Bill to Create HMO Regulatory Board Is Vetoed

Gov. Pete Wilson vetoed legislation Friday that would have set up a powerful consumer commission to regulate HMOs and allow patients to get a second, outside opinion if they have been denied treatment.

The two bills were among the most significant health care legislation of lawmakers’ 1997-98 session, potentially affecting about 19 million members of California’s managed care groups.

The Republican governor in his official veto message said the proposal to create the commission “failed to deliver the reform it promised,” while the second-opinion proposal was “flawed.”

His action was immediately criticized by a consumer group that backed both bills.

Wilson noted that the Legislature had rejected his proposal for a “single-focused regulator.”

“I am disappointed that the Legislature rejected this health care reform,” the governor said.

But the Santa Monica-based Consumers for Quality Care denounced Wilson’s action.

“It’s terrible to end a political career by vetoing reforms that have bipartisan support,” said Jamie Court, a spokesman for the group that has long been critical of the governor.

One bill, by Sen. Herschel Rosenthal (D-Los Angeles), would have removed the regulation of HMOs from the state’s Department of Corporations, placing it instead under the authority of a five-member commission in the Consumer Affairs Department. Commissioners would have included health care professionals and members of the public, and would have obtained advice from a 29-member advisory board.

Consumer groups have long argued that authority over HMOs, which deal with medical care and insurance issues, should be transferred out of the Department of Corporations, which is primarily a business regulator.

But Wilson said the proposed board would have established a “weak and unaccountable regulatory bureaucracy.”

Wilson said the board’s “burden of collective decision-making will not provide consistent and responsive leadership . . . a single [gubernatorial] appointee would be more accountable,” the governor said.

A second bill, by Assemblyman Michael Sweeney (D-Hayward), would have required health service plans and disability insurers to provide a second, outside opinion to a member who was denied treatment.

“There is no evidence that qualified physicians with the same medical group do not provide professional and unbiased second medical opinions,” the governor said.

But Court said the vetoes reflected the governor’s political affiliation with insurers at the expense of consumers.

“It’s a parting favor to the insurance industry,” he said.

Earlier, the governor signed legislation requiring doctors and their HMOs to reveal financial incentives involving the way patients are treated or referred to specialists.

The new law takes effect in January. It requires HMOs to make the information available to the public on demand.

Some health care groups offer incentives to physicians who refrain from referring patients to specialists or who limit the use of costly medical treatments.

Rosenthal said his bill was intended to enable patients “to be able to ask about incentives that may limit patient access to specialists.”

Wilson said the bill would “make sure all the information must be laid on the table beforehand.”

The governor signed another Rosenthal bill that would require HMOs to set up anti-fraud units and report their progress annually to the Legislature.

Other legislation signed by Wilson included one requiring insurance companies to cover the cost of prostate exams to check for cancer.