Oversight of HMOs Weak, Group Says

State regulators are failing to protect the interests of 12 million Californians who belong to health maintenance organizations because of weak oversight of the fast-growing managed-care industry, a consumer watchdog group said Thursday.

Consumers Union charged in a report released by its regional office in San Francisco that the California Department of Corporations is “failing to fulfill one of its primary responsibilities: educating and informing consumers about HMOs.”

Similar complaints have previously been leveled against the department. The agency has been under pressure to toughen HMO oversight since it was sharply criticized by a state auditor general report in 1992. And in August, the Los Angeles Times detailed problems with the agency, including sloppy record keeping and weaknesses in its procedures for evaluating and reporting consumer complaints and the overall quality of medical care in HMOs.

The criticism has led to a flurry of legislative measures to broaden and toughen the agency’s oversight of HMOs. The agency has not only responded to the legislative mandates but has also taken steps on its own to improve its performance.

“We feel we are on top of this issue and are taking proactive steps to correct any deficiencies,” said Damian Jones, a department spokesman. Jones notes that the agency has established a toll-free number to handle consumer grievances and is working to improve its handling of HMO medical audits.

Under former Corporations Commissioner Gary Mendoza, the department won praise from consumer advocates for some of the changes. But Mendoza left the agency earlier this year to become a deputy mayor for Mayor Richard Riordan. Gov. Pete Wilson has yet to appoint a permanent successor.

The Consumers Union report, which may increase pressure on the Legislature to reform the department, says the agency’s efforts don’t go far enough.

Four years after the auditor general report cited the department for failing to meet a mandated timetable for completing medical audits, the agency still is not meeting its three-year timeline or even a previously mandated five-year timeline, Consumers Union said. The survey found, for example, that the Aetna HMO had not been surveyed for more than five years.

“Last time these problems were raised, the department said it was taking care of them,” said Eleanor Hamburger, the study’s author. “Four years later, the problems still persist.”

The Consumers Union study recommends that the department conduct medical surveys every year instead of every three years, make public its standards for conducting those surveys and revise its reports so they are easier to understand and more useful to HMO members trying to choose a health plan.

Jones said the department plans to make the medical surveys available on the Internet by the end of the year. Legislation proposed by state Sen. Herschel Rosenthal (D-Los Angeles) would require the department to publish an annual report to consumers with comparative information on HMOs and to publish that information on the Internet.