ABLEnews Extra

                    "Ghost" Trusters Violate Spirit of Law

     On August 27 through August 31, the Los Angeles Times reported on
     its seven-month investigation of California HMOs. Excerpts from
     the series of particular interest to persons concerned with the
     impact of managed care on patient care are provided below.
     (Ellipses have been omitted to facilitate reading.)

     [N.B. The entire series may be ordered by calling Times on Demand
     at 800-788-8804. The following file may be freq'd as MC50827.*
     from 1:275/14; and other BBSs that carry the ABLEFiles
     Distribution Network (AFDN) and ftp'd from ftp.icdi.wvu.edu on
     the Internet. Please allow a few days for processing.]

To Carol Green it was a clear case of blaming the victim.

In April, the state Department of Corporations finally responded to
her complaint against Kaiser Foundation Health Plan over the treatment
of her father, Mel Spiro, during the end stage of his terminal
illness.

Green had alleged months before that California's largest HMO had
denied Spiro necessary pain medication, intimidated her family from
accompanying him to treatment, and delayed for three hours sending an
ambulance to take him to the emergency room.

On every particular, the Department of Corporations--which regulates
health maintenance organizations in California--found in Kaiser's
favor.

In fact, the agency's investigation consisted largely of asking Kaiser
for its version; records show that the department's findings parroted
the health plan's defense virtually point for point.

In contrast, when the Los Angeles County Department of Health Services
probed Green's complaint, it found that the ambulance delay was due to
confusion between two Kaiser facilities. Spiro's excruciating pain,
the product of bone cancer, remained uncontrolled because Kaiser
nurses had erroneously recorded it as "mild."

Consumer groups and patient-care advocates say the Department of
Corporations' handling of Green's complaint was all too typical. As
HMOs and other managed care firms come to dominate health care in
California, the department's ability to enforce compliance with state
law is coming under strong challenge.

Critics say the department may be the state's weakest
regulator--weaker than the boards that oversee chiropractors and
cosmetologists, weaker than the Department of Insurance or the
Department of Motor Vehicles.

That is no small concern. The health plans under the Department of
Corporations' jurisdiction provide medical care to 12 million
Californians--consumers who, under medical care, have fewer choices
among health providers and fewer places to turn when things go wrong.

Corporations Commissioner Gary S. Mendoza, the department's head,
acknowledges the preeminent important of HMO regulation.

"If someone has a problem with an escrow company or a licensed lender,
they get annoyed," Mendoza said. "But if they have a problem with
their health care, or the health care for their child or parents, it's
a life-impacting development."

But observers say the agency has not come close to fulfilling its
responsibility.

"It's almost a ghost of a regulator," said Jamie Court, director of
Consumers for Quality Care, a Los Angeles-based advocacy group.
Because of the agency's lax oversight, he says, "an automobile repair
shop is much more likely to be cited for a botched tuneup than an HMO
is for failing to diagnose cancer or refusing a referral to a
specialist."

A review of department records by The Times, as well as interviews
with health care professionals and other experienced observers, shows
that accountability is precisely what is missing from state regulation
of the HMO industry.

In the 20 years it has held jurisdiction over managed care firms, the
department has fined an HMO for violating patient care standards only
once.

Beyond that single case, not one of the state's 10 biggest HMOs has
been cited by the department for a violation relating directly to
patient care since at least 1985, which is as far back as department
records go.

The agency has consistently failed to meet a legal mandate that it
inspect each HMO at least once every five years for compliance with
state health and safety standards. Three of the state's biggest HMOs
haven't been audited even once.

The Department of Corporations has even assisted HMOs in throwing a
curtain over problems and deficiencies that by law it must publicly
disclose.

State law requires that all deficiencies cited by department auditing
teams be disclosed if they haven't been corrected by the HMO within 30
days. The agency, however, repeatedly stretched the deadline,
according to a 1992 report by the state auditor-general, sometimes
granting HMOs extensions of several months and nevertheless striking
the deficiencies from public reports.

The department's very existence remains a secret to the vast majority
of managed care subscribers. Only 1% of insured Californians surveyed
in June by the Los Angeles Times Poll were able to name the Department
of Corporations as the principal HMO regulator.

The agency's obscurity is unsurprising, for HMOs under no legal
mandate to tell patients where to turn for help with a consumer
complaint.

Although state law requires businesses such as taxicabs and
barbershops to prominently post the phone numbers of their regulators,
a bill requiring HMOs to do the same is stalled in the state
Legislature--because of the health plans' opposition.

"The facade of being regulated serves as a great benefit to the HMOs."
said one former department investigator. "But the reality is there is
no regulation. . . . The Department of Corporations is doing nothing."

Even when the department tries to investigate, it is sometimes
stonewalled by the HMO industry.

HMO executives say they regard the department as a tough regulator.

"The DOC has provisions for patient complaints, and we're constantly
responding to them," said Kaiser Chairman David Lawrence. "They're
pretty aggressive and very proactive."

State lawmakers this year tried to appropriate $2 million for the
department to step up its auditing of health-plan quality. But
lobbying by the HMO industry--which pays for its regulation through an
annual per-patient assessment--emasculated the funding measure.

As a result of tight budgets, the department has consistently been
unable to meet its legislative mandates.

Perhaps the most serious shortcoming of the department's medical audit
program is one the agency inherited from the Legislature. By law, any
deficiencies cited by the agency that the HMO pledges within 30 days
to correct are not publicly disclosed--no matter how major.

An attempt to strike the secrecy provision from the law was killed in
Sacramento this year by HMO lobbyists who argued, as Health Net
lobbyist Jeff Shelton put it in an interview, that the rule provides
an incentive for HMOs to correct deficiencies.

That viewpoint is not shared by patient advocates.

In the words of Allen Davenport, legislative director of the Service
Employees International Union, the largest public employee union in
the state: "The idea that covering up inadequate health care is going
to improve the system is contrary to every free-market principle we
know of."

[State Widely Criticized for Regulation of HMOs, Michael Hiltzik and
David Olmos, Los Angeles Times, August 28, 1995]

CURE Comment:  As patient advocates since 1981, we have a modest
               proposal to provide an "incentive" to HMOs to correct
               patient-endangering deficiencies: Appoint real
               regulators who will impose substantial fines on
               violators and revoke the licenses of HMOs who persist
               in their crimes.

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