Closer Look at Complaints on HMOs Urged
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Read Making a Killing

home / healthcare / in the media

Los Angeles Times
Feb 15, 2002

by Charles Ornstein, Times Staff Writer

Closer Look at Complaints on HMOs Urged

Regulation: State wants to review arbitration cases involving patients, while industry representatives say it would be an undue invasion of privacy.
California HMO regulators are seeking to expand their review of arbitration cases involving patients, citing concerns about the fairness of the process.

The Department of Managed Health Care is proposing regulations requiring HMOs to submit additional data so it can investigate patients' complaints and look for patterns of abuse. Agency Director Daniel Zingale said the secrecy of the current arbitration process keeps even the regulators in the dark.

"There's very serious reason to believe that the current system gives HMOs an advantage over patients, and we need a closer look at that," he said. "We want to create a more equal playing field for patients."

The department is reviewing public comments to the proposed regulations and will submit them for final approval to the state Office of Administrative Law. As proposed, the rules would:

* Require HMOs to submit complete copies of all arbitration decisions within 30 days of receiving them. Under current guidelines, health plans need only provide the state with altered copies of arbitration decisions that do not include the HMO's name, the patient's name, the doctor's name or any other identifying information.

* Force all HMO arbitration settlements to include a clause allowing patients to discuss their cases with regulators. In the past, Zingale said, some patients have declined to answer regulators' questions about their cases because they were afraid of violating confidentiality agreements.

HMOs say the proposed regulations would violate the privacy of patients and constitute an additional--and unnecessary--regulatory burden. They also say the state is exceeding its regulatory authority.

The vast majority of HMOs in California require consumers to submit their grievances to arbitration rather than filing lawsuits. Health plans say the out-of-court process is speedier, less contentious and not subject to the variability of juries.

Zingale said the arbitration process may be stacked against patients because health plans select the firms that administer it.

"We're concerned that there may be an incentive for the contracted decision-makers to lean in favor of the HMOs because those are the repeat customers," he said. But the state's largest HMO, Kaiser Permanente, says it repeatedly uses arbitrators who have sided with patients.

The HMO industry trade group said Zingale's proposal is unnecessary because arbitration cases are few and far between. "If the department is looking for information on how the arbitration process is working, what they're going to find is that there's not a lot of data," said Walter Zelman, president of the California Assn. of Health Plans.

Zelman said most complaints are settled well before they reach arbitration, either through an internal grievance process within an HMO or through an independent medical review overseen by the state.

Data released by the state show that most health plans received few if any arbitration requests from January to October 2000. Blue Cross of California received 135 requests, of which 127 were withdrawn by patients or their lawyers before a hearing.

Kaiser receives hundreds of arbitration requests each year because it owns its hospitals and has an exclusive relationship with a physician group. The HMO, which pays the legal costs for its doctors and hospitals, is typically named as a defendant in medical malpractice claims.

HMOs say Zingale's proposed regulations are overly intrusive. "This constitutes an unwarranted invasion of privacy, breach of confidentiality and is burdensome and oppressive on the plans," Long Beach-based SCAN Health Plan wrote in comments submitted to the state.

But some consumer advocates praised Zingale's decision to collect more information on the arbitration process. Although the number of arbitrations is small, they say, the cases represent real patients with real problems.

"What the department has finally realized is that arbitration is an iron curtain that the public can't see through and it only has limited ability to see beyond," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights.

Court's group supports a bill, approved by the state Senate last year, that would allow HMO members to bypass the arbitration system in some cases and file lawsuits in court.

Current state law allows HMOs to require that consumers handle virtually all grievances in a private arbitration system as a condition of membership.

The bill, sponsored by Sen. Martha Escutia (D-Whittier), is pending in the Assembly. Zingale said his office has not taken a position on the legislation.



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