Christian Science Monitor
In an ambitious health-care reform package expected to spur similar changes nationwide, California will soon offer medical consumers a wide range of new benefits – including access to second medical opinions and the right to sue health-maintenance organizations for punitive damages.
Some states have already passed individual measures within the package, but the breadth of the California reforms is unprecedented. Indeed, as the birthplace of managed care and the state with the greatest patient load, California is expected to influence what other states and perhaps Congress does from here.
The Golden State’s legislation tilts the balance of power more toward consumers than what Congress has done so far. Thus the states – led by California in this case – appear poised to set the health-care agenda, as they have with other issues in the 1990s, such as welfare and education reform.
“Everyone has known that California will be the bellwether,” says Karen Ignagni, chief executive officer of the American Association of Health Plans in Washington. “The compromises will offer real promise as a model for the rest of the nation.”
One reason for this, Ms. Ignagni says, is that the reform represents a significant compromise by both reform advocates and the managed-care industry. But the new laws are still raising concerns that key provisions will raise health-care costs, crunching small employers and physician groups, which are already in precarious financial shape.
For their part, reform advocates are touting the new California measures as the first shot in a national revolution. They only await Gov. Gray Davis‘s signature, which could come as early as next week.
“In the state that invented managed care and where most of the big HMOs [health maintenance organizations] are headquartered, we have now pioneered massive reform as well,” says Jamie Court, director of the Foundation for Taxpayer and Consumer Rights. “[These reforms] will spread to every state in the nation.”
The laws will touch almost every area of patient care in California, where almost 90 percent of patients use managed care.
For example, under current California law, consumers who disagree or question a doctor’s diagnosis may submit a grievance, and wait 60 days for a department review. The new plan says reviews can be conducted by an independent medical panel in cases where a desired treatment has been “denied, modified, or delayed.” The appeal can be for small or large concerns and will cost nothing.
Another provision specifies how, why, and when a patient can request a second medical opinion. In cases of “serious threat,” the plan calls for a second opinion within 72 hours.
“These provisions are a major step forward for protection in health care and in solving what had been some of the biggest complaints against HMOs,” says Diana Bianco, attorney for Consumers Union, the publisher of Consumer Reports. “Patients will be able to get an independent look at whether their health-care provider has made the right decision.”
But there are several concerns voiced by those in health care. The provision that has caused the most concern regards the patient’s right to sue HMOs when they are denied necessary care. This issue, in fact, has been one of the biggest points of contention in Congress’s efforts to reform health care.
The US Senate recently passed reforms that didn’t include the right to sue, but the House is planning to take up the issue within the next two weeks. The prospects for including a right-to-sue provision are consider much more favorable in the House.
Still, some Republicans are concerned about the potential costs of allowing the right to sue. It’s something Californians are already dealing with. Here, no cap on monetary liability has yet been established.
“We simply would like to see some limit on the amount you can sue an HMO for,” says Walter Zelman, president of the California Association of Health Plans, which represents the state’s HMOs. “We just feel the public isn’t well served by an organization that can be sued for $ 30 million or more by one individual for one small mistake.”
Mr. Zelman and others worry that such liability will drive health-care costs up.
Along with other provisions, the reforms could force health-insurance premiums up by 4 to 5 percent, they say. “That’s a substantial increase for someone not earning a great deal of money and struggling to buy insurance to begin with,” says Zelman.
Others counter that there is no evidence that expensive or frivolous lawsuits would be a problem under the reformed system. No such problems have occurred in other states that have held HMOs liable, such as Texas, they say. And in California, where state employees have long had the right to sue, no serious consequences have resulted.
The Money Question
Another key concern for many here is that the package sets up minimum financial standards for HMOs. The eight-member Financial Solvency Standards Board will only approve HMOs that have the minimum amount of money, and it will monitor them.
But the opponents say the bill does not address the causes of financial stress. Those include costs incurred by buying drugs in a wildly fluctuating market, and also the lack of standardized capitation rates. A capitation rate is the amount of money that HMOs pay to physicians per patient per month. Oftentimes, critics say, certain patients need more care, which costs more money.
“There is currently no relationship between the capitation payments that physicians are receiving and the cost of the care they are asked to give,” says Scott Syphax of the California Medical Association. “This package creates a greater number of requirements for us to comply with and no more dollars to do it with. Until the government addresses the inadequacy of physician reimbursement, we will continue to see more and more medical groups go out of business.”