Health Insurers Denounce HMO Reform Package : Medicine: Three measures awaiting the governor’s signature are aimed at protecting consumers from abuses.

Health insurers on Thursday denounced a package of reform measures approved by the Legislature that are intended to protect consumers from abuses by health maintenance organizations.

Insurers said the three measures--now awaiting Gov. Pete Wilson’s signature before they can become law--would impose costly and unneeded government regulations on the industry.

A spokesman for Wilson said the governor has made no decision yet about the bills.

The measures--strongly opposed by the California Assn. of HMOs, an industry group--would require health plans to publicly disclose more information about their profits and overall finances. They would impose requirements on insurers in resolving disputes with their members over the denial of medical services.

The measures were supported by a group of consumers, health professionals and labor organizations led by the California Medical Assn., which has been critical of the “exorbitant” profits of some insurers.

“For-profit HMOs are under increasing pressure to show an impressive bottom line to Wall Street investors,” said Steve Thompson, vice president of government relations for the state’s largest doctors group. “Legal protections must be created . . . to ensure that quality medical care is not compromised in the drive for profits.”

One of the bills, by state Assemblyman Burt Margolin (D-Los Angeles), would require health plans to disclose to consumers what proportions of each premium dollar go to patient care, administrative costs and profits. It would also require the state to publish an annual financial report on all state-licensed health plans.

In a report released earlier this year, the CMA found that paperwork, advertising, executive salaries and profits accounted for up to 30% of each medical premium dollar collected by health plans. As originally drafted, the bill would have capped health plans’ administrative costs and profits at 15% of premium dollars. That restriction was dropped to gain the support of some Assembly Republicans.

The HMO trade group contends that such financial information is already provided in public filings with the state Department of Corporations, which regulates HMOs.

Deborah Kelch, director of health policy for the HMO group, said consumers won’t benefit from detailed data about a health plan’s finances. “Information about quality, price and services is what consumers want,” she said, noting that HMOs are already providing more of that information.

But Danielle Walters, a CMA spokeswoman, said HMOs opposed the measure because they fear it could hurt profits.

The HMOs “keep claiming that consumers won’t understand it, but we’ve had thousands of phone calls from labor groups and business managers who are using this (financial) information to negotiate with the plans” to get better prices, Walters said.

Another measure, by Sen. Dan McCorquodale (D-Modesto), would mandate when HMOs must pay for emergency medical care for their members who go outside the health plan’s approved network of hospitals. The bill’s supporters contend that HMOs sometimes refuse to pay for emergency treatment of members who go to out-of-network hospitals, often because they are closer than the HMO’s hospitals.

Kelch said HMOs do allow members to go to the nearest hospital in actual medical emergencies and reimburse patients for those services.