MINI-HMOS: Senate Considers Moratorium
The California Senate Appropriations Committee met yesterday to review legislation that would "impose a moratorium on so-called limited Knox-Keene licenses, which allow smaller groups to function much like HMOs," the San Diego Union-Tribune reports. These smaller versions of HMOs receive premiums and compensate their doctors, but on much thinner reserves and often with fewer covered lives and therefore less room to spread risk -- setting the stage for fiscal upheaval. "Patients should be concerned because limited Knox-Keene licenses have created an illusion of safety that has turned out not be true because of incompetent regulation," said Steven Thompson, vice president for government relations at the California Medical Association. Some notorious examples of failed "mini-HMOs" are FPA Medical Management and MedPartners. "All of these different entities are accepting health insurance risk and passing this risk to another entity below them," such as a physician group, said Michael Ashcraft, aide to the bill's sponsor, state Sen. Jackie Speier (D). "Who is responsible for the risk is becoming more and more blurred and not well defined in law," he added. Thompson alleged that the large insurers are responsible for picking up the smaller HMOs' broken pieces, noting, "When the subcontractor fails to perform, that is still the general contractor's responsibility and every contractor knows that." Larger HMOs enjoy and may even require the arrangement. "It allows us to contract more efficiently with health plans," said Marc Reynolds, president of Scripps Clinic Health Plan Services Inc., which provides care to 325,000 people. However, Jamie Court, advocacy director at the Foundation for Consumer and Taxpayer Rights, said, "We'd like our doctors and hospitals to remain in the business of medicine, rather than insurance." Currently, 22 applications are pending for limited Knox-Keene licenses statewide (Rose, 5/25).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.