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Read Making a Killing

home / healthcare / in the media

Los Angeles Times
Sep 10, 1999

by Carl Ingram and Dan Morain

Ambitious Plan to Reform HMOs Nears Completion

Legislature: Measures Would Ease Access to Second Opinions and Grant New Power to Appeal Decisions, As Well As Mandate Coverage for Severe Mental Illnesses.
SACRAMENTO, CA -- In a day of frantic lawmaking that could dramatically affect the health care of virtually every Californian, legislators Thursday completed most of an ambitious state plan to reform managed care.

Under changes approved by the Senate, consumers would have easier access to second medical opinions, new power to appeal medical disputes, and coverage for treatment of severe mental illnesses.

The bills--the bulk of a package negotiated with Gov. Gray Davis, managed care executives, patient advocates and health care providers--returned to the Assembly for a final nod before the Legislature adjourns for the year today.

Coupled with legislation passed Wednesday that would let patients sue their managed care providers for damages, the new proposals bring lawmakers closer to their goal of curing the state's ailing health maintenance organization system. The HMO liability bill was sent Thursday to Davis, who has indicated that he will sign it.

"If you take the package together, it's one of the most ambitious HMO reforms in the nation. Texas is the only state that rivals it," said Jamie Court, of the Foundation for Taxpayer and Consumer Rights.

On Thursday, the Senate approved:

* A bill, sponsored by the consumer group Health Access of California, requiring health care plans to pay for a second doctor's opinion if a patient or primary physician requests one. The legislation was approved 25 to 11 as part of a patients "bill of rights."

* A bill creating an independent system to review--and potentially reverse--health plan decisions that blocked or delayed a patient's care.

* A measure requiring that employers who offer health care plans include coverage for medication, therapy, hospital stays and other necessary treatment for severe mental illness such as schizophrenia--just as they do for heart disease, diabetes and other physical ailments.

Because most of the legislation involved significant compromises to match the middle-of-the-road HMO reform course set by Davis, no interest emerged as a clear winner. Reform advocates failed to win the broad rights they sought to sue health plans. The managed care industry was forced to accept, amid cries that it would dramatically increase consumer and employer costs, the right of patients to sue for punitive damages.

Big Worries About Mental Health Care

Walter Zelman, president of the California Assn. of Health Plans, said the mental health mandate is the portion of the reforms that worries the industry the most.

Many large employers already offer mental health coverage, Zelman said, but premiums for small employers and individuals who buy scaled-down health packages could increase substantially.

"We're torn because we don't deny there's value there," said Zelman, whose HMOs cover 20 million Californians.

Davis has not said whether he will sign the bill, which would take effect in July.

The proposal lists nine mental illnesses to be covered: schizophrenia, major depression, bipolar disorder, panic disorder, schizoaffective disorder, obsessive compulsive disorder, pervasive developmental disorder or autism, anorexia and bulimia. Scientists have little doubt that severe mental illnesses are brain diseases and can be treated medically.

The legislation would also require that health insurance companies offer broad mental health care for children.

"Finally, with this bill we take a step toward solving the problem of discrimination against people with mental illness," said Carla Jacobs, a Long Beach-based board member of the National Alliance for the Mentally Ill. "This will help prevent families from mortgaging their homes and going into bankruptcy to care for their loved ones."

The Senate approved the bill (AB 88) by Assemblywoman Helen Thomson (D-Davis) on a 30-6 vote.

Last year, then-Gov. Pete Wilson vetoed similar legislation, saying it would increase costs to employers and cause many small employers to drop health care coverage.

The second-opinion bill (AB 12, by Democratic Assemblywoman Susan A. Davis of San Diego) would remove some restrictions that reform advocates say endanger the quality of care. Under the measure, a patient or treating physician could request a second opinion from another qualified doctor in the same medical group. If none was available, a doctor outside the network could be called in and the patient's plan would pay a negotiated fee, said Sen. Jackie Speier (D-Fremont).

In cases of an "imminent or serious" threat to the patient's health or life, the plan would have to approve the request for a second opinion within 72 hours.

Californians "really want to see this happen," Speier said, adding that she believes Davis will sign the bill.

The proposal drew criticism from Sen. Richard Mountjoy (R-Arcadia). He said it represents a calculated attempt by Democrats to drive the costs of health care so high that HMOs and insurers would be forced out of business. Then, he said, government would take over.

"That's the goal of all these mandates," he told Speier.

Speier shot back that Mountjoy didn't understand the issue of second opinions, which she insisted would not increase costs.

Taking personal aim at Mountjoy, a grandfather of six, Speier suggested that if his doctor recommended a vasectomy for him, Mountjoy might "decide that you want to get a second opinion. This bill would provide you the opportunity."

Davis is expected to sign the independent review bill (AB 55) by Assemblywoman Carole Migden (D-San Francisco).

"It's our bill. The governor's been fighting for it. He'll sign it," said press secretary Michael Bustamante.

The plan drew praise from virtually all sides, including Zelman, who called it more far-ranging than HMOs would have preferred. Nonetheless, he called it the "single most important thing the Legislature will do in health care this year."

The bill passed the Senate on a bipartisan 29-2 vote.

As one of the major pillars of health care reform in this session, it would establish a middle ground between patients who believe they have been dealt with shabbily by their cost-cutting health plans, and providers who insist they are delivering high quality care at a reasonable price.

Independent Medical Review System

Effective Jan. 1, 2001, the bill would create an independent medical review system to examine decisions by health plans to delay or deny patient treatments based on a lack of "medical necessity."

Supporters of the bill said the process would short-circuit the need for patients to seek relief in the courts. However, the bill is silent on whether evidence gathered in the review process could be admitted in court. Backers of the measure said such a decision would be left to judges.

Some health plans, including Aetna US Healthcare, voluntarily use a form of external review as a way to settle grievances. But patient rights advocates have claimed that existing systems tend to contract with doctors who are friendly to the managed care industry or have an economic interest in it. The Migden bill would require reviewing doctors to demonstrate that they have no financial conflicts of interest.

Also Thursday, the Senate approved a bill that would empower Atty. Gen. Bill Lockyer to intervene in mergers of nonprofit HMOs to investigate whether the proposed transaction would reduce competition. The bill (AB 351) by Assemblyman Darrell Steinberg (D-Sacramento) was approved 21 to 14 and sent back to the Assembly for approval of Senate changes.

Times staff writer Amy Pyle contributed to this report.



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