Judge Rules DMHC Cannot Fine Blue Shield Over Weight-Loss Drug Coverage Dispute
As expected, a state judge in Sacramento ruled yesterday that the Department of Managed Health Care cannot penalize Blue Shield of California over its decision not to cover a weight-loss drug excluded in an obese member's contract, the Los Angeles Times reports. Superior Court Judge Joe Gray issued a preliminary injunction preventing the DMHC from fining the insurer for not paying for the drug and for "refusing to participate in an independent medical review that later determined that the patient should receive the medicine." Blue Shield spokesperson Tom Epstein said that a ruling in the state's favor could have "jeopard[ized]" the insurer's contracts with employers. "If a state agency can come in and rewrite a valid contract that they've already approved, that will create great uncertainty and is unfair to insurers and will result in higher premiums," he said. Yesterday's ruling marks the second time in less than a year that a DMHC decision has been blocked by a court. In July, a judge ruled that the DMHC could not require Kaiser Permanente to cover Viagra or other sexual dysfunction drugs. DMHC officials said they had not decided whether to drop their pursuit of Blue Shield, appeal Gray's decision or "push for a full trial."
The Blue Cross dispute stems from a November 2000 state regulation requiring insurers to cover all "medically necessary" drugs. After Blue Shield refused to pay for the treatment, both the member's doctor and the independent review panel determined that the drug, Xenical, was necessary. Blue Shield did eventually agree to pay for the drug before it filed the lawsuit, and it said yesterday it would continue to do so long as the case continues. But DMHC Director Daniel Zingale said that he was "particularly disappointed" that Blue Shield refused to take part in the independent review, a decision for which the department had wanted to fine the insurer $270,000. "I don't have any regret for siding with the patient in this case," he said (Ornstein, Los Angeles Times, 1/16). Nevertheless, Zingale conceded that Blue Shield's concern about covering drugs excluded from members' contracts was valid. "The goal would be to strike a balance between ensuring patient access to medically necessary drugs without requiring HMOs to cover all drugs prescribed by all doctors in all situations," he said (Rapaport, Sacramento Bee, 1/16).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.