HMO Patients Deserve Broader Rights on Care

Managed care, pioneered in California more than a decade ago, is enjoying a huge growth spurt in the state, with 2 million members added to health maintenance organizations in the last two years alone. That pace is expected to pick up as the Wilson administration moves 1.5 million low-income Medi-Cal recipients into HMOs.

But as managed care becomes the California standard, complaints about denial of certain treatments have inundated state legislators. The lawmakers have responded with a flurry of bills attempting to ensure that HMOs balance profit with consumers’ need for quality health care. Many of these bills unwisely attempt to legislate the practice of medicine, but three of them have broader aims that would help achieve a better balance of power between patients and HMOs.

* When consumers sign up for an HMO, they receive reams of glowing description and plenty of fine print. But nowhere are they likely to find out what’s covered or not covered, and why. Later, if a medical procedure is denied, the HMO need not provide a timely rationale for the denial. There are many documented cases in which HMOs have approved treatment selectively--for instance, saying yes to expensive bone marrow treatments for an HMO employee while denying such care to an ordinary policyholder. AB 536, by Assemblyman Martin Gallegos (D-Baldwin Park), would require HMOs and insurers to disclose their rationales for rejections to patients within five days and to make public their coverage criteria and procedures for approving or denying care. This would go far in ensuring fair treatment of policyholders.

* The medical director of a California HMO is ultimately responsible for deciding what care is provided. But current law does not require these directors to be California-licensed physicians, so they are all but beyond the reach of the state medical board. SB 324, by Sen. Herschel Rosenthal (D-Los Angeles), would require physicians making decisions about the necessity of care to be licensed in the state, closing an important loophole.

* AB 794, by Assemblywoman Liz Figueroa (D-Fremont), includes provisions similar to the above and adds the requirement for a second physical exam if an HMO denies care that the primary care physician has recommended. Legislators say this potentially expensive requirement would be likely to lead to a veto by Gov. Pete Wilson.

At least the Gallegos and Rosenthal bills should land on the governor’s desk. Both enjoy the support of numerous consumer groups and the California Medical Assn.

Last month, consumer complaints about HMOs led Texas Gov. George W. Bush to agree not to veto a law, the first of its kind, allowing patients to sue HMOs directly for medical malpractice if decisions to deny or delay treatment cause injury. The law is expected to significantly drive up HMO operating costs.

Given the growing demand for basic health care rights, California state lawmakers and Gov. Wilson should respond now with the more moderate patient rights guarantees under consideration in Sacramento. Otherwise they could face demands for a Texas-type law that would undermine HMO cost-efficiency.