Judge Bars DMHC From Collecting or Disclosing Financial Information About Medical Groups
Siding with the California Medical Association, a state judge in Sacramento County has ruled that the Department of Managed Health Care cannot collect or distribute information about the financial stability of medical groups, the Los Angeles Times reports. In a ruling dated Feb. 28 and released yesterday, Superior Court Judge Gail Ohanesian called the regulations establishing the DMHC's authority to inform the public about the financial health of medical groups "arbitrary and capricious" (Ornstein, Los Angeles Times, 3/6). The dispute stems from a 1999 law allowing state regulators to collect financial information from doctor groups, many of which have folded in recent years, disrupting care for thousands of patients (Fong, San Diego Union-Tribune, 3/6). Under a regulation issued last August, the DMHC planned to provide the information collected from medical groups to the public Oct. 1. But in September, Ohanesian granted a temporary injunction sought by the CMA, blocking the agency from releasing some of the information, although she allowed the state to continue collecting financial information from medical groups (California Healthline, 9/27/01). The DMHC in October released some of the information it had collected, which revealed that only 44% of the state's medical groups met the four standards of financial solvency set by the state (Colliver, San Francisco Chronicle, 3/6).
In her ruling, Ohanesian agreed with the CMA's argument that releasing the financial information would put medical groups at a disadvantage when negotiating contracts with health plans (San Diego Union-Tribune, 3/6). "If health plans said this group is not as strong as the other group, and we better move our patients now rather than later, it would pretty much destroy the group that it is struggling to get back to financial health," CMA President John Whitelaw said (Rapaport, Sacramento Bee, 3/6). Ohanesian also noted that Sen. Jackie Speier (D-Hillsborough), the author of the 1999 law creating the financial reporting mechanism, has stated that the intent of the bill was to keep records confidential. Speier said that lawmakers intended to give regulators the "tools to help medical groups, not to expose their weaknesses publicly" (Los Angeles Times, 3/6). In fact, in ruling that the DMHC did not have the authority to collect the information in the first place, Ohanesian's decision went beyond what the CMA -- which only opposed releasing the information publicly -- was seeking (San Francisco Chronicle, 3/6). The extent of the information collection limitation is unclear, however. Ohanesian said that the 1999 law limits the information the agency can obtain from medical groups to what they must report to health plans, but another part of her ruling said that the department must "cease and desist" collecting financial data (San Diego Union-Tribune, 3/6). Speier said, however, that the ruling will allow the DMHC to continue to collect quarterly financial reports from medical groups. "There's no harm to consumers in this ruling. I would argue that it has constrained the department from interpreting the statute more broadly than it was supposed to be applied in the first place," she said (Sacramento Bee, 3/6).
DMHC Director Daniel Zingale and consumer advocates strongly disagreed with Speier, saying the ruling will leave patients in the dark about the health of their medical groups. The order "essentially puts us back to where we started -- without any regulation or oversight of medical groups. I thought there was broad agreement that this was not a good situation, certainly not for patients," Zingale said (Los Angeles Times, 3/6). Health Access California spokesperson Beth Capell added, "Without the same financial data that we can get on HMOs, how can we or purchasers like CalPERS or anyone else tell whether these groups are in real financial trouble?" (San Diego Union-Tribune, 3/6) Walter Zelman, president of the California Association of Health Plans, said that the state should be able to collect financial information from medical groups. "It's hard to see how it can carry out the function of consumer protection and early warning about financial difficulty in medical groups if it can't collect information," he said (Los Angeles Times, 3/6). The DMHC has not decided whether to appeal. According to Earl Lui, a senior attorney for Consumers Union, if Ohanesian's ruling means that the department cannot collect medical information, it could lead to new legislation granting it that authority (San Diego Union-Tribune, 3/6).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.