State’s Choice of HMO Quality-Review Organizations Draws Fire

The state’s selection of an outside contractor to help evaluate the medical quality of HMOs serving 13 million Californians has drawn strong protests from two unlikely allies: the HMO industry and consumer groups.

The dispute erupted Monday, when the Joint Commission on Accreditation of Healthcare Organizations, a private group that inspects and accredits most of the nation’s hospitals, and a subsidiary of the California Medical Assn. announced that they had been awarded state contracts to evaluate up to 32 California HMOs.

“This is a definite conflict of interest,” said Alan Tomiyama, a spokesman for the California Assn. of HMOs, an industry group whose members include Kaiser, Health Net and PacifiCare. “The CMA had demonstrated a lot of antagonism and animosity toward managed care in California.”

Consumer groups and the HMO industry also pointed out that the two groups selected by the state have little experience in evaluating HMO quality. The joint commission has completed evaluations on just eight of the nation’s more than 1,000 HMOs, while the Institute for Medical Quality, the CMA affiliate, has never conducted an HMO review.

Some consumer activists also charged that the commission has been lenient in its accreditation of medical facilities.

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The California Department of Corporations, the state agency that regulates HMOs, defended its choice of the two organizations, which were chosen from about seven groups that bid for the job. One of the bidders was the National Committee for Quality Assurance, a Washington-based group that is by far the largest and best-known accrediting agency for HMOs.

“We’ve thought about this long and hard, and we’ll live with the determination we’ve made,” said Brian Thompson, the agency’s chief deputy commissioner. “We took as many steps as we could to be impartial and fair.”

The controversy over the selection is more bad news for the Corporations Department, which has frequently been criticized by legislators and consumer groups for having an overly protective attitude toward the industry it regulates.

Moreover, consumer groups and others had complained that the agency’s HMO quality reviews were sometimes not completed by

their state-mandated deadlines, were not easily accessible to the public and contained little useful information to help consumers make choices among HMOs.

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Corporations officials stressed that the decision to turn over medical quality reviews to an outside group for the first time is part of an effort to improve oversight over health plans. The job is significant because California accounts for roughly one in five people enrolled in HMOs nationwide.

But HMOs and consumer groups said they don’t think the agency accomplished its goals through its choice of outside reviewers.

Consumers for Quality Care, a Los Angeles consumer rights organization that is strongly critical of the managed-care industry, charged that the joint commission has proven itself a weak overseer of the health-care industry. It noted that a study released last month by Public Citizen, another Ralph Nader-affiliated consumer group, said many of the hospitals that win accreditation fail key measurements of safety.

But Dennis O’Leary, president of the joint commission, defended his organization.

“We do quality audits,” he said, noting that the federal government requires accreditation by his organization before it will reimburse hospitals for Medicare patients.