Facing tough liability reform proposals, California HMOs push voluntary reviews.

Facing tough liability reform proposals, California HMOs push voluntary reviews

Legislators consider call for increase in noneconomic damages

Partly in response to calls for liability reforms, the California Association of Health Plans (CAHP) last year became the first industry association in the nation to urge its members to set up independent external review procedures. We all believe the Legislature should do it, says CAHP president Walter Zelman. The public needs to be absolutely certain they will get the care they need. If the state and federal governments fail to mandate external review this year, he adds, all CAHP member plans, which cover about 95% of California HMO enrollees, voluntarily will move in that direction.

One plan, Woodland Hills-based Health Net, already has an independent external review mechanism in place. Health Nets 2.2 million subscribers dont even have to request the external review; its automatic for all denials, and decisions are binding on the HMO. Since the program began last May, about 5,000 denials have come up for review. Thirty percent of the denials are overturned, and a like number are upheld. But 27% are resolved through an alternative treatment plan accepted by the member. Eighty percent of all reviews are completed within 20 working days, and expedited review is available in life-threatening situations.

The cost to Health Net: about $300,000 annually, which no doubt pales in comparison to the threat of a single liability award.

So have Californias HMOs been swept up in a tide of consumerism? Or do their calls for independent external review stem from a desire to derail liability reforms, as some cynics suggest?

I think all industries change, says Mr. Zelman, and obviously this industry is trying to respond to consumer concerns.

Still, the associations move seems shrewd in view of pending state legislation that would hold health plans and/or their medical directors liable when medical determinations result in injury to subscribers. Unlike last year, when then-Gov. Pete Wilson pledged to veto civil liability legislation if it passed, Democrats now control the governors office and both houses of the Legislature.

Assembly Speaker Antonio Villaraigosa is sponsoring AB 1380, which sets forth findings of fact holding that, among other things, the current $250,000 cap on non-economic damages needs to be increased. And while Gov. Gray Davis has suggested that he will exercise caution as he evaluates liability bills that come his way, CAHPs Mr. Zelman predicts theres still quite a good chance that a reform bill will make it into law.

Contact Mr. Zelman at [phone] and Health Net spokeswoman Kelli Davis at [phone].