Activists Hail HMO Reforms Sent to Wilson

Consumer activists and patient-care advocates are hailing passage of a bill, approved in the waning hours of the legislative session, requiring state regulators to take stronger action on complaints by members against their health maintenance organizations and to improve governmental oversight of the fast-growing industry.

But they contend that the measure still falls short of giving patients all the rights they need to ensure that they get quality care from their HMOs.

“Giving patients more rights is a step in the right direction, but it’s a baby step,” said Jamie Court, director of the Los Angeles-based Consumers for Quality Care.

The Legislature passed the bill late Friday night and sent it to Gov. Pete Wilson, who is expected to sign it. Several other health care bills supported by reformers, however, fell by the wayside during the legislative session.

Among them was a proposal that would have required HMOs and other health insurers to pay for minimum hospital stays of 48 hours after childbirth for mothers requesting them. The legislation was triggered by a plan by Kaiser Foundation Health Plan, the state’s largest HMO, to discharge mothers as soon as eight hours after giving birth; it passed the Senate but died when the Assembly failed to take it up before the legislative session ended Saturday.

The bill now before the governor mandates, among other things, that state regulators follow up more aggressively on grievances and complaints filed by HMO members. They must also establish a toll-free line through which patients can complain directly to state officials.

The legislation also requires that regulators inspect HMO facilities more frequently than they do now and publicize all deficiencies that are found.

Previously, the state Department of Corporations, which oversees how HMOs deliver health care to more than 12 million Californians, was required to inspect the health plans once every five years. The bill shortens that to three years.

The legislation also eliminates a 20-year-old provision allowing the Department of Corporations to keep secret any deficiencies corrected by an HMO within 30 days. HMO critics have long complained that the provision allows the agency and HMOs under its jurisdiction to hide a wide range of problems from the public.

These problems and others were among those highlighted by a recent series of articles in The Times. The series demonstrated that HMOs in the state were widely engaged in rationing health care, denying treatment to many seriously or chronically ill members. The articles also showed that the health plans often manipulated grievance and arbitration procedures to the disadvantage of their members.

Patients who turned to the Department of Corporations for assistance, the series reported, found the agency to be an under-financed and inefficient regulator.

HMO critics say the new legislation places far more responsibility on the Department of Corporations’ shoulders than it has ever had before. That, they say, may be a weak link in the system of consumer protection.

“The [question] is how the department is going to do in implementing the law,” said Judith Bell, co-director of the San Francisco office of Consumers Union.

In the past the department, for example, has refused to investigate complaints as long as they were subject to ongoing grievance or arbitration procedures--even though it had the authority to investigate any HMO treatment. Under the bill, the agency must intervene in any case where a member complains that a grievance has been unresolved for 60 days or more.

The legislation also requires HMOs to publicize the state’s toll-free complaint line and, indeed, the agency’s very existence. This represents a radical change from current conditions; a recent Times poll found that only 1% of all HMO members in the state were aware that their plan was regulated by the Department of Corporations.

Many of the new bill’s provisions were strongly opposed by HMO lobbyists in Sacramento.

The health plans, for example, initially fought a $2-million raise in their per-patient assessments--money used to finance the state regulators’ work. The raise was cut to less than $500,000 until last-minute negotiations restored the original amount.

The HMOs also fought a provision allowing the department to fine health plans that ignored or mishandled enrollee complaints as much as $100,000 per complaint; the industry proposed limiting the fine to $5,000 per complaint, according to legislative sources. The final bill sets the penalty at a lump sum of $250,000, over and above any other administrative penalties the agency might impose.

HMO lobbyists also attempted in vain to kill the provision mandating disclosure of all deficiencies, including those corrected within 30 days. Legislative sources say several provisions opposed by the HMOs were restored to the bill after The Times raised questions about the industry positions.

One provision the HMOs did succeed in deleting from the bill, sources say, was a proposal giving the Department of Corporations the authority to review and approve all quality claims made in HMO advertising.

“We think misleading advertising is an important consumer concern that ought to be followed up on,” said Allen Davenport, a Sacramento lobbyist for the Service Employees International Union.

For its part, the HMO industry has indicated it is content with the bill’s final version.

“We’re pleased with the bill,” said Tina Tingus, a spokesman for the California Assn. of HMOs, the industry’s Sacramento lobbying arm. She said that although the group has not formally asked Wilson to sign the measure, it has not asked for a veto.

That in itself leaves some HMO critics discontented.

“I think the fact that there’s no official opposition to the bill by HMOs shows that it doesn’t go far enough,” said Court.