Many States Fail to Adequately Monitor HMOs, Study Finds : Health care: Consumer group looked at grievance procedures, quality of care, and legal penalties.

A national study has found that state laws protecting consumers who belong to health maintenance organizations vary widely and that many states are failing to adequately monitor the quality of medical care provided by these fast-growing health plans.

“Based on our analysis, many states do not provide adequate protections for HMO enrollees,” said Geraldine Dallek, the study’s author and executive director of the Center for Health Care Rights, a Los Angeles-based consumer advocacy group.

In California, where there are 12 million HMO members, consumer protections have been bolstered in recent years by legislative reforms, the study concluded.

“Before a recent spate of legislation, regulation in California was very weak in a number of areas,” Dallek said. “Now California is really doing some innovative things.”

Even so, state regulators are facing aggressive legal challenges from the HMO industry as they try to enforce those laws. In separate actions, two of California’s biggest HMOs, FHP Inc. and PacifiCare Health Systems, have sued the state’s top HMO regulator to block enforcement and oversight actions.

The Center for Health Care Rights study looked at consumer protections for HMO members in 50 states. Among the areas surveyed were laws dealing with HMO member grievance procedures, access to and quality of care, and penalties for violating state laws.

“In every area of consumer HMO law, we found that critical legal and regulatory issues were inadequately addressed,” Dallek said. Of particular concern was the “lack of strong state mandates” to allow regulators to monitor the quality of medical care in HMOs or information to enable consumers to comparison shop among different plans. Many states lacked adequate procedures for HMO members to appeal denials of care or services, she said.

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Thanks largely to consumer reforms passed by the state Legislature in 1994 and 1995, California’s HMO laws now are “among the strongest in the nation,” the study found. The report cites new laws that expedite the resolution of HMO member complaints and that established a toll-free telephone hot line for consumer grievances.

However, Dallek said that California still lacks consumer protections mandated by other states. Several states require HMOs to provide data on such services as prenatal care or childhood immunization rates. And many require disclosure of HMOs’ internal data on member complaints and medical malpractice claims against HMOs and their doctors.

Myra Snyder, executive director of the California Assn. of HMOs, a trade group, said the state is “doing a good job with respect to consumer protections.” More regulation of HMOs is not necessarily the best answer, she said, noting that HMOs and private employers have spearheaded a number of consumer-related programs.

The yearlong study, funded by the Robert Wood Johnson Foundation, a Princeton, N.J., health care philanthropy, concluded that Minnesota had the most comprehensive HMO consumer protection laws in the nation.

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Dallek noted that even the toughest state laws can be ineffective without strong regulatory enforcement. The California Department of Corporations, which regulates HMOs, has a reputation for weak enforcement but “has shown a renewed commitment” to its watchdog role under current Commissioner Gary Mendoza, she said.

But HMOs have strongly challenged Mendoza’s more assertive approach.

Last week FHP Inc., based in Fountain Valley, sued Mendoza, challenging the state’s authority to levy a $500,000 civil fine against FHP’s Take Care unit in a high-profile case involving the alleged denial of access to a medical specialist for a young girl with cancer. FHP, which is appealing the fine in an administrative hearing, disputes the allegations and claims in a lawsuit filed Nov. 21 in Orange County Superior Court that the maximum fine allowable under state law is $15,000.

Damian Jones, a Department of Corporations spokesman, said that the FHP suit lacked merit and that the state has the authority to levy the $500,000 fine.

In a separate legal dispute involving the state’s authority to regulate HMOs, PacifiCare and Mendoza’s agency will face off today in a hearing in Orange County Superior Court.

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Pacificare is challenging the Department of Corporations’ demand last summer for access to medical records of members. The department claims it sought the records after receiving numerous complaints about PacifiCare.

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Times staff writer Barbara Marsh contributed to this report.