DMHC May Need to Regulate Doctor Fees, Bee Columnist Writes

California's new law requiring medical groups to disclose their financial status and "fix" any problems that keep it from meeting the state's definition of solvency may force the state to solve contract disputes been the groups and managed care companies, Daniel Weintraub writes in his Sacramento Bee column. Under the law, medical groups must submit financial solvency reports to the Department of Managed Health Care periodically. In the reports, the groups must state whether they meet four standards that detail how quickly they are paying their claims and whether they have "enough cash in the bank" to cover future bills. A medical group that does not meet one or more of the standards must prepare a remedial plan, which must be approved by each managed care plan that contracts with the group. If the medical group and the health plan cannot agree on a solution, the director of the DMHC "is required to step in." Steve Thompson, vice president of the California Medical Association, warns that the law potentially "sets the stage for a full-fledged regulated system where the state is setting everybody's rates." Walter Zelman, president of the California Association of Health Plans, said "he can't imagine" the state having a role in setting rates, but conceded that the law is "vague" and the state "would be justified in pressuring" the two sides to reach a deal. He added, "This legislation seems to say we don't want them to part ways and we're going to intervene to ensure they don't. That's a slippery slope." Daniel Zingale, the director of the DMHC, said he does not believe that the law gives the department the authority to set rates. "I think if we go into this with the attitude that the government will take care of it on behalf of one side or the other, it's probably going to make things worse." Weintraub concludes: "Zingale might be right. But he might not have a choice" (Weintraub, Sacramento Bee, 11/11).