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New York Times
Sep 28, 1999
by James Sterngold
Trailblazing California Broadens the Rights of its H.M.O. PatientsGov. Gray Davis signed a package of bills today that will give patients a variety of new rights in their relationship with health maintenance organizations in California and could well influence managed health care coverage across the country.
Most important, the broad set of bills, hammered out between advocates on both sides over several months, gives patients the right to sue their health insurers for punitive damages and solicit outside reviews of decisions denying them coverage.
The legislation also requires managed care providers to pay for second opinions on some treatments, cover the testing and treatment of breast cancer, pay for contraceptives and expand coverage for serious mental illnesses.
The measure will create a new state Department of Managed Care to regulate the huge industry, which covers about 23 million Californians.
The provision that gives patients the right to seek punitive damages when they have suffered substantial harm was the most contentious. It provides a way around a 25-year-old Federal law that prohibits many such suits, and it has been championed by consumer groups for years.
A battle at least as contentious over the issue is under way in Congress as part of the debate on a patients' bill of rights. Health care insurers have long criticized this provision, saying its potential costs outweigh the benefits.
While there is no guarantee that the changes in California will play out around the country or be a decisive factor in the Congressional debate, California has long been a leader in developing managed care and regulating the industry. In addition, many of the country's largest insurers are based here.
As a result, many other states look to California for guidance on regulatory issues, and it was clear that today's signing was being watched closely. Texas allows patients to seek damages, while Georgia and Louisiana have procedures allowing patients to appeal care that was denied or insufficient.
Both consumer advocates and H.M.O. industry leaders ultimately found something to praise in California's package of 21 bills, the product of a series of compromises that have created what many characterized as landmark legislation in the struggle on the slippery financial and ethical terrain of managed care to make it both profitable to the insurers and responsive to patients' needs.
At one time, Mr. Davis, a centrist Democrat, was perceived by consumer advocates as resistant to giving patients such broad rights to seek damages, but he hailed today's measure as a solid middle ground.
"None too infrequently, Californians fighting for their lives are forced at the same time to fight H.M.O.'s," Mr. Davis said at the signing, held at the Family Medical Center in North Hollywood. "It's time to make the health of the patient the bottom line with California H.M.O.'s."
He added, "I want to make sure managed care is more about quality care than it is about managed cost, and that's what these reforms will do."
Walter Zelman, president of the California Association of Health Plans, a trade group that represents most of the H.M.O.'s in the state, said, "This is going to be a shot in the arm for those advocating reform bills in Congress and in other states." Mr. Zelman said that he felt the cost of lawsuits would drive up premiums for consumers, but that, all in all, "from where we started, this was a good package of bills."
He said the industry particularly supported the bill providing for outside reviews of decisions by H.M.O.'s denying coverage to patients.
Jamie Court, the advocacy director of the Foundation for Taxpayer and Consumer Rights, which sponsored the bill creating the right to punitive damages, said that the threat of lawsuits would help patients, even if they never had to go to court, by pressuring the companies to put medical concerns first.
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