California's HMO Regulator is 'Invisible' to Consumers, New Report Finds; Report Offers Future Regulator Guidance for Dramatic Improvements.

SAN FRANCISCO--(BUSINESS WIRE)--June 11, 1999--

The state department in charge of regulating health maintenance organizations (HMOs) made little effort under previous administrations to educate and inform health care consumers and lagged behind efforts in other states, according to a new report by two consumer groups.

In Manage to Care: How California Can Better Inform Consumers About Managed Care, Consumers Union and the Center for Health Care Rights examine the Department of Corporations' efforts to educate and inform California consumers and protect their well-being.

Specifically, the consumer groups studied data available from 1995 through 1998 in four key areas: the Department's overall outreach efforts; Annual Hotline Reports, on the toll-free complaint hotline; Late Grievance Reports, on HMOs' grievance procedures; and Medical Survey Reports, on HMOs' compliance with quality of care issues.

In all four areas, the report finds the Department is an "invisible regulator" to the consumers the agency should serve.

"A state regulator can't be credible, to the public or the industry, if it's invisible," said Betsy Imholz, director of the West Coast office of Consumers Union. "We need an agency that has the expertise, resources and vision to regulate a complex and growing industry."

Polls show that few Californians are familiar with the Department and its role as HMO regulator. In reviewing basic communications tools available to the Department, the report finds that the Department has taken few proactive steps to increase its visibility to Californians.

"Our report outlines what the Department has not been to consumers, and what it desperately needs to be," said Peter Lee, director of Consumer Protection Programs with the Center for Health Care Rights. "It has not been consumer-friendly, and it clearly needs to put consumers first."

OUTREACH TO CONSUMERS: Since 1995, the Department issued only four news releases about the hotline and generated scant media attention to this resource. The report finds that the Department has not promoted itself or its consumer services through even the most basic resources -- the phone book and directory assistance.

The Department does not publish educational materials for consumers, nor does it provide brochures or posters for providers' offices. The Department does not follow the lead of many other states (with far fewer consumers in managed care), which provide information about navigating the health care system and make public HMO comparisons.

The Department makes poor use of its web site, barely revealing its regulatory role over HMOs and offering little practical consumer information.

ANNUAL HOTLINE REPORT: The Department's complaint hotline is a largely untapped resource. The Department does not track where consumers heard about the hotline, and it only tracks information from callers who send in a complaint form. In 1997, for example, 83 percent of the 13,371 consumers who were sent complaint forms did not return them.

Therefore, the Department's reports reflect no information on the vast majority of consumers who call it with HMO complaints. The report also finds that the Annual Hotline Reports are generally not effective at comparing HMOs or providing consumers with useful information. The Department compares complaints across HMOs in only four broad areas, and otherwise presents only raw data, making comparisons impossible.

Using information available to the Department, Manage to Care created an alternative presentation of data with expanded categories for complaint data from 1997. The report found that consumers in three plans (Aetna, FHP, and PacifiCare) called the Department with problems at a much higher than average rate.

Without information about how consumers learn about the hotline, it is unclear whether such findings indicate differences in care or in publicizing the hotline to patients.

LATE GRIEVANCE REPORTS: Plans are supposed to resolve grievances within 30 days, and file a report that tracks grievances that are pending and unresolved for 30 days or more. Manage to Care finds that because the plans use a range of definitions and formats to report the data and the Department does not provide a summary and analysis of the plans' reports, Late Grievance Reports are nearly meaningless.

Manage to Care includes a preliminary analysis of 1997 second-quarter information, which finds that the rates of late grievances varied dramatically, from .44 late grievances per 10,000 enrollees at Cigna to 9.56 for Health Net.

However, because the Department has not adopted clear standards for HMOs, it is unclear whether this difference is due to a difference between HMOs' grievance handling or differences in how they collect and report the data to the Department.

MEDICAL SURVEY REPORTS: The Department is required by law to conduct medical surveys to review utilization procedures, internal procedures for assuring quality of care, and overall performance in providing health care benefits. Current law requires the Department to conduct onsite medical surveys at least every three years, and publicly release a survey report within 180 days after the survey's completion.

Then, within 18 months of a survey report's release, the Department must conduct a follow-up review to ensure that HMOs have taken action to correct deficiencies. Manage to Care finds that for California's major HMOs the average time between surveys was nearly five years -- two years longer than mandated by law. In addition, the Department did not issue one survey report within 180 days.

Instead, it took an average of 12.4 months. Finally, the Department does not appear to adequately follow up when medical surveys reveal plan deficiencies. Of the surveys reviewed for this report, all had deficiencies, and five should have had follow-up reviews completed by the closure of the study period. However, the Department had only two follow-up reports on file.

If this indicates that the Department is not ensuring that plans correct deficiencies, consumers are at risk and it sends a signal to HMOs that they will not be held accountable. If the Department has conducted but not reported on follow-ups, it undermines public confidence in the Department's ability to do its job.

Manage to Care includes recommendations in each of these areas to improve the performance of the Department.

"This report joins too many state and independent reports over the years that have identified the deficiencies of the Department," Imholz said. "It's time to move beyond documenting the problems and instead to take action to better protect California's health care consumers."

"We've all heard that change is on the horizon for HMO oversight in California," Lee said. "We urge Governor Davis and his administration to lead the state into a new day where consumers come first."

For copies of the four-page executive summary or the 40-page report, please call Consumers Union at 415/431-6747 or go to Consumers Union's web site at www.consumersunion.org and go to the "Health" page.