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review//mike1st/mark2nd By JESSICA TOLEDANO Staff Reporter Can the HMOs ward off more regulation? Lawmakers and consumer advocates say no, but the industry is giving it a shot anyway by announcing plans to establish independent appeals panels that would review cases in which patient requests for treatment have been denied. That’s been one of managed care’s thorniest issues, and the preemptive strike was seen as an effort to ward off more intrusive state legislation. But it could be a losing battle. “HMO liability will happen next year,” said Assemblyman Martin Gallegos, D-Baldwin Park, who chairs the Assembly Health Committee. “This action won’t do anything to forestall that. Those of us who have been working on consumer-friendly legislation know this is an empty gesture.” Gallegos and many consumer groups argue that outside review boards are not unbiased. More important, they say, is that without the threat of a lawsuit, HMOs will never be truly accountable. “Eight out of 10 Californians want to be able to sue their HMO,” said Lea-Ann Tratten, legal counsel for the Consumer Attorneys of California. “We think the right to sue holds them accountable. You are not going to get fair results with external review.” Not true, said Walter Zelman, president and chief executive for the California Association of Health Plans, which represents the state’s largest HMOs and announced the review board plan last week. “A consumer’s main concern is not to be able to sue, it is to get a quick resolution,” said Zelman. “This will allow that to happen. We are doing the right thing here, our motivations are good. Even the consumer groups supported this last year.” Consumer groups and legislators did try to pass a form of external review, but in the final days before the session ended, a provision allowing patients to sue was attached to the bill, and it was killed in committee. At the time, proponents argued that external review alone would be senseless, if consumers were not simultaneously given the right to file suit. The plan laid out last week by the HMO industry association, which includes PacifiCare of California, Blue Shield of California and Health Net, would allow members of HMOs to appeal a denial of a medical treatment or prescription drug to an independent review board. The appeals are to be answered in a timely manner and all the plans have agreed to institute the review program before the end of 1999. It is up to the various plans to set up the review panels, but certain criteria must be met. The panel must be made up of health care professionals who cannot have a financial relationship with the plans that would constitute a conflict of interest. Kaiser Permanente, also a member of the association, will wait until the next legislative session has ended before instituting any review board. Two plans Health Net and PacifiCare already have outside independent review boards. Under Health Net’s program, members can appeal a denied treatment and are assured that the panel will try to render its review decision within 20 days. When a patient is denied care, the appeal is sent to one of two external review companies, Boston-based Core Inc. or the Center for Health Care Dispute Resolution in Pitts, N.Y. The companies, paid by the health plans, do not render the review decisions themselves, but hire outside experts to review patients’ appeals. Reviewers are not told the identity of either the HMO or patient involved, but they do know they are being paid, indirectly, by the HMO. Dr. Alan Zwerner, chief medical officer for Health Net, which instituted its program six months ago, said the health plan’s original decision is upheld in 85 percent of the cases. “In most instances we are doing the right thing,” said Bruce Bodaken, chair of the California Association of Health Plans and president and chief operating officer of Blue Shield of California. “And when we are not, we are trying to change things.” But Tratten called review panel decisions an example of how independent boards have an institutional bias. “What you tend to see in many of these cases is that the alternative dispute resolution boards are paid by the health plans, so they automatically form an institutional bias,” she said. “People are shocked when they are denied treatment, and they find out they can’t sue their HMO. Californians want to be able to sue their HMO.” Zelman contended that review boards are being put together by some of the same companies used by the federal government to review cases in which Medicare patients have been denied treatment. He also said the move last week was not political, and that the process will be unbiased. The health plans are simply trying to respond to consumer demands. “It is like people who refuse to accept that their enemy is doing something different,” said Zelman. “We do not have a specific agenda. I think, in general, the industry has admitted that it has to do better. We are trying to do that.” Thrust in the middle of the debate will be Gov.-elect Gray Davis. Chris Campana, a Davis spokesman, said the move toward an external review was a step in the right direction. But the governor-elect also supports a consumer’s right to sue. “(HMO liability) is an issue the governor-elect is looking at very closely,” said Campana. “It will be one of the issues on his radar for next session. He supports a patient’s right to sue their HMO, but a lot of the details of any legislation still need to be worked out.” Gallegos said the Democratic delegation has plans to meet with Davis before the session on the issue. Even representatives of some health plans concede that some mandate for HMO liability likely will become law.

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