Davis Outlines Platform on HMO Reform

Setting the terms of engagement on health care reform, Gov. Gray Davis on Wednesday outlined what he would accept in new HMO regulation, including letting patients sue their health plans and submit disputed medical decisions to independent reviewers.

Davis, criticized for failing to get involved in the debate over HMO reform legislation, jumped into the high-stakes fray with a detailed proposal for changes he is willing to sign into law.

Issued a month before the end of this year’s lawmaking session, the program drew mixed reaction from Davis’ fellow Democrats in the Legislature--although it was embraced by the leader of the Assembly’s Republicans.

Chief elements of the plan, which aides called a “work in progress,” include:

* A relatively limited ability of patients to sue their health maintenance organizations for punitive damages resulting from denial or delay of a doctor’s recommended treatment.

* A grievance procedure that would enable them to appeal disputed decisions to an outside panel of state-paid health care experts.

* Expedited reviews of patient complaints, including reducing from 60 to 30 days the time allotted for state regulators to settle grievances.

* Establishing a state managed care department with beefed-up enforcement authority and a consumer advocate to investigate complaints. Davis would put the new department under the jurisdiction of the state’s business and transportation agency, which critics complain is too friendly with the health care industry.

Davis did not address the highly contentious issue of whether to require insurers to provide certain new benefits, including birth control pills, mental health coverage, cancer screening tests and certain medications for diabetics.

Most of the governor’s plan reflected proposals already advancing in the Legislature and headed for his desk; none has yet reached it. Davis did not, however, spell out the fine-print details that can often mean passage or defeat of a bill.

“We think this is a very balanced first year approach,” said Maria Contreras-Sweet, California’s secretary of business, transportation and housing, who helped draft Davis’ plan.

Five weeks ago, Davis stirred controversy by warning the Democrat-controlled Legislature against sending him some 70 often conflicting and duplicative health care reform bills. He said he wanted only a half-dozen or so, but did not specify what their contents should be.

Aides insisted that in offering his reform vision, the governor is not drawing a “line in the sand” for the Legislature, which plans to adjourn Sept. 16.

At a briefing for reporters, Contreras-Sweet and Susan Kennedy, secretary of the governor’s cabinet, conceded that the plan would not satisfy every interest group but asserted that “it does a lot for consumer protection.”

They also voiced confidence that it could be squeezed into six or eight bills, reflecting the administration’s “best thinking” of what can be accomplished in this legislative session.

But the governor’s vision met a lukewarm reaction from Democrats in the Legislature and from patient and consumer advocates.

“We’ve been in a holding pattern waiting for the administration,” said Senate leader John Burton (D-San Francisco). “This doesn’t give us a hell of a lot of direction, assuming we wanted to take it.”

In the Assembly, Speaker Antonio Villaraigosa (D-Los Angeles) said the plan offers “areas of agreement, but some of this does fall short of what we believe our HMO reform package should look like.” He said it needed more work and Assembly Democrats would be willing to try to reach compromises.

Sen. Jackie Speier (D-Daly City), chairwoman of the Senate Insurance Committee and a reform leader, offered a strong endorsement, calling the proposal “bold and ambitious.”

“It is going to be a welcome relief for the consumer patients of California,” Speier said.

Consumer advocate Jamie Court, of the Foundation for Taxpayer and Consumer Rights, criticized the governor’s outline as “looking like it was drafted by HMO executives and business people.” He complained that it was “written with loopholes and is much weaker than reforms enacted in Texas under [Republican Gov.] George W. Bush.”

The plan drew an enthusiastic reception from the leader of the Assembly’s minority Republicans, Scott Baugh of Huntington Beach. “Republicans will support this,” he said. “It’s up to the governor to lobby Democrats and persuade them.”

Times staff writer Nancy Hill-Holtzman contributed to this report.