California managed care task force kicks off legislative season with long to-do list
California Managed Care
December 31, 1997
Promising a banner year for managed care legislation in California, a task force appointed by the governor and legislature has voted on a long wish list of recommendations for improving managed care in the state.
Among the key decisions: The state should move managed care regulation to a new single-purpose agency and give consumers a process for independent appeals of decisions by their managed care plans.
Voted down by the task force, to the major disappointment of consumer advocates, was a recommendation to extend liability for medical decisions to managed care plans as well as to any entity contributing to a medical decision such as third-party administrators and professional service organizations.
"One of the real tragedies is that the task force did not act in this area," said Peter Lee, director of the Center for Health Care Rights’ HMO Consumer Protection Project, and a member of the task force.
Jeanne Finberg, senior attorney and policy analyst for Consumers’ Union, and member of the task force, predicts that the task force’s wish list will lead to "hundreds of bills" and a "very exciting and complicated legislative year." While she described many of the recommendations as mild and moderate, Ms. Finberg noted that there is a pent-up demand for legislation. Gov. Pete Wilson did not sign some 80 managed care bills passed by the legislature earlier this year, saying that he wanted to wait for the task force to complete its work. The governor said he and the legislators could use the recommendations as a guide for future regulation.
Philip Romero, the governor’s chief economist and deputy cabinet secretary, who serves as executive director of the task force, said the 80 bills not signed by the governor will soon find their way back to his desk for signature.
The task force met in Sacramento Dec. 12 and 13 to vote on its final recommendations, which are to be sent to the governor in early January. The decision on how managed care should be regulated in the state was one of the most closely watched actions taken by the task force.
Health plans are currently regulated by the Department of Corporations which is housed within the Business, Transportation and Housing Agency. A major criticism of the DOC is that it has a major focus on securities regulation.
"Given the size, the complexity, and the high degree of public interest, health care service plans ought to have their own regulatory agency, headed by a person who devotes his or her complete attention to the industry and who has had a substantial career in health services," notes the task force findings.
According to Scott Syphax, associate director of government relations for the California Medical Association (CMA): "There’s a lot of good law on the books for managed care regulation, but it’s enforced with less than vigor."
Myra Snyder, president and CEO of the California Association of HMOs (CAHMO), said creating a new agency was the "best" of the task force actions. The "worst," she said, was that there were 150 recommendations.
One of the critical questions debated by the task force was whether a single agency head should have governing authority or whether the authority should be given to an appointed board. Rather than make a choice, the task force will present the pros and cons in its findings and recommendations.
Mr. Syphax said the CMA favors board governance because "it puts sunshine on the decision-making process." Consumers have access to board deliberations, which are subject to open meeting laws, but they are not privy to decisions made by a single agent. A board governance structure also gives the regulator "raw, unfiltered input from the people they are supposed to be serving."
CAHMO on the other hand, opposes a board whose members will be appointed by the governor and legislators. Managed care is a "populist" and "highly politicized" issue, Ms. Snyder said, and board members would be too subject to influence by "special interest groups."
Another regulatory issue is how to handle emerging products and risk-bearing entities in the market. Mr. Romero said the task force believes that regulation of all entities in managed care, including medical groups, PPOs and individual providers, should also be regulated by one "single-purpose" organization. "This is a very fast-moving industry. If you build a regulatory structure on different products it becomes obsolete very quickly," he said.
The task force also recommended that the state:
• fund two pilots for "independent external assistance or external ombudsman programs." These programs would provide consumers with assistance in disputes with their health plans.
• encourage the development of purchasing groups to increase consumer choice for small and medium-sized employers. Limited consumer choice choice appears to be an issue not only in the small group market (2-50 employees) but also in the mid-size market (groups of 51-100 employees). If guaranteed issue, plan design disclosure and premium rating limitations were in effect for groups of 51-100 employees as well as for groups of 2-50 employees, this would help stimulate formation of purchasing groups for the mid-sized market.
• urge CALPERS to take the lead in introducing diagnosis-based risk adjustment to the California market and to report to the legislature in two years. The state should consider requiring all purchasing groups to risk-adjust payments to plans. Payments to providers by plans should also be risk-adjusted.
• adopt consistent standards regarding dispute resolution across all types of plans. "A consistent process would require consumers to learn only one basic system." The Legislature should develop and adopt consistent standards on: timetables for responding to grievances, how consumers are to be informed of their rights to appeal decisions, how they are to be informed of grievance or appeals decisions.
• standardize the way health plans report out complaints so that they are comparable. "This is an incredibly important advancement in the common collection of grievance and complaint experience," said Mr. Lee. A recommendation to standardize "evidence of coverage" would also help guide consumers.
• require disclosure to consumers, upon request, of treatment guidelines and authorization procedures for specified conditions and treatments. Plans should also be required to periodically publish their formularies and to have and disclose "timely exceptions" for non-formulary drugs.
Led by noted Stanford University economist Alan Enthoven, the task force "coping strategy" for the huge task of deciphering the health care market in California by producing a series of research papers (see box). With 30 members and "a lot to do," the force was broken into 15 subcommittees of two members each to work on the papers. The open meeting laws do not apply to meetings of two people, so those early working meetings were not public. The presentations of research papers to the full task force were public meetings.
Contact Mr. Lee at 916-551-2184, Ms. Finberg at 415-543-3307, Mr. Romero at 916-324-1711, Ms. Snyder at 916-552-2910.
California task-force papers
• Risk avoidance strategies
• Governmental regulation and oversight of managed care
• Dispute resolution
• Consumer involvement, communication and information
• Practice of medicine
• Vulnerable populations
• New quality information development
• Expanding consumer choice
• Provider incentives
• Academic medical centers
• Physician-patient relationship
The web site for the task force is at http//.www.chipp.cahwnet.gov/.
California managed care task force kicks off legislative season with long to-do list
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