With California Task Force Report Done, Reform Focus Moves Back to Legislature

Last year, California Gov. Pete Wilson vetoed several managed care reform bills, saying he was waiting for a report from the Managed Health Care Improvement Task Force that he and the state legislature appointed.

Now that the report and its 100 recommendations are in, the focus of reform moves back to the legislature.

“Some will criticize the task force for being modest,” Philip J. Romero, the panel’s executive director, wrote in summary. “Others will say it was too radical. It produced a package of centrist, incremental proposals that emerged as thoughtful compromises between highly opposed interests.”

Romero, who is the Republican governor’s chief economist, was right about reaction. Consumer groups say the proposals offer inadequate protection to patients, while managed care trade groups blast them for not considering costs and for seeking to micromanage plans.

Calling the task force’s proposals “industry-friendly, weak and rather soft,” Assembly Health Committee Chairman Martin Gallegos, a Democrat and a task force member, said he will propose a managed care reform in the form of a constitutional amendment he hopes to place on November’s statewide ballot. To reach the ballot, the bill must be approved by two thirds of each house of the legislature, but it does not need approval by the governor.

The task force proposals, if adopted, would:

  • Create an agency to regulate HMOs, taking that responsibility out of the hands of the Department of Corporations–which primarily regulates securities–and phase in regulation of risk-bearing physician groups, preferred-provider organizations and individual clinicians. The new entity would regulate quality of care and establish clinical best practices standards.
  • Encourage creation of purchasing groups, starting with state employees and business coalitions.
  • Introduce risk adjustment, so that physicians who treat sicker patients would be paid more, and plans would not have financial motivation to avoid those patients.
  • Standardize health insurance contracts by developing five model documents, to which plans would have to compare their own offerings.
  • Streamline complaint-resolution for patients by creating an independent review panel to resolve patient complaints about denial of treatments by HMOs. This proposal enjoys broad legislative support and might be one of the first of the recommendations to become law.
  • Require plans to disclose financial incentives for physicians and other providers.
  • Bar the practice of giving individual practitioners financial responsibility for a substantial portion of the cost of referrals.
  • Allow a woman to choose an Ob/Gyn as her primary care physician.

The task force did not address the issue of whether patients should have the right to sue health plans for malpractice when they are wrongly denied coverage.

The state’s largest HMO, Kaiser Permanente, says it will enact nearly all of the panel’s recommendations regarding dispute resolution. Last summer the state Supreme Court criticized Kaiser, saying the plan had manipulated its self-administered arbitration system against patients. Kaiser plans outside of California will not be affected by the change.

The report can be found at http://www.chipp.cahwnet.gov/mctf/front.htm on the Internet.

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