Assembly Seeks HMO Review Panel

Rising medical costs are stymieing California legislators’ attempts to require HMO coverage for such benefits as infertility treatments, bone density screenings and hearing aids.

Assembly leaders agreed this week to temporarily shelve such proposed mandates on health plans and instead support the creation of a commission to weigh costs and medical benefits of each possible new coverage requirement.

“We need a better process of evaluation than we have right now,” said Helen Thomson (D-Davis), chairwoman of the Assembly Health Committee. Commissions to evaluate similar health mandates are used in 11 states, she added.

HMO industry leaders say that if the 18 bills for various treatments pass, California employers and consumers would have to pay an increase of more than $3 billion for coverage. Such added costs would further exacerbate a crisis of affordability in private and public health insurance, they say.

Even without any expanded benefits, the California Public Employees’ Retirement System agreed this month to pay insurers a 25% increase in premiums next year. Some of that increase will be passed on to the 1.2 million state and local government workers and their families, as well as retirees.

Private employers also expect to face double-digit rate increases, although not to the same extent as the pension fund.

“It’s clear there has to be some balance,” Thomson said. “We simply can’t afford to cover every possible service. On the other hand, the industry has frequently cried wolf. This commission will help find the truth and help us set our priorities.”

The bills in Sacramento would, among other things, require coverage for bone marrow donor testing, ovarian cancer screening, wigs for cancer patients and enhanced substance abuse treatment.

Many of the proposed mandates would increase costs for the state, which pays for public insurance programs. Facing a budget deficit of $17.5 billion or more, the state can ill afford any additional expenses, said Assemblyman Robert Pacheco (R-Walnut), who also supports a commission.

Health plan representatives say they are not trying to prevent patients from receiving care or to stonewall all the bills. Last year, they supported a law requiring coverage for patients participating in cancer clinical trials.

That said, many previous mandates “have been passed without any understanding of what they cost,” said Walter Zelman, president of the industry’s California Assn. of Health Plans.

The Senate Insurance Committee has used a task force led by the California HealthCare Foundation to evaluate mandates. In 1999, the working group studied the cost of requiring extra coverage for mental health, diabetes education, hospice care and contraception. All those became law. Sen. Jackie Speier (D-Hillsborough) has said she wants to use a similar structure to evaluate pending bills.

If a commission is established, it must give ample consideration to the medical benefit of proposed treatments, not just their costs, consumer advocates say.

“At the end of the day, people need to get the care that they need,” said Anthony Wright, director of organizing for Health Access. “We need a real process to actually look at these treatments and say in certain instances, ‘Maybe this is medically necessary.’”

Assemblywoman Patricia Wiggins (D-Santa Rosa) said she has mixed feelings about the delay for her bill, which would mandate coverage of hearing aids. As a hearing-impaired person, she says, she knows the value of hearing aids and the benefits they provide.

“My big concern is the opportunity to get relevant information to those that will be making these evaluations,” Wiggins said.