Complaints Against HMOs Up 18% Last Year

A state report released Thursday shows consumer complaints against HMOs rose only modestly last year, but officials and consumer activists said the figures may “dramatically” understate the problem. More current data show complaints doubling, officials said.

The California Department of Corporations, which regulates the state’s 113 medical, dental, vision and mental health HMO plans, said it registered 2,321 complaints in 1996, a jump of 18% from 1,964 complaints in 1995. The state’s health maintenance organizations, with a combined enrollment of 19 million people, received an average of 1.1 complaints per 10,000 enrollees.

1996 was the first full year of operation for a state-run toll-free hotline intended to make it easier for Californians to register complaints. The hotline was established by legislative mandate after years of complaints that few consumers had ever heard of the corporations agency or knew of its watchdog role over HMOs.

But many HMOs failed to notify members of the hotline, prompting corporations Commissioner Keith Bishop to levy fines against 80 health plans totaling more than $700,000. State officials say consumers’ lack of awareness of the hotline probably explains what is a modest rise in complaints, given HMOs’ rapidly growing membership.

After the fines were announced late last year and HMOs began notifying their members, the number of calls “increased dramatically,” said Joe Parra, the agency’s newly appointed HMO ombudsman.

The agency also released numbers Thursday showing that calls to the complaint line and complaint investigations roughly doubled in January and February, after the fines were announced.

“We still fear that the number of complaints [to the Department of Corporations] is not anywhere close to reality,” said Jeanne Finberg, senior attorney for Consumers Union’s West Coast office in San Francisco. “Our impression is that people still don’t know that the Department of Corporations regulates HMOs, even some very educated people.” Finberg also noted that the report doesn’t include information on the seriousness of the complaints or how they were resolved. “Maybe all of these 2,300 complaints were meritless or maybe they involved a life-threatening situation, we just don’t know.”

Parra also cautioned against using the 1996 complaint data to compare one HMO against another, especially in view of the problems with the hotline notification.

“This is a Joe Friday report--just the facts,” Parra said. “Maybe if we had 10 years of data, we could do some trending and draw some conclusions where complaints were going.”

But Kurt Davis, a spokesman for Foundation Health Systems, one of the state’s largest HMOs, saw the report in a different light.

“Overall, this shows the industry is doing a good job of serving its members,” Davis said. “I don’t think 1.1 complaints per 10,000 people is what you’d consider an extremely high level of complaints. I’d venture that you have more complaints than that in a given year about newspaper delivery and other issues.”