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Read Making a Killing

home / healthcare / in the media

Sacramento Bee
Jan 12, 2001

by Aurelio Rojas

HMOs underreport disputed cases

Although the majority of California's largest HMOs require patients to submit disputes to an arbitrator, many are not reporting the cases as required by law to the state, a study released Thursday concluded.

The report by the California Research Bureau, an arm of the State Library that conducts studies for lawmakers, found the typical arbitration case costs $4,500 -- with most health maintenance organizations requiring patients to split the tab.

The report -- the findings of which were challenged by the California Association of Health Plans -- also suggests the dispute system may be tilted against the nearly 24 million Californians who receive their medical care through managed health care plans.

That's because health plans are likely to have repeated experiences before individual arbitrators, while many patients are not represented by attorneys, according to the report.

"Patients may not be as well-informed about arbitrator behavior, especially if they are proceeding without the aid of a lawyer," the report found.

The study was requested by then-Assemblywoman Sheila Kuehl, whose bill to prevent HMOs from forcing patients into arbitration died in the Legislature last session after HMOs and Gov. Gray Davis opposed the measure, AB 1751.

Kuehl, D-Santa Monica, who has since been elected to the state Senate, said in a cover letter to the report that it offers valuable evidence to policy-makers.

"The report contains important new facts and objective information, rather than the spirited rhetoric and anecdotes that has characterized our debate," Kuehl said.

But Bobby Pena, vice president of the 36-member California Association of Health Plans, disputed the report's accuracy.

"Unfortunately, it's somewhere between inaccurate and misleading," he said, asserting the study was based on false assumptions.

Authors Marcus Nieto and Margaret Hosel estimated that about 300 medical cases are decided in California year, but only 171 were reported to the Department of Managed Health Care from March 1999 to April 2000.

"Since 30 (of California's main 50 health plans) require binding arbitration, it seems likely that many health plans are not complying with the statutory reporting requirement," the report said.

Health care plans are required by state law to report arbitration cases to the Department of Managed Health Care.

But Pena disputed the authors' estimate of 300 annual cases, and said most cases are resolved through the HMOs' grievance process with their patients.

"(The authors) started with an assumption, and when they weren't met they assumed something was wrong," Pena said.

Pena said the report also assumed that patients and HMOs split arbitration costs. But he said that in many cases HMOs pick up the entire cost to streamline the proceedings.

"While we don't dispute the costs of arbitration cases, the alternative -- taking the case to trial -- is far more expensive," he said.

Nonetheless, the Foundation For Taxpayers and Consumer Rights, which sponsored Kuehl's bill, predicted the study will be a valuable document in the debate about HMO arbitration.

"This report should convince the Legislature that patients should not have to waive their rights to simply join an HMO," said Jamie Court, the group's executive director.

Pena dismissed the groups's criticism: "They're backed by the trial lawyers who don't like the arbitration system."


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