The San Diego Union-Tribune

Government regulation of health maintenance organizations has long been criticized for being lax in California, but Daniel Zingale is working to change all that.

Zingale is the director of the state’s Department of Managed Health Care, which today marks its one-year anniversary as the nation’s first agency created specifically to oversee the managed-care industry.

Already, Zingale and his staff of 271 have weathered a rough-and-tumble ride through one of the state’s — and country’s — most heated issues.

“A good solid structure has been built,” Zingale said during a recent interview in his Sacramento office. “I regard this as a work in progress. I don’t have any delusions about this being a perfect organization.”

The department was created as a result of landmark 1999 legislation that rewrote managed-care patient rights in California. Included in the package of 20-plus bills signed by Gov. Gray Davis was one that created the Department of Managed Health Care to replace the Department of Corporations.

The Department of Corporations had regulatory control of health plans until last summer, and it was described as a regulator that had been de-clawed and de-fanged.

Zingale has tried to make sure that doesn’t happen with his department. Thus far, the agency has put out a consumer guide to managed-care and created an HMO Help Center to help patients navigate the state’s health-care system.

The department also took high-profile action against health plans.

In March, for instance, it fined PacifiCare Health Systems $250,000 for not paying doctors and hospitals on time. In late May, it took control of Maxicare of California, citing concerns about the HMO’s finances and preventive health programs.

Such moves drew the praise of Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, a Santa Monica-based consumer group and a critic of HMOs and the Department of Corporations. “We finally have a cop on the beat,” Court says.

Many had complained that the Department of Corporations lacked the will to punish health plans, so expectations ran high that Zingale’s department would take a much harder line with HMOs.

“It was clear that whoever was coming in was being lobbied to be the nasty club-swinger,” says Beau Carter, executive director of Integrated Healthcare Association, an HMO trade association in Walnut Creek.

Others, including Zingale himself, see his role in a different light.

“I’m sure he considers himself a consumer advocate … but he’s also a regulator, a judge, an impartial arbiter,” says Walter Zelman, president of the California Association of Health Plans, a trade group representing 35 health plans in the state. “He’s not Consumers Union. He’s not an activist.”

Zingale was an advocate at one time, serving as director of the AIDS Action Council, a national lobbying group. The Sacramento native also was the governor’s chief of staff when Davis was the state controller.

In his current job, Zingale says his approach has been to preach a message of shared responsibility. He has worked to keep the lines of communication open with health plans, doctors and patient advocates.

Court says, however, that Zingale may be too diplomatic at times. “I think he wants to be a friend to the patient and the HMO, and sometimes those roles are completely incompatible,” Court says.

Consumer groups are especially critical of an opinion recently issued by Zingale. The opinion concluded that his department has no regulatory control over health plans that arrange for discounts for medical care.

Since 1983, the state has ruled that such plans — they do not pay doctors or hospitals and do not bear any financial risk for the care of patients — are a form of health insurance. Zingale disagreed.

Critics of his decision worry that the plans will operate unregulated, or only marginally so, in California.

“Obviously, the old Department of Corporations under the Republican administration felt (it) had the right to legislate these plans, so we were surprised by his decision,” says Earl Lui, senior attorney for Consumers Union West Coast division.

Zingale’s department also is tackling the thorny issue of medical group finances. The state had never regulated medical groups, which in recent years have failed at an alarming rate — prompting the state’s involvement.

Last November, KPC Medical Management, based in Riverside County, had to close its 38 clinics and file Chapter 11 bankruptcy despite a $30 million loan from health plans.

Care for 300,000 patients throughout Southern California was disrupted as a result, and doctors and hospitals were left to eat millions of dollars in unpaid bills.

As the department tried to create solvency standards for physician organizations, medical groups worried that the standards would be set too high, putting many groups in jeopardy.

In fact, the department reported last week that 55 percent of the medical groups that have so far reported their financial records to the state failed at least one of four criteria.

The medical groups also expressed concern that financial information given to the state would be shared with health plans and the public.

“Generally, information that belongs to the public belongs to the public and when you’ve brought into the public realm the issue of financial solvencies of medical groups, there are some disclosure requirements and there will be some disclosure,” Zingale says.

The department, however, has no regulatory power over medical groups and cannot force them to submit information.

As the department moves into its second year, two items stand at the top of Zingale’s list of priorities: improving preventive health care and getting health plans to pay for patient costs associated with clinical trials.

Preventive care is one of the tenets of managed care, but because patients switch health plans frequently — often because their employers switch plans — the plans have lost incentive to create and market preventive-care programs, Lui says.

Zingale says legislating HMOs to do a better job with preventive care might be necessary.

He also wants HMOs to pay the costs to patients who are in clinical trials. “We’re all dependent on the success of those clinical trials,” he says. “Not only the patients who are in them, for whom it’s life or death, but all of us depend on those trials being successful, so I think the HMOs have a responsibility to cover those costs.”