State Denies HMOs’ Bid to Drop Coverage of Some Drugs

In a further indication that the Davis administration is taking a tougher stance with health maintenance organizations, six HMOs and health insurers have been denied requests to delete drugs from their prescription coverage plans.

The 21 medications include the top-selling antidepressant Prozac and the popular ulcer treatment Prilosec. Among the companies involved are two of the state’s largest HMOs, Kaiser Permanente and Health Net of Woodland Hills.

Although the action by the state Department of Corporations, which oversees HMOs, drew praise from consumer advocates and others, the department was quick to point out that it had concurrently allowed the deletion of about 130 drugs for any new health plan enrollees.

Consumer advocates said they are worried that the deleted medications may be needed by future patients.

Legislators who have long fought for patient rights heralded the department’s action regarding the 21 medications as unprecedented.

“This administration is clearly interested in protecting the consumer. The last administration was interested in protecting the industry,” said Assemblyman Martin Gallegos (D-Baldwin Park).

A chiropractor and chairman of the Assembly Health Committee, Gallegos last year championed legislation preserving drug lists for continuing patients. Part of the new law takes effect in July.

Gallegos was among those who alleged that HMOs were dropping more expensive medications from their lists in anticipation of the law, leading the Department of Corporations to investigate.

During last year’s gubernatorial campaign, Davis vowed to improve health care, and since then he has announced his intention to set up a separate agency for HMO oversight. In March, he approved a state takeover of MedPartners Provider Network, a financially troubled managed care company.

Health Net spokesman Ron Yukelson said his company does not feel under siege, adding that he believes Davis will fulfill promises to give managed care an opportunity to solve its own problems first.

“We learned long ago that voluntary compliance is better than legislative mandate,” Yukelson said. For that reason, he said he did not expect Health Net to appeal the prescription drug ruling.

Department of Corporations spokeswoman Julie Stewart said letters sent last month made it clear that the state would keep an open mind toward any additional information that would justify the drugs’ removal.

In seeking to delete the 14 drugs it was ordered to keep and the 58 it will be allowed to cut for new enrollees only, Health Net considered use, cost and whether there were reasonable alternatives, Yukelson said.

But Warren Barnes, supervising counsel for the Department of Corporations, said such reasoning was not always sound.

For instance, he said, “the beauty of an alternative [drug] is in the eye of the beholder.”

Barnes’ division got involved in the drug list review in December, after allegations from consumer advocates that companies were deleting drugs after their annual open enrollment period ended. In January, the department singled out six companies for further evaluation.

Kassy Perry, executive director of Citizens for the Right to Know, said: “Every body is different, and everybody responds differently to chemicals. The patient ought to get the medication that works and that their doctor thinks they need.”

Perry’s organization, formed in 1994 to push for increased managed care disclosures, sponsored the Gallegos legislation last year out of concern that patients were being offered an ever narrowing group of medicines.

State Investigation Is Far From Over

The Gallegos bill is being enacted in two parts. As of Jan. 1, health organizations were required to make their drug lists public on request. Perry alleged that companies had previously only revealed the lists after a patient had enrolled.

Beginning July 1, the law requires HMOs to continue to provide deleted drugs to current patients with serious, ongoing ailments, as long as those drugs are safe and effective.

Meanwhile, the state investigation is far from over. More than 40 health providers were sent the December letter asking them to detail their drug deletion plans, and Barnes said several others remain under review.

Barnes said Department of Corporations attorneys also are looking into whether health care companies inappropriately switched patients from one drug to another.