Official Sees Peril to HMO Reforms

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Chief of state agency says House bill would create an appeals fee and cap potential damages.

Los Angeles Times

California’s HMO czar warned Sunday that patient-protection legislation passed by the U.S. House last week would undermine the state’s reforms that took effect in January.

Daniel Zingale, director of the Department of Managed Health Care, said two key consumer rights will be imperiled if the House bill becomes law: Most patients will no longer be able to appeal an HMO treatment decision to independent medical experts without paying a fee and filing a written application. In addition, patients will face new damage limits if they sue their health maintenance organizations for denying or delaying treatments.

“Californians now finally have a place they can turn to when they hit a wall with their HMO and they think economic interests are getting in the way of patient care, which so often happens with enrollees and HMOs,” Zingale told reporters in a conference call. “The House bill appears to pull the plug on that.”

Supporters of the House bill, including President Bush and Republican leaders, say their legislation protects 190 million Americans with private health insurance. At the same time, the bill seeks to prevent frivolous lawsuits by limiting damages that can be awarded in court. Sponsors seek to create a uniform standard so insurers wouldn’t be bound by different regulations in each state.

Zingale prefers the bill passed by the Democratic-controlled Senate, which he says would not supersede the state’s managed-care laws.

The House bill would require non-indigent consumers to pay a fee of as much as $25 to have their appeal considered by independent medical experts. California charges consumers nothing, forcing health plans to pay the full cost, from $395 to $2,500 per review.

The House bill also would allow health plans to select reviewers to evaluate appeals, so long as they don’t have an economic link to the company. In California, the HMO department chooses the medical experts. Finally, the House bill would require consumers to submit their requests in writing if the HMO wants. California allows patients to submit oral requests, which are processed by the state’s 100-person HMO Help Center.

Though the Senate bill has similar provisions, it allows states to keep their rules in place if officials certify that they meet or exceed federal law.

In the area of lawsuits, the House bill would place a $1.5-million limit on damages for pain and suffering, as well as a separate $1.5-million cap on punitive damages intended to punish the company for wrongdoing.

The Senate defers to state law in disputes over whether a treatment is medically necessary. California law has no limits on what patients can collect in state court.

Consumer advocate Jamie Court said both bills in Congress would extend protections to more than 5 million California residents not covered by state regulations because their employers pay their medical claims internally rather than through an insurer.

But the House bill would take rights away from about 20 million Californians, Court said.

“The public will not accept a patients’ bill of rights that diminishes current rights, and in the long run, it’s not a political move that Bush can get away with,” said Court, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

The California HMO trade group has largely stayed out of the debate in Washington, but officials say they would not support efforts to weaken the state’s independent appeals process.

“It would be unusual to see the federal government preempt state law in this area and not allow states to enact stronger measures,” said Walter Zelman, president of the California Assn. of Health Plans. “We’ve accepted the California law here and did from the beginning.”

Since January, fewer than 300 patients have used the state’s independent review process and no one has filed suit. Many insurers have changed their behavior to avoid being sued, Zingale said.

“In the real world, in the day-to-day dealings of members and their health plans, the issues get resolved through the existing system,” said Michael Chee, spokesman for Blue Cross of California. “That’s what counts.”

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