Consumer Advocacy Groups Concerned About Status of HMO Regulations
Consumer advocacy groups on Thursday expressed concern that an executive order by Gov. Arnold Schwarzenegger (R) might rescind regulations that provided "significant protections" to HMO patients, the Los Angeles Times reports (Girion/Lifsher, Los Angeles Times, 1/30). In November, Schwarzenegger issued an executive order that suspended all proposed state regulations for as long as 180 days and called for a 90-day review of current regulations imposed under former Gov. Gray Davis (D) (California Healthline, 11/18/03). The purpose of the order was to review all proposed regulations and to identify and potentially modify "underground" regulations, agency rules, polices or procedures not written into law depending upon how such regulations "work within the state's current economic climate," the San Diego Union-Tribune reports (Berestein, San Diego Union-Tribune, 1/30). According to the Times, agencies "often create rules outside of the formal regulatory process in response to compliance questions and to clear up confusion" about some laws' provisions. G. Lewis Chartrand, assistant deputy director of legal services at the Department of Managed Health Care, wrote in a memo that the department had identified 12 rules that affect HMOs and their patients that potentially could be considered "underground" regulations. The regulations will be submitted to the governor's office for review, during which time they may be used "on an opinion-only basis which will not carry the force of law," according to the executive order.
"It's really unconscionable that Schwarzenegger would come along and remove the legal authority to enforce these strong consumer laws by just the stroke of a pen," Jerry Flanagan, a spokesperson for the Santa Monica-based Foundation for Taxpayer and Consumer Rights, said, adding, "They've been revoked without review" (Los Angeles Times, 1/30). Daniel Zingale, former head of DMHC, said that he had not read the memo, but added, "The freezing of HMO regulations is troubling to HMO consumers" (San Diego Union-Tribune, 1/30). Zingale said, "The industry has thrived even under the toughest patient protections in the country. I can't imagine what the justification would be for stalling or reversing patient rights in California." Sen. Sheila Kuehl (D-Santa Monica) said she was worried that Schwarzenegger's "blanket order" for review could be used as an excuse to ensure that rules "do not go beyond the minimum" (Los Angeles Times, 1/30).
Debra Cornez, senior counsel for the Office of Administrative Law, which will review the regulations, said that "it's not fair to say that because something is listed in these reports that it doesn't have the force of law," adding, "Just because an agency has identified it in these reports doesn't mean it is an underground regulation" (San Diego Union-Tribune, 1/30). Chartrand said, "Any time a consumer calls up and says we've got a problem, we're resolving them on a case-by-case basis." Steven Tough, president of the California Association of Health Plans, said that the rules under review would "better serve patients and HMOs if they were fully vetted," the Times reports. He added that HMOs support most of the rules but have problems with details of some rules that they say are "overly burdensome or make no sense," according to the Times (Los Angeles Times, 1/30). Rules determined to be underground regulations would have to go through a formal process to become legally enforceable unless they are determined to be exempt, the Union-Tribune reports. According to the Union-Tribune, that process, which would include a public comment period, could take three months to one year. Cornez said that the Office of Administrative Law has not been given a timeline for issuing its legal opinion about the regulations under review (San Diego Union-Tribune, 1/30).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.