MEDICAL MARKETS

California physicians leery about move to HMO liability

Unlike their colleagues in other states, California doctors prefer a measure that makes HMO medical directors, not health plans, liable for coverage decisions.

By Leigh Page, AMNews staff. June 28, 1999. - Additional information.

Despite doctors' misgivings, California appears poised to pass a bill to make HMOs liable for medical consequences of coverage decisions.

Both chambers of the Democrat-controlled state Legislature approved different versions of the measure in early June. Lawmakers could craft a compromise this summer, but Democratic Gov. Gray Davis, who favored the concept of HMO liability, has not yet indicated whether he will sign it.

A record 65 managed care bills, backlogged by eight years of resistance by former Republican Gov. Pete Wilson, passed either the state Senate or the Assembly in June, according to the California Assn. of Health Plans.

Many of those measures, such as external review of HMO coverage decisions, already have been enacted elsewhere. But only three states have passed HMO liability. A victory in California could bolster similar bills in the states and in Congress.

While physicians were key to passing HMO liability laws in Texas, Missouri and Georgia, California physicians show little support. In a state where managed care is pervasive, they worry that such a law could create more problems than it solves.

"If you say an HMO is liable [for malpractice], you are saying that it makes medical decisions," said Marie Kuffner, MD, president-elect of the California Medical Assn. "Our view in California -- and it should be every doctor's view -- is that the physician makes the medical decisions."

Rather than opposing HMO liability, the CMA supports legislation that would make HMO medical directors liable for coverage decisions, thus preserving physicians' authority.

Doctors objecting to HMO liability also cite a purely Californian concern. They want to preserve an unusually low $250,000 cap on noneconomic damages under the 1975 Medical Injury Compensation Reform Act.

The HMO liability legislation, lacking a cap on damages, could create a precedent that would "blow the cap off of MICRA," predicted Tom Riley, a lobbyist for the state chapter of American Academy of Family Physicians.

In fact, the Assembly just passed a bill that would adjust the MICRA cap for inflation. Originally sponsors wanted an $800,000 cap, and trial lawyers still want a higher increase.

But even if MICRA is unchanged, a law making HMOs liable for medical decision-making would let trial lawyers "make an end run around MICRA" by routinely naming HMOs in medical liability, predicted David J. Lerman, MD, a member of the executive committee of the Los Angeles County Medical Assn.

That hasn't happened in Texas, where only a handful of such cases have been filed in two years.

Legislation to make HMOs liable enjoys widespread support from consumer groups.

"Without the threat of damages, patients will continue to have no leverage against billion-dollar HMOs," said Jamie Court, executive director of the Consumers for Quality Care, a Santa Monica, Calif., group.

While HMO representatives claim that the governor has backed away from his support of HMO liability legislation, spokesman Michael Bustamante said Davis supports it to address "catastrophic harm that comes about as a result of an HMO overruling a doctor's orders."

Bills cover a wide range of issues

In the past, the former Republican governor and Democratic Legislature were so sharply divided on how or whether to oversee managed care that even widely accepted measures like external review were held up. Such measures are now expected to pass.

Even HMOs favor this approach, approved by both houses. Plans pledged to create an independent review system last fall, but many are now waiting for a law to be enacted, said Corey Black, spokesman for the California Assn. of Health Plans.

Sensing "a real drive to beat up on the industry," Black said HMOs are trying to support moderate bills. But they still oppose HMO liability, arguing that lawsuits are expensive and are filed only after the harm is done.

HMOs also oppose a bill allowing enrollees to seek care from any doctor they choose, arguing it would destroy physician contracting. And the industry says a mental health parity bill would raise costs.

Meanwhile, CMA supports several bills affecting doctors' payment that have been passed by the Assembly. They would raise the interest penalty for late pay to 12%, ensure that rate increases for Medi-Cal HMOs be passed on to physicians and require the state to report annually on the adequacy of Medi-Cal reimbursements.

But the CMA does not support bills that would simply reduce HMOs' powers, Dr. Kuffner said.

Doctors in favor of HMO liability and similar measures are saying, "Let's kill managed care and then we'll be back in the saddle again." But, she said, "It's not going to happen."

Back to top.

Back to top.