HMOs Get a Break as Bills Target Care for Uninsured.

FOR the past several years, when it came to health care legislation in Sacramento, HMOs were everyone's favorite whipping boy, with hundreds of bills targeting their practices on the table.

But HMOs didn't dominate the debate this year. After a managed care reform package got through the Legislature and was signed into law last year, the pressure was off.

Only a handful of bills targeting HMOs were introduced this year. And only one made it through to Gov. Gray Davis' desk; it requires health plans to cover prostate cancer screening tests.

"There was a general consensus among the lawmakers and the governor that they wanted to give last year's reforms time to work before coming back and doing more," said Andrew Pontius, a lobbyist with Consumers for Quality Care.

With a booming state economy and a record $13 billion budget surplus, the focus changed this year to expanding health care coverage to as many of the state's 7.5 million uninsured people as possible.

The centerpiece of the effort was extending the state's Healthy Families program -- which currently covers only children in low-income families -- to include their parents, which would add between 350,000 and 600,000 new enrollees. The bill, AB 1722, was sponsored by Assemblyman Martin Gallegos, D-Montebello.

Although that total represents only about 6 percent of the state's total uninsured population, the Gallegos bill is widely regarded as a significant step. "This is a major breakthrough that health care advocates had been working toward for years," said former state Assemblyman and L.A. County health czar Burt Margolin, who now works at the law firm of Berliner, Candon & Jaimison.

Added Steven Thompson, vice president of government affairs for the California Medical Association: "In a policy of creeping incrementalism that we've seen in recent years when it comes to dealing with the uninsured, this is a significant step."

In search at funds

Even though the bill passed and is now on Davis' desk, there's one big catch: It has no funding. The governor has announced plans to seek a federal waiver allowing the state to tap into unused Healthy Families funds for children and make them available for coverage of parents.

But a bill that could have helped fund this program starting in 2002 died in the frenzied closing minutes of the legislative session; a computer crash kept it from getting to the floor until it was too late. It would have required that all tobacco industry settlement dollars be used for health care purposes.

In another effort involving the uninsured, the CMA, which represents physicians, led an effort earlier in the session to increase the reimbursement rate for Medi-Cal (the state's health care program for the poor). The rate now ranks as one of the lowest in the nation.

With such a low reimbursement rate, many physicians no longer accept Medi-Cal patients, forcing many to seek treatment at public hospitals. Although the CMA pushed for a 25 percent increase in rates, Davis finally approved an average 17 percent increase in Medi-Cal reimbursement.

A companion measure, SB 2132 by state Sen. Joe Dunn, D-Garden Grove, appropriates $25 million for reimbursing emergency and on-call physicians for providing services to the uninsured.

Other efforts to expand coverage to the uninsured met with mixed results. Two bills requiring notification of eligibility for Healthy Families -- AB 1735 and AB 1974 -- passed. However, legislation sponsored by the California Association of Health Plans, which represents the state's HMOs, to provide a $65 per month tax credit to small employers (with 25 or fewer employees) to offset the cost of purchasing health insurance was defeated.

"It didn't seem to have the political sex appeal of things like the vehicle license fee tax reduction, so it was put on the back burner," said the CMA's Thompson. The CMA supported the bill.

Meanwhile, Sacramento did manage to forge an agreement ending a long-running feud between a majority of L.A. County supervisors and Latino lawmakers over the size of a new County-USC Medical Center, the nation's largest public hospital that treats many of the county's 3 million uninsured patients.

Two years ago, county supervisors -- on a 41 vote with Gloria Molina dissenting -- passed a measure authorizing a 600-bed hospital to replace the outdated and earthquake-damaged medical center in Boyle Heights.

Molina, county health officials and Latino state lawmakers backed a proposal for a 750bed hospital, which the remaining supervisors rejected as too costly.

After months of on-again, off-again negotiations, an 11th hour compromise was pushed through by Assembly Speaker Bob Hertzberg, D-Van Nuys. It called for a 600-bed County-USC facility in Boyle Heights and a satellite facility in Baldwin Park that would have 80 beds.

L.A. County Health Services Director Mark Finucane, who had earlier backed the 750-bed proposal, praised the deal in a Business Journal roundtable last week, saying it would help reduce travel times for patients in the San Gabriel Valley.

Cutting HMOs a break

While expanding health care coverage for the uninsured and related issues dominated the health care debate this session, several bills were introduced dealing with managed care reform. However, with one exception, all those bills were defeated.

The biggest HMO-related bill was AB 1751, by Assemblywoman Sheila Kuehl, D-Los Angeles. The measure would have prohibited health plans from requiring people who enroll in their plans to accept binding arbitration. Consumer advocates viewed the bill as the second major part of HMO reform after last year's passage of a limited HMO liability package.

"This was to be the No. 2 of a one-two punch," said Pontius of Consumers for Quality Care, an L.A.-based consumer health care lobbying group. Pontius said intense lobbying from HMO killed the bill.

But California Association of Health Plans president and chief executive Walter Zelman characterized the action as a successful effort by his group to convince legislators to hold off on the measure.

"We just passed a whole raft of HMO reform legislation and there was a consensus from the governor and the Legislature that we need to wait and see how those reforms work before they enact any more," Zelman said.

Two other key bills involving HMOs went down to defeat. One, SB 2007, by state Sen. Jackie Speier, D-San Mateo, would have granted physicians an exemption to federal antitrust law and allowed them to enter into collective bargaining agreements with HMOs. The other, SB 1224 (also by Speier), would have required state contractors to provide health insurance to their employees.