Battle rages in Legislature between competing managed care interests.

As California continues its rapid shift into managed health care, the wrangling between physicians and health maintenance organizations is becoming intense.

Their respective trade groups - the California Medical Association and California Association of HMOs - are slugging it out in the state's Legislature, as they lobby for bills to support their often-competing interests.

While the HMO association does not typically sponsor legislation, its relationship with the politically powerful physicians' trade group, the CMA, is often antagonistic.

"Compromise is a big issue up here in Sacramento," explained John Benton, regional vice president of government affairs at Glendale-based Cigna Health Care of California. "A lot of times, lobbyists from the CMA and CAHMO get thrown into a room. They beat each other up, and then come up with a compromise."

In the current legislative session, a hefty chunk of the CMA's legislative activities are expected to focus on monitoring the Wilson administration's health care "strategic plan," which is currently being implemented statewide.

That plan aims at improving health care and reducing state expenditures by shifting Medi-Cal recipients in HMOs.

Managed Medi-Cal care

A portion of Wilson's plan stipulates that the state enter into contracts with HMOs to provide services in 13 California counties to Medi-Cal recipients at a fixed rate.

The Medi-Cal clients would have the same privileges as other HMO members. The state would "capitate" rates, meaning the HMOs would get paid a flat fee for each enrollee, regardless of the amount of services provided.

Many of the HMOs competing for these contracts, which are scheduled to be awarded later this year, already have experience providing for the Medi-Cal population. But the CMA wants to legally ensure that HMOs provide ethnic, linguistic and geographically sensitive care.

So the CMA is proposing legislation, commonly known as "any willing provider" legislation, that would allow any health care provider willing and qualified to provide services within a geographic area to join an HMO network.

"The state and the CMA have had to beat the bushes to find physicians and Medi-Cal health care providers to treat this population," explained Steven Thompson, CMA vice president of government affairs. "Now that we have created a fairly diverse and accessible network (of health care providers), when we go into managed care options, we have to make sure the plans ... don't exclude, for example, a black physician that's been giving care for years to patients in a primarily African-American community. That's why we think the legislation is important to maintain those relationships where they exist."

Thompson said the CMA's proposed statute would allow for continuity of care.

Opposition's view

Maureen O'Haron, a legislative director at the California Association of HMOs, challenged Thompson's assertions, by pointing out that "any willing provider" legislation destroys HMOs' ability to control which physicians participate in their plans and destroys HMOs' ability to negotiate rates.

"The whole point of managed care is to have a select network," O'Haron said "... If there is a huge sprawling network, HMOs can't control it. They can't control costs, and the providers have no incentive to bargain, to compete. Rates go out the door."

Many executives in the HMO industry contend that "any willing provider" legislation is the CMA's way of ensuring the economic well-being of its member physicians. Thompson, however, maintained that such legislation ensures the continuity and quality of patient care. "Why disrupt a doctor-patient relationship if there is no reason to?" he asked.

Yet, O'Haron of the HMO association explained that current HMO registry regulations stipulate that patients who switch health plans voluntarily, or if they change employers, can continue to see a physician even if that physician is not in the new network.

"Our regulations require us to continue such care with that provider as long as it is medically necessary," she explained. Problems arise, she said, because many patients don't know they have that option.

Pool controversy

Another area expected to cause a flap between the HMO and physicians' groups regards legislation affecting small-business pools participating in the state's Health Insurance Plan of California (HIPOC). The HIPOC, a state-run pool comprised of small employers who would otherwise be unable to afford health insurance their employees, negotiates on behalf of small businesses with the HMOs to get affordable rates.

Currently, the HIPOC allows businesses with as few as three employees and as many as 50 to participate in the pool.

The CMA intends to co-sponsor legislation this year that would expand that HIPOC pool to include self-employed individuals and businesses with up to 100 employees. By increasing the pool to larger businesses, Thompson explained, the enlarged pool would bring rates down through economies of scale. So more people could be covered, and the per-person cost would be lower.

But HMO industry observers contend that affordable insurance coverage is not a problem for businesses with as many as 100 employees.

And by allowing high-risk individuals working at small companies into the pool, the larger companies' rates may go up.

"There's a real concern that high-risk people with diseases like diabetes or AIDS will go into this market for coverage, and it will drive up the rates for those in the pool," Benton said.

But Thompson disagreed, noting that HMOs used the same argument when the HIPOC was created. So far, he said, the HIPOC has proved that the pools bring down rates lower than those being offered in the private sector. "Anyone can give a spiffy policy to a healthy 23-year-old male who goes to the beach," Thompson said. "The whole concept of insurance is that you take the high and low risk, and then you balance out the costs."