HMO Reform Redux

Legislative Legerdemain: Part 2: HMO Reform Redux

Earlier this evening, the Assembly passed AB922(Monning) in a final floor vote, and this bill, to improve consumer assistance, goes to the Governor for his consideration. The bill, which augments the Office of Patient Advocates (OPA), moves both the OPA and the Department of Managed Health Care (DMHC), to the Health and Human Services Agency.

Here in California, we are proud that in 1999 we enacted HMO reform, passing 21 important measures from the right to a second opinion to independent medical review to creating a new Department of Managed Health Care that put consumers first. We won a lot that year—more than we started with in 1996, and more than we hoped for, but we did not win everything we wanted.

Moving the Department of Managed Health Care (DMHC) from the Business, Transportation and Housing Agency to the Health and Human Services Agency recognizes a longstanding goal of Health Access to treat the Department of Managed Health Care as a regulator of health care first and finances second.

Lodging the Department of Managed Health Care at the Business, Transportation and Housing Agency reflected an era in which HMOs managed dollars, not care. The creation of the Department of Managed Health Care, out of the then-Department of Corporations, through legislation in 1999 began its evolution to a department that put first getting care for consumers, and treated financial solvency as a means to that end, rather than the primary objective of the regulator.

Why was DMHC at Business, Transportation and Housing Agency for the last 35 years? Because HMO regulation was transferred from the Department of Health Services when Knox-Keene was enacted in 1975 because the Department of Health Services had so badly mismanaged the regulation of Medi-Cal managed care plans that some plans were taking the capitation payments and sending them to the Bahamas, the Cayman Islands or similar places and not bothering to contract with doctors and hospitals. This is financial solvency and network adequacy are so intrinsic to Knox-Keene: it was the inter-related absence of both that led to the enactment of the law. But why not the Department of Insurance? Because back in 1975, insurers regarded HMOs and capitated payments with undisguised horror as anathema to the very nature of insurance which paid claims in accordance with the insurance contract. The notion of providing comprehensive benefits as required under Knox-Keene is at odds with the insurance mentality that you can insure a wedding ring, a painting, a singer’s voice, or any other separable item; This philosophy still underpins the Insurance Code which allows limited-benefit health insurance policies such as hospital only, no maternity or cancer only coverage.

AB922 will accomplish two more pieces of HMO reform that we fought for but did not win in 1999: a real Office of Patient Advocate that will serve as an ombudsman for consumers and moving the Department of Managed Health Care from the Business, Transportation and Housing Agency to the Health and Human Services Agency.

AB922 revises and expands the responsibilities of the Office of Patient Advocate to make that office a state-level ombudsman who serves as a first line of triage for consumer complaints while leaving with the respective regulators and sources of coverage the responsibility for resolving the complaints and grievances within their jurisdiction. AB922 also connects state government with the federal government agencies responsible for resolving complaints, such as the Department of Labor for ERISA plans and Medicare for Medicare coverage.

So even if people don’t know what kind of coverage they have–if it is “individual market” or “small group market,” if it is regulated by the Health and Safety or the Insurance Code, if it is private or public, if the issue is regulated by the federal or state government–consumers will have a place to call and be directed to the help they need. This is a step forward for patient rights. With the upcoming federal health reform, with millions of Californians with new coverage, and millions more with new rights and protections, this is not just an improvement, but an imperative.

Health Access California promotes quality, affordable health care for all Californians.
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