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Monday, May 29, 2023




Staff Reporter

Virtually everyone in Democrat-dominated Sacramento expects a major overhaul in the way managed care plans are regulated. The only questions are, just how many screws will be tightened and how much it will cost the industry and consumers.

So far, half of the 130 health care bills introduced to date have passed their first committee; almost none have been rejected.

In fact, the pressure for reform is so great that the lobby for health maintenance organizations last month put forward its own set of reforms in an effort to exert damage control over the changes that occur.

But until Gov. Gray Davis shows his hand, few legislators are willing to predict exactly what measures will pass.

“People are waiting for Gov. Davis to take the lead on HMO oversight,” said Assemblyman Martin Gallegos, D-City of Industry. “Some bills won’t need to move forward if a new, stronger regulator comes in who is willing to exert more enforcement authority.”

Gallegos said he has heard from officials in the Davis administration that the governor will announce his HMO reform package in the next few weeks. Davis himself was not available for comment.

The biggest battle looms over whether HMOs should be held liable in civil court for decisions they make about covering certain medical treatments. Two major bills deal with this issue: SB 21, sponsored by state Sen. Liz Figueroa, D-Fremont, and AB 55 by Assemblywoman Carole Migden, D-San Francisco.

Consumer advocates and trial lawyers are pushing to ensure that patients have legal recourse when they are denied treatment or believe treatment mistakes are made. They cite a Texas law enacted in 1997 that makes HMOs liable and say it has resulted in few court cases.

“The biggest problem is that consumers do not have the leverage they need to get the care that’s medically necessary for them,” said Jamie Court, executive director of Consumers for Quality Care. “That leverage cannot come from just another bureaucratic review system; it must be coupled with ultimate accountability in court.”

But legal liability is fiercely opposed by members of the HMO lobby, who say allowing patients to sue will drive up coverage costs and perhaps result in employers deciding not to offer health care coverage.

“Liability is very expensive and unnecessary,” said Walter Zelman, president and chief executive of the California Association of Health Plans. “That’s why the industry endorses an external review process, where if an individual is denied something by their HMO, they should have the right to have an independent panel of physicians review it.”

Partly out of fear that it will be forced to accept liability, the HMO industry has introduced compromise proposals favoring an external review procedure, guaranteed access to second opinions, and a statutory guarantee that only physicians and medical professionals not HMO administrators can deny care.

But critics have dismissed these reforms as largely window dressing from an industry trying to pre-empt even tougher regulation.

“When the HMOs had a friendly governor, they blocked all reforms,” Gallegos said. “Now, with a governor less friendly to them, they have had an epiphany? I don’t think so. What’s happened is that the health plans clearly see the writing on the wall and recognize that they are going to have to come to the table and make compromises.”

There is general agreement that responsibility for HMO oversight should be removed from the Department of Corporations, where it now resides. The question now is whether the oversight duties should be transferred to another agency or to an entirely new agency. Where Davis stands on that issue will be the key to any future reform.

The major external review proposals in concept at least also appear to have widespread support. Both the HMO lobby and consumer advocates have bought into the idea of an independent review panel of physicians determining what treatment gets covered. But many HMO critics want external review panels to be buttressed by the right to sue HMOs, while the HMO lobby vehemently opposes this.

Several other bills would expand the choice of doctors available to patients. One bill, AB 1124, by Sally Havice, D-Artesia, would allow patients to choose any physician they want, even if the physician is outside the HMO network.

Finally, there is a host of bills requiring HMOs to cover certain treatments and medications that are now optional.

Of these, the most sweeping mandate would require HMOs to cover mental illness care. The legislation is in two bills: AB 88, by Assemblywoman Helen Thompson, D-Vacaville, and SB 468, by Richard Polanco, D-Los Angeles. Health care lobbyists and legislative staff members expect some form of mental health coverage to pass, though the details have yet to be worked out.

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