MANAGED CARE: Auditor Says Health Agency Should Oversee Industry
The Health and Welfare Agency would be better at overseeing the managed care industry in California than the Department of Corporations, the state auditor concluded in a report released last Tuesday. State Auditor Kurt Sjoberg wrote that California "should place regulator responsibility for health care service plans in a setting where health care is a primary focus." The Sacramento Bee reports the auditor's "nonpartisan" report is yet another voice entering the "debate over who is fit to regulate California's exploding" managed care industry. Gov. Pete Wilson and the industry want "to create a new health care department run by a single appointed director," but consumer groups want a "new health care commission run by a board of appointees," and the state insurance commissioner wants his department to regulate HMOs. While most states regulate HMOs through their health or insurance departments, the Bee reports that California's case is unique because since the 1970s, the Department of Corporations "has been charged with licensing and financial reviews of health plans."
Who Ya Gonna Call?
The report found that the corporations department is "too busy" and does not have "broad expertise in health care issues nor the insight necessary for regulating health plans." On the other hand, the health agency has the necessary experience because it "already conducts many regulatory functions and is the most focused on health care issues." But the agency itself does not think it is the right one for the job. Director S. Kimberly Belshe said there could be conflict of interest because her agency "is one of the largest purchasers of managed care services." She said problems could arise "if we knew that ... a given fine against a managed health care company might negatively impact our budget through potential premium increases for the health care that we purchase." But if the state institutes "[a]ppropriate separation and oversight" of the agency's "purchasing and regulating activities," the "potential conflict" could be minimized, the report concluded. The Bee notes that the auditor's report will be sent to state lawmakers who are currently considering the governor's proposal (Young, 5/9).