Head of nation's only HMO watchdog looks for a change of scenery after seven years of spearheading regulatory action
Seven years at the helm of the only HMO watchdog agency in the nation was enough for Cindy Ehnes. Monday was her last day.
Chief deputy director Edward Heidig – No. 2 at the California Department of Managed Health Care for the last four years – became interim director Tuesday. No permanent replacement appears likely while Gov. Jerry Brown wrestles with the $26.6 billion budget deficit.
Ehnes took regulatory action on multibillion-dollar mergers of health maintenance organizations, pay fights with providers, coverage cancellations and the implosion of Kaiser Permanente's troubled kidney transplant program.
Hired with government experience and a consumer tilt, Ehnes also tackled issues of timely access to care, fraudulent discount health plans and enforcement of mental-health parity laws.
Appraisals of her record are as mixed as the regulatory action she took.
"She had a very active agenda and was very accessible to consumer groups," said Anthony Wright, executive director of Health Access, a San Francisco-based consumer group. "She took on a lot of different regulatory battles and implemented landmark legislation making California first in the nation to require language (services) and timely access to care."
"She started out with a good attitude – but then something happened," countered Jamie Court, president of Consumer Watchdog. "She was unable to keep a consumer focus or someone else was pulling the strings."
Health-care organizations generally offer praise.
"It's a hard job and she's done it fairly," said Patrick Johnston, president and chief executive officer of the California Association of Health Plans. "She's listened to all sides and balanced the needs of plans, providers and consumer protections under the law."
And Jerry Fleming, a senior vice president at Kaiser Permanente, said the health plan particularly appreciates her emphasis on "making health plan performance visible for Californians."
Ehnes, 60, says her "to do" list is done, and it's time for someone else to make a new one for what's coming under federal health care reform.
"I am absolutely not retiring," she said. "I don't know where I'm going – I don't have a job or a job lined up – but I'm looking at opportunities in health care."
When Ehnes became director in March 2004, the Department of Managed Health Care had a staff of 275 and annual budget of $35.8 million. Now it has 285 employees and an annual budget of $52.7 million.
DMHC opened its doors in 2000 as the only agency in the nation to regulate HMOs. It was created as part of a sweeping package of HMO reforms approved by California lawmakers to regulate managed-care plans. Daniel Zingale, an AIDS activist and the agency's first director, took a cabinet post with former Gov. Gray Davis in 2003.
Ehnes went into the job as a consumer advocate worried about continuity of care. A lawyer, Ehnes became interested in health insurance after difficulty getting coverage for a daughter with severe asthma.
The first item on her "to do" list was to take the department from "what I call a passionate adolescent to a mature organization." The process for insurers to get new types of health plans was an initial priority.
"When I came, I teased them: I'll take a year to tell you 'No' " Ehnes said.
This was important because by 2004, inexpensive preferred provider organizations were beginning to grab HMO market share. High-deductible PPO plans that didn't get quick results at DMHC began to go for approval at the California Department of Insurance instead, which regulates non-HMO plans.
"HMOs offer a comprehensive product with reasonable cost sharing, and we did a ton of stuff to get staff to understand the implications of the erosion," Ehnes said.
A checklist of requirements so health plans knew ahead of time what was expected helped shave the wait to license new products to 27 days from 137. Electronic filing helped, too.
The agency became more responsive to consumers.
DMHC has ordered 18 discount health care companies to cease operations or become licensed since a crackdown started in 2004.
Complaints about HMO coverage denials have remained essentially flat, but urgent complaints plummeted to 131 last year from 871 in 2004.
Quick resolutions increased almost five-fold, to 1,065 from 225, over the same period.
And complaints that went to independent medical review – a process in which a third party makes a decision – more than doubled to 1,776 in 2010 from 839 in 2004. Not without controversy, however.
Consumer Watchdog sued DMHC in 2009 over the way it counseled plans to approach approval of expensive treatment for autistic children. A Los Angeles court in December ruled that a department memo constituted an underground regulation.
"It was clear case of direction by plans that hurt consumers," Court said.
Some of the gritty business of regulating HMOs led to high-profile enforcement actions and fines.
Both departments that regulate health insurance – DMHC and the Department of Insurance – weighed in when it came to approvals for Anthem Inc.'s $16 billion acquisition of WellPoint Health Networks Inc. in 2004 – and again on United HealthGroup Inc.'s $8.1 billion purchase of PacifiCare Health Systems Inc. in
2005.
Regulators got the plans to contribute millions to community-benefit programs for California consumers. Although former insurance commissioner John Garamendi was louder in his call for cash for community benefits, Ehnes says she pursued grants to purchase bonds that would finance clinics and other safety-net
programs around the state on an ongoing basis.
In 2006, DMHC stepped in to move 2,313 Kaiser patients waiting kidney transplants in the HMO's troubled San Francisco program to other providers. Kaiser was fined $5 million for failing to oversee the program and arrange for timely access to care.
DMHC action in 2008 and 2009 made California the first state to halt "recissions," a practice of canceling coverage after care was provided due to alleged errors or omissions in coverage applications.
The department's leadership on the issue led to its inclusion in national health care reform. DMHC investigated the five largest HMOs in the state and levied fines totaling almost $14 million.
Critics say Ehnes' fines on this issue and others came too late and were too low.
Overall, the department levied $35.3 million in fines during her tenure.
"No fine will be large enough to affect a company's behavior unless it is accompanied by strong corrective action," Ehnes said. "We might be criticized for not getting as high a fine, but we were very focused on the follow-up with strong corrective action."
In 2008, DMHC approved regulations to protect consumers from balanced billing by doctors for emergency services when health plans don't pay the tab in full.
"We stopped it – and won a court ruling – but have been unable to get resolution on what amount emergency physicians should be paid," Ehnes said.
