MANAGED CARE REFORM: State Lawmakers Punt On Big Changes
Last year, after Gov. Pete Wilson vetoed scores of HMO reform bills, he told lawmakers and the public that managed care changes should be delayed until a panel of experts that he appointed could convene and make recommendations. When the California Managed Care Health Improvement Task Force issued its findings last December, many expected 1998 to be the year of comprehensive managed care reform. But with the state Legislature now adjourned, 1998 looks like another year of incremental changes, with the few bills that have made it into law affecting health care delivery only on the margins. What follows in a brief overview of just some of the managed care-related bills introduced in the California Legislature this year.
Deadlock Over New Agency
One of the most important recommendations offered by Wilson's managed care task force was the creation of an independent agency to regulate HMOs and other managed health care plans. The Legislature and the governor, however, took different positions on how the new agency would be managed. While Wilson favored putting the agency under the direction of a gubernatorially appointed leader, the Legislature wanted the agency under the leadership of a board appointed by both the governor and legislative leaders. The state Senate rejected Wilson's plan in July, and at the end of the session legislators sent their proposal for the new HMO board (SB 406) to Wilson's desk. As of Sept. 15, the governor had not taken action on the bill, but a veto is likely given Wilson's stated opposition to this approach.
Perhaps the biggest failure for Democrats was their inability to pass a bill (AB 2436) subjecting HMOs and other health plans to liability suits from enrollees. During the last weeks of the legislative session, Democratic supporters of the HMO liability bill decided a do-or-die approach was needed and linked the hard-core reform measure with some more moderate ones. That move angered conservatives and moderates alike, who said it all but guaranteed Wilson's veto. The right-to-sue proposal never made it to final passage.
Up In The Air
By far the biggest bill sitting on Wilson's desk now is AB 1100, which would require HMOs and health insurers to cover six biologically based mental illnesses on par with physical illnesses. Wilson has called this mental health parity bill "bad public policy," and business and employer groups protest the bill would drive up the costs of providing health coverage. A veto is likely, though Wilson had taken no action as of Sept. 15. Other important bills pending a Wilson decision include:
- Health Plan Mergers: SB 330 would require the state attorney general to scrutinize HMOs' plans to merge to ensure that the proposed change does not substantially reduce competition or create a monopoly.
- Utilization Review: The Legislature approved AB 332, which would require that health plan medical directors be licensed to practice medicine in California.
- Ombudsmen: SB 1689, a bill to establish pilot ombudsman programs to assist and advocate for managed care enrollees, was sent to the governor at the end of the session. Click here to read past CHL coverage.
- Reconstructive Surgery: AB 1621 would mandate HMO -- and Medi-Cal -- coverage of reconstructive surgery necessary for a patient's "normal appearance."
- Care for the Seriously Ill: AB 2639 ensures that people with life-threatening health conditions can get a quick decision from their health plans about whether their treatment will be covered. In addition, the bill mandates health plan coverage of cancer screenings.
- Second Opinions: AB 341 would give health plan members access to second medical opinions in certain circumstances. HMOs would be required to pay for a second opinion by another plan doctor, or by a doctor outside the plan if an in-network specialist is not available.
Reform On The Margins
Last year, Wilson signed only one of a slew of managed care reform measures passed by the '97 Legislature -- a bill designed to protect women and newborns from " drive-through deliveries." From the list below, readers can clearly see that Wilson and the Legislature could reach agreement this year on incremental changes only:
- OB/GYN Access: The first HMO reform bill Wilson approved this year guaranteed women direct access to OB/GYN services (AB 12).
- Benefits Comparison: The same day Wilson signed the OB/GYN access bill, he approved a bill making it easier to compare different health plans' benefits by requiring HMOs to display their information in consumer-friendly "uniform formats" (AB 607).
- Referrals: This spring, Wilson signed a "standing referrals" measure (AB 1181). Now, chronically ill or disabled patients who frequently need to see a specialist will not have to obtain repeated referrals from their primary physicians. This was a concept advocated by the task force.
- Rx Access: Two prescription access bills also made it into law. One requires managed care plans to continue to provide prescription drugs for patients with long-term illnesses, even if the drug is removed from a plan's formulary (AB 974). The other bill requires an HMO to provide members with an "expedited process" for reviewing denials of requested drugs (SB 625).
The biggest bill to earn Wilson's veto so far is the so-called "pill bill" that would have required HMOs and other insurers to include contraceptives in their prescription drug coverage (AB 1112). Wilson vetoed a similar bill last year because it imposed the mandate on employers who might object to such coverage for religious reasons. The final version of AB 1112 contains an exemption that would appease those concerns. However, the new version has another amendment that earned the bill a Wilson veto -- a provision saying the state will cover prescription contraceptives for low-to-middle-income women whose employers claim a religious exemption (see CHL 9/14). The governor has until the end of September to sign or veto the remaining bills on his desk. California Healthline will continue to track Wilson's action on all health-related legislation.
House And Senate Roundups
See California Healthline's look back at major health care bills introduced in the California House and Senate -- Click Assembly (from the 9/11 issue) or Senate (from the 9/15 issue). Or read recent CHL coverage of legislation vetoed by the governor. [Note: Contributing writer Jeff Dufour and assistant editor Rachel Kennedy prepared the research for this article.]