American College of Physicians: Internal Medicine — Doctors for Adults ®

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California: shaking things up

Physicians lead backlash against HMO practices

From the April 1996 ACP Observer, copyright © 1996 by the American College of Physicians.

By Deborah Gesensway

Berkeley, Calif., gastroenterologist John W. Roark, MD, is mad enough about what managed care has done to his practice and his patients that he is spending the month passing petitions around town.

If he and his friends in several health care labor unions and community action groups across the state can collect 700,000 signatures by the end of April, Californians will vote on a ballot initiative in November that would criminalize some common HMO practices involving denial of care, financial incentives and gagged physicians.

Just as California has perhaps the nation's mightiest managed care industry, it also is home to some of the strongest backlash against managed care practices. According to an article in the Feb. 15 issue of Annals of Internal Medicine, California already has "the most advanced regulation" of the managed care industry.

Last year, the California legislature improved the process patients and physicians follow if they want to file a grievance with the state against an HMO. It prohibited health plans from including "hold harmless" clauses in their provider contracts and from awarding bonuses to their employees for denying health care services. Today, there are currently a half-dozen anti-gag bills in the legislature, two of which are sponsored by the California Medical Association (CMA).

The CMA this year is also lobbying for legislation that would force HMOs to document the actuarial basis behind their capitated payments to doctors and adjust these payments to account for severity of illness.

"There is a large school of thought that plans are setting their rates based on what the market will bear, not on actuarial data," said CMA spokeswoman Danielle Walters. "The thinking is that when you have for-profit health plans, you need to have a check in the system to ensure the capitation rates are adequate to serve the population."

Moreover, this year, two separate petition drives are under way throughout the state to qualify propositions for the November ballot. Dr. Roark's is being sponsored by the Service Employees International Union (SEIU), several Bay area consumer health groups and California Physicians Alliance, which in the past has advocated a single-payer health care system. Another ballot initiative is being spearheaded by the California Nurses Association.

"In the 1980s, it was decided that it was first unethical and then illegal to own a lab that you could refer to," Dr. Roark said. "Now, we're seeing the flip side of that. When [a doctor] can be penalized [by a health plan] just for referring a patient to somebody else, I think that is unethical, and the public is starting to get educated and outraged about it."

Under the proposition he is backing, called the Health Care Patient Protection Act of 1996, HMOs would not be allowed to pay physicians bonuses for withholding or delaying medically necessary care. It would also prohibit HMOs from preventing physicians, nurses or other caregivers from informing patients of all health care options, even if the HMO is not going to pay for them. HMOs would be banned from deselecting or sanctioning any physician who advocates for a patient or complains to authorities. "Termination without cause" would not be allowed. Last year, Dr. Roark said he lost about 15% of his practice overnight when one IPA deselected him from its panel of specialists.

"There is a huge chilling effect going on because you know that everything you order counts against you," Dr. Roark said.

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