Specialized HMOs Pay Disproportionate Share of DMHC Budget, State Audit Finds
Specialized HMOs, such as vision or dental plans, account for about half of the Department of Managed Health Care's budget even the though the agency devotes nearly 80% of its regulatory work to full-service health plans, according to a state audit released yesterday. The San Francisco Chronicle reports that the Bureau of State Audits found that specialized plans pay $14.9 million, or 48%, of the department's $31 million annual budget. In contrast, full-service HMOs such as Kaiser, Blue Shield, Health Net and PacifiCare pay $16.1 million, or 52%, of the budget but are the focus of 78% of the agency's regulatory efforts, the audit found. Ninety-four percent of the agency's budget comes from the plans it regulates; the other 6% comes from penalties, interest, licensing fees and other sources. As of September, the department regulated 59 specialized plans and 48 full-service plans. Although the audit -- the first involving the DMHC since the agency was created almost two years ago -- does not offer "formal recommendations," the report suggests that state lawmakers consider altering the funding system to bring HMO payments in line with regulatory activity. Specialized plans have suspected the disparity in the DMHC fees and "would welcome" an adjustment in their fees, according to Jeff Album, a spokesperson for Delta Dental of California. Walter Zelman, director of the California Association of Health Plans, said that full-service plans "may be willing" to pay more fees but "would be wary of any large hikes" (Colliver, San Francisco Chronicle, 5/29). The complete audit is available online. Note: You must have Adobe Acrobat Reader to view the audit.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.