Kaiser Wins Break from Health Reform Clause : Health care: Under the provision, the HMO would retain control over the doctors it hires.

Kaiser-Permanente, the largest health maintenance organization in the nation, has won a special break from a congressional committee that would exempt it from a critical element of federal health care reform, lobbyists and congressional sources said Wednesday.

The huge Oakland-based health system, which provides coverage for 4.6 million Californians, would be allowed to retain control over the doctors it hires, avoiding proposed new federal regulations that could force other major HMOs to use almost any doctors who asked to join their networks.

Kaiser won the exemption in the House Ways and Means Committee, which adopted its version of health care reform in late June. Industry lobbyists and congressional staff members said Rep. Jim McDermott (D-Wash.) pushed the amendment, in part to give a similar break to a smaller HMO in his home state, Group Health Cooperative of Puget Sound.

First Lady Hillary Rodham Clinton has praised the Puget Sound organization as a model for first-class health care. Rep. Fortney H. (Pete) Stark (D-Oakland), chairman of the health subcommittee of the Ways and Means panel, also supported the exemption.

The special break for Kaiser gets the big nonprofit organization out of a bitter political fight now raging between the nation’s physicians and the country’s rapidly growing HMOs over the direction of health care reform.

Doctors are fearful that the rise of HMOs will limit their independence and reduce them to little more than subcontractors for large insurance firms. They are using the health care reform legislation now before Congress as a way to push for new restrictions on how HMOs control physicians and their access to patients.

As a result, the American Medical Assn., which represents 300,000 of the nation’s doctors, has fought for a provision in the health care legislation that would require an HMO to accept any doctor willing to join its system.

That controversial “any willing provider” clause was included in the Ways and Means bill and may also be included in the House Democratic leadership’s health care bill that Majority Leader Richard A. Gephardt (D-Mo.) issues in the next few days.

Lobbyists for HMOs have argued that such an AMA-backed provision would devastate the managed-care industry and make it difficult for any reform effort to contain health care costs. The AMA has argued, however, that it would give more doctors access to the new world of HMO networks and allow patients to see doctors with whom they are most comfortable.

Under the Ways and Means legislation, HMOs that hire physicians directly or contract with groups of physicians to work exclusively for the HMO would be exempt from the AMA-backed proposal. Only a handful of HMOs fit that description, and by the far the largest in that category is Kaiser. Most HMOs set up networks of physicians who accept HMO patients, but those doctors do not work exclusively for those HMOs.

The deal for Kaiser means it could continue its current practices, turning away physicians eager to gain access to Kaiser’s vast pool of patients. HMOs like to limit the number of doctors in their systems to contain costs. By directing a large volume of work to a smaller group of physicians, HMOs have the leverage to negotiate lower fees.

With Kaiser exempted, the “any willing provider” proposal would mainly affect HMOs owned by large insurance firms, notably Aetna, Metropolitan Life, Travelers Insurance Co. and Cigna. Lobbyists for those HMOs said they are angered by the Kaiser exemption but had been unable to stop it because they were fighting other battles on health care.