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Pressure Is Mounting for Better Oversight of HMOs : Health: Several legislative measures are pending. Activists seek ombudsman, swift handling of grievances.

THE HEALTH CARE REVOLUTION. Remaking Medicine in California . Last in a series


Here's what happened when Kaiser Foundation Health Plan and other managed care companies started discharging mothers from the hospital as early as eight hours after childbirth.

Legislators in Congress and in at least three states, including California, introduced bills to regulate how many days of hospital care after delivery insurance companies had to cover. The American College of Obstetricians and Gynecologists decried early discharge programs as "uninformed" and called for a moratorium on such changes.

At Kaiser, which began a voluntary eight-hour discharge program at its Sunset Boulevard medical facility in April, officials said that a 1994 study of 19,000 births at Kaiser facilities found no difference in the rate of readmission for babies discharged before 24 hours. But they acknowledged that they had little or no clinical data on how the earlier discharges affected such phenomena as maternal bonding, breast-feeding rates or patient satisfaction.

The result of this contretemps, many medical professionals complain, was the worst of all possible worlds: lawmakers trying to legislate medical practice because the medical insurers appeared to be changing policy largely to save money. (A bill requiring insurers to pay for at least 48 hours of postnatal hospital care is still wending its way through the California Legislature.)

But the episode also underscores much of what needs to be fixed in the California HMO industry.

Pressure to minimize costs and increase earnings is growing far faster than clinical data showing how changes in policy will affect patients. The HMO industry's state regulatory agency, the Department of Corporations, is regarded as so ineffectual that legislators step into the breach to micro-manage health care.

Meanwhile, patients face proliferating obstacles when they try to exercise control over how they are cared for--by bringing official complaints, appealing HMO denials of care, or suing in court.

In short, there is scant oversight of how the HMOs--most of which are publicly held companies--handle their self-proclaimed mandate to reduce medical costs for American society as a whole.

"You don't want these kinds of [medical] decisions made by a company staring at its bottom line," said Judith Bell, co-chairwoman of the San Francisco office of Consumers Union. "To the extent that we're making them as a society, they should be made by public policy-makers, not by insurance executives."

For their part, HMOs say it is the doctors who make the medical decisions, not insurance executives. However, when disputes arise over treatments and coverage, the health plan often has the final authority to determine what is "medically necessary" and what is not.

Patient care advocates, consumer protection experts and even some HMO officials list these as critical elements of a program to bring HMO decision-making out into the sunshine in California and level the playing field between the health plans and their patients:

Create an Ombudsman

Bell proposes the creation of a state office of consumer advocacy staffed by trained advocates representing consumers and reporting on results over time.

Health care is "different from going out to buy any other service because there is a big imbalance in knowledge," she said. "The patient really has to rely on doctors [because] consumers are not used to having to advocate for themselves, as they have to in managed care."

HMOs have long resisted such third-party review on grounds that outsiders are likely to be tainted by the same "empowerment" philosophy that leads to medical overuse and demands by patients for unnecessary and costly treatment.

"We don't have outsiders review claims [by patients] unless and until it goes to court," Kaiser Foundation Chairman David Lawrence said this summer in an interview with The Times, "because nobody knows how to practice [medicine] the way we do."

California law requires that every HMO licensed under the Knox-Keene Act of 1975--the legislation governing most managed care in the state--establish an internal system to address formal complaints by members.

Neither the law nor regulations sets forth how those systems should work.

Except in limited cases, the law provides no deadlines ensuring speedy consideration of grievances by the HMO or medical group.

Patient advocates say California should follow the lead of other states with tighter standards. Minnesota, North Carolina, Wisconsin and West Virginia give HMOs two to three working days to respond to grievances where denial of care could lead to serious harm to the patient. Others require responses to all grievances within specified time frames, and many require written explanations of grievance rulings.

A bill that would require HMOs to respond to enrollee grievances within 30 days and to emergency cases within five days is pending in Sacramento. The HMO industry recently dropped its opposition to that bill.

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