Opening a major rift along ownership lines in the managed-care industry, a group of not-for-profit HMOs and consumer organizations led by Kaiser Permanente last week called for federal consumer-protection standards.
The group called for "an appropriate government entity" with authority to enforce standards.
Besides Kaiser, other organizations involved are Group Health Cooperative of Puget Sound, HIP Health Insurance Plans, the American Association of Retired Persons and Families USA.
The American Association of Health Plans, which is the managed-care industry's trade group, and individual HMOs contacted by MODERN HEALTHCARE said they oppose further legislation to enforce standards. The AAHP calls such laws "micromanagement."
The not-for-profits' split from the AAHP on this key issue pulls out another brick from the industry's united front.
Two major for-profit HMOs-Cigna HealthCare and Aetna U.S. Healthcare-already have left the Washington-based AAHP. Kaiser, however, is still a member.
Meanwhile, the move puts Kaiser on high ground as it battles attacks from local unions, poor reports on its Northern California hospitals and ongoing employee discontent. Just last week a Los Angeles watchdog group released details of what it said is an internal Permanente physician newsletter showing low physician morale and frustration at budget cuts. The group, which is called Consumers for Quality Care, says Kaiser must become more accountable.
But Oakland, Calif.-based Kaiser, the nation's largest HMO with 8.7 million enrollees in 19 states and the District of Columbia, is in a more defensible position now. It essentially can say that if what they're doing is wrong or inadequate, they are willing to be judged against the law.
The not-for-profits proposed standards covering 18 areas, including access and continuity of care, coverage of emergency services, confidentiality of patient data, provider reimbursement incentives and utilization management.
They want President Clinton's healthcare quality commission, which is expected to draft a national patient bill of rights, to consider the principles in its effort.
The group's move upstages a program of voluntary standards launched last year by the AAHP called "Putting Patients First." That self-policing program has been widely viewed-and sometimes criticized-as an attempt to head off more federal and state laws regulating the behavior of managed-care plans (May 12, p. 37).
The Kaiser group said it believes the AAHP's program has not gone far enough to repair consumer trust, raise the level of poorly performing plans and stem the barrage of state and federal legislation.
While supporting "Patients First," Kaiser had been considering calling for enforceable standards. In an interview with MODERN HEALTHCARE last spring, Steven Zatkin, Kaiser's vice president of government relations, said: "We support the AAHP effort, but there have been some who have argued that it may not be enough. Not all plans are AAHP members, and not all are regulated. Many of us are national plans and deal in multiple states. Certainly a case can be made for national standards that apply to all plans."
Karen Ignagni, president of the AAHP, said, "Any significant changes in the current regulatory framework should be seriously and deliberatively evaluated to understand their impact on voluntary, employer-based health coverage."
Several HMO executives said they agree in principle with Kaiser's proposed standards, many of which are already covered by existing regulations. They said they believe in the need to restore trust in healthcare but are leery of the impact of further legislation on innovation and price.
The rift is bound to widen. PacifiCare Health Systems said the not-for-profits' call for disclosure of an HMO's medical-loss ratio-the amount of money spent on medical care-needs discussion.
Cypress, Calif.-based PacifiCare is a managed-care company covering 4 million enrollees in 14 states and Guam.
Investor-owned plans like PacifiCare disclose quarterly how much of the premium dollar is spent providing healthcare, while not-for-profits are exempt from public disclosure, PacifiCare said.
Kaiser touts its high medical-loss ratio as setting it apart from for-profits. But PacifiCare said not-for-profits often count administrative services as medical expenses.
Meanwhile, the Kaiser-led coalition said it submitted its standards to the quality commission, the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. Families USA Executive Director Ron Pollack, who sits on the 32-member commission, said he believed it will consider the document.
At a recent commission meeting, co-chair HHS Secretary Donna Shalala said the commission's patient bill of rights should be the basis for federal legislation.
That prompted a letter from Ignagni, who said the commission was not looking at the full economic impact of changing federal laws.