $100,000 at the start of the year for advertising a medical savings account program for which the DOC had not yet given its approval.

The proposed increase in the DOC budget came last month, as Bishop faced a hostile Democrat-controlled Senate Rules Committee considering his reappointment. A Wilson appointee, Bishop had served as acting commissioner for one year, and required Senate approval to continue in the job.

Bishop’s critics, including the patient advocacy group Consumers for Quality Care, waged a publicity and lobbying campaign against his reappointment, claiming Bishop had a pro-industry bias and had until recently failed to strictly monitor HMO practices.

Jamie Court, a co-director of the group, said the increased DOC budget is the price Wilson had to pay to retain Bishop.

“Wilson paid the ransom we held (Bishop) up for,” Court said. “But I think it’s tragic we had to take the position of forcing a regulator to request more resources for their own department, which tells you much about the man.”

Prior to Wilson’s proposal, Bishop had not sought any major increase in financing for the medical-related division of the DOC, though California HMOs have added about 2 million enrollees in the last two years, Court said. (The DOC’s Stewart says Bishop did propose a budget increase to Wilson earlier this year, but she did not know how much Bishop had sought.)

Like Gallegos, Court said he is skeptical that an increased DOC budget will change the department’s enforcement attitude, which he describes as lax.

In addition to the proposed DOC budget increase, Wilson named a state health care ombudsman, also seen as an attempt to satisfy Bishop’s critics. That appointment does not require Senate approval.

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