HMO FOUNDATIONS: Questions Raised About Disbursements
State officials are questioning the way "several large health-care charities created by HMOs" are distributing money, the Los Angeles Times reports. According to Attorney General Dan Lungren, his office has launched an investigation of the foundations "after media reports question[ed] whether some grants were keeping with the groups' charitable responsibilities." In addition, state Assemblywoman Liz Figueroa (D-Fremont) yesterday "challenged the state's biggest health care charity, the California Healthcare Foundation, to justify a $40,000 grant awarded last year to an HMO industry group." The Times reports that as a result of the for-profit conversion of several HMOs in the state, there are now "about half a dozen separate charities with combined assets of more than $4 billion." The creation of these "charities has sparked considerable debate nationally ... about how such vast sums of money should best be spent."
Cause For Concern?
Figueroa said she was "'very concerned' about a $40,000 grant that the California Healthcare Foundation made to the California Association of Health Plans," a trade group that lobbies on behalf of HMOs. The Times notes that when the foundation was created by the for-profit conversion of Blue Cross of California in 1996, state regulators and consumer advocates stipulated that its charity disbursements "be independent of any influence by Blue Cross management." Figueroa sent a letter Tuesday to California Healthcare Foundation President Mark Smith calling the California Association of Health Plans "'a Blue Cross political lobbyist' and not 'the kind of organization that should ever have access to public benefit funds.'" However, Smith said yesterday that the HMO association had been granted the money, along with two other groups, to compile "background reports" on the needs of "elderly people enrolled in HMOS." He said, "We are looking for help understanding the perspectives of a variety of people who must be involved in providing care for the elderly." In addition, Smith said the grants accounted for only "a tiny portion of a $15-million program for improving the medical care of" seniors in HMOS. The Times reports that "Figueroa conceded that she sent the letter without seeking an explanation of the grant," which was brought to her attention by Los Angeles-based Consumers for Quality Care. According to Smith, the consumers group "was denied a grant from the foundation last year had has been 'vindictive' every since.
Lungren Launches Action
Lungren's probe into HMO foundation spending was prompted by an article in the "March issue of California Medicine [that] questioned grants by the California Wellness Foundation to support youth music festivals and anti-violence 'peace marches,' among other groups." The foundation, which was created by the 1992 reorganization of the Health Net HMO into a public company, said the "grants were justified and in any case represent only a tiny fraction of the money awarded by the foundation." According to deputy attorney general Jim Schwartz, the state's audit of HMO charities "will include a 'spot check' of grants made by about half a dozen charities" (Olmos, 4/29).