The California Legislature has sent to Gov. Pete Wilson a package of bills that supporters-led by the California Medical Association-say is designed to protect HMO patients.
But the HMO industry contends the bills would limit HMOs' ability to control costs and discourage plans from marketing to underserved populations, among other things.
A bill by Assemblyman Burt Margolin (D-Los Angeles) would require HMOs to disclose to consumers in their marketing materials the percentage of the premium dollar the plans expend on profits, administrative costs and direct medical services. It also would require the state to publish an annual report comparing the financial information on all health plans.
This information already is filed with the state, said Maureen O'Haren, director of legislative affairs at the California Association of HMOs. Plans with larger networks or those marketing to rural areas need to spend more on marketing and monitoring, she said.
"When you start publishing data like this, if you make administrative costs look bad, fewer plans will go into rural areas or maybe not market as heavily to individuals and to Medi-Cal and Medicare recipients, which is counterproductive to what good public policy would dictate," Ms. O'Haren said.
Another bill would force HMOs to pay for emergency-room care by non-HMO physicians, even when a patient's illness wasn't severe enough to warrant a visit to the emergency room, Ms. O'Haren said.
Other bills would require review of denied claims by a person trained in appropriate specific clinical issues. The proposed requirement is unnecessary because "HMOs use medical directors and utilization-review nurses. We do not have clerks reviewing claims," she said. Physicians could use the law to contest denials in court, which is "another litigation nightmare waiting to happen," she said.
The CMA said the reform package was introduced in response to numerous cases of patients suffering as a result of HMO decisions to deny or delay treatment. A recent study by the CMA showed that as much as 30% of the healthcare dollar, paid by businesses and consumers, is used by some for-profit HMOs for paperwork, advertising, executive salaries and profit.
But only one plan, which markets heavily to individuals, spent 30% of premiums on nonmedical costs, Ms. O'Haren said. The average for HMOs is 10% to 12%, she said.
Mr. Wilson has a month to sign the bills into law. "He has not indicated what he will do with them," a spokesman for the governor said.