DRUG COVERAGE: DOC Orders Six HMOs to Restore Formularies
Taking pre-emptory action to stop "possible violations" of state law, the state Department of Corporations this week ordered six HMOs -- covering 8.7 million Californians -- to "stop deleting drugs from their formularies" and "restore scores" that had been removed since last October. In letters mailed this week, DOC counsel Brian Bartow also ordered the HMOs -- Aetna U.S. Healthcare of California, Health Net, Kaiser Permanente, Key Health Plan, Molina Medical Centers and United HealthCare of California -- "to notify providers, pharmacists and enrollees that the drugs had been restored" (Benson, Wall Street Journal/California Edition, 1/27). "The whole purpose of this letter is to put them on notice," said DOC spokesperson Julie Stewart. "There is obviously enough of a concern from the department to seek further information" (Griffith, Sacramento Bee, 1/27). The Journal reports that the DOC opened the investigation last December in response to complaints from Citizens for the Right to Know, a health care watchdog agency. After meeting with the group, the DOC sent letters to 56 HMOs asking for information about their formularies. "They raised some interesting questions and concerns," said acting DOC Commissioner William Kenefick. "And we immediately realized the importance of what they were saying and, frankly, took action," he added (1/27). "We are very encouraged by the fact that the department has taken these very aggressive steps to look at potential violations of law and to protect consumers in managed care plans," said Citizens for the Right to Know Executive Director Kassy Perry (Bee, 1/27).
The six HMOs singled out for action "were chosen from an initial examination of documents submitted by 40 health plans," with the department still reviewing or awaiting records from the other 16. Some state officials are concerned that HMOs may "be engaging in a form of bait-and-switch: slashing their formularies after the end of so-called open-enrollment periods" (Journal, 1/27). Some also suspect that the HMOs are attempting to violate "the spirit of a new law that goes into effect July 1," which will require HMOs to provide drugs for patients even after the drug is removed from the formulary if it has been prescribed by a patient's doctor. The DOC's Stewart said if "the plans deleted drugs from their formularies to avoid the impending law, it would violate the public policy embodied in the legislation." The health plans denied any attempt to finesse the new law, "explaining that changes to the formulary are routine and always prudent." Dr. Sharon Levine, associate executive director of the Permanente Medical Group, said the DOC is "alleging misbehavior and drawing inferences about bad conduct based on a process we have been using for 10 years" (Bee, 1/27). Kaiser is planning to review 44 drugs before July 1, said spokesperson Tom Debley, but he noted that Kaiser doctors may prescribe drugs off the formulary without prior authorization. Health Net plans to eliminate 72 drugs before the deadline, but spokesperson Ron Yukelson said "Health Net would never delete a drug for purely financial reasons." Aetna has already removed 44 drugs as of Jan. 1, but spokesperson Bob Pena said their changes "do comply with relevant regulations in California" (Journal, 1/27).