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EXECUTIVE SUMMARY
In a time of increasing distrust in and confusion about the health care system, Californians need better information about managed care. They need information about the differences between health maintenance organizations ("HMOs") and medical groups, information on their rights, information on how to navigate an increasingly complex health care system, and information about how the State is ensuring that all HMOs provide a basic level of quality health care. One source of this information should be the California Department of Corporations (the "Department"), which oversees HMOs. This report documents the very limited and flawed efforts that the Department has undertaken in these areas under past administrations. More importantly, the report makes recommendations that can serve as part of a new day for the Department and the State of California - a day in which consumers can look to a state agency for unbiased information and assurance of protection.
In "Manage to Care: How California Can Better Inform Consumers About Managed Care," Consumers Union and the Center for Health Care Rights examine how the Department has presented itself to the public and made its products and services accessible to consumers. Specifically, the study makes findings and recommendations about annual reports on complaints to the Department's toll-free complaint line ("Annual Hotline Reports"); reports on the timeliness of HMOs' internal grievance procedures ("Late Grievance Reports"); and reports on periodic reviews of HMOs' compliance with medical and organizational requirements ("Medical Survey Reports"). Some of the key findings and recommendations are:
The Department has been an invisible regulator.
Few people know that the Department is the state agency that regulates HMOs, so it is hardly surprising that consumers generally are unaware that they can turn to the Department for help with HMO problems. The Department has made ineffective use of the media to publicize its role as regulator, the toll-free hotline for HMO complaints, and the reports on HMO performance that the Department is required by law to provide consumers. The Department has not effectively promoted itself or its complaint hotline through telephone books. It has not published consumer education materials to help consumers make informed HMO choices, nor provided analysis to consumers of the data it compiles.
Recommendations
Due to inadequate promotion and weak data collection, analysis, and reporting, the complaint hotline is not as useful to consumers as it was intended to be.
Since 1995, the State has operated a toll-free hotline that consumers with complaints about their HMOs can call for assistance. Despite the hotline's potential for both resolving complaints and providing comparative information on HMOs, the Department has not adequately informed consumers about the hotline. Insufficient promotion of the hotline in telephone books and through the media, as well as inconsistent notice of the hotline in correspondence from HMOs and medical groups to consumers, hinders awareness, and ultimately, use of the hotline. In addition, the Annual Hotline Reports do not show whether individual complaints are upheld or denied, nor does it state how long the Department takes to resolve complaints.
Recommendations
Variations in reporting standards for Late Grievance Reports and the lack of comparative measures make information on HMO complaint handling nearly meaningless to consumers.
Since 1997, HMOs have been required to file Late Grievance Reports with the Department on a quarterly basis. These reports give information about grievances filed by consumers that have been pending with an HMO for 30 or more days. This information is an important indicator of how quickly an HMO resolves grievances.
Although individual HMOs file Late Grievance Reports, the Department does not summarize these reports in a way that would facilitate comparisons among HMOs. In addition, inconsistent definitions and reporting standards, including possible differences in how HMOs define "grievance," make valid comparisons about grievance handling impossible. Clear guidelines are needed in a number of key areas, including the timing of which grievances to report and the closing date of grievances for reporting purposes.
Recommendations
The effectiveness of medical surveys is severely undercut by the Department's failure to conduct surveys and publish Medical Survey Reports in a timely manner and to provide consumer-friendly summaries to the public.
At least once every three years, the Department is required to conduct a review of each HMO's compliance with medical and organizational requirements ("medical survey"), followed by a publicly available report within 180 days of the survey's completion. Consumers Union's 1996 report examining medical surveys, "A Shot in the Dark," found that the Department was not conducting medical surveys or publishing Medical Survey Reports in a timely fashion. Furthermore, the Medical Survey Reports and their summaries were difficult for consumers to get, and those that were obtained were difficult to understand.
Regrettably, the Department's performance regarding medical surveys is largely unchanged since our 1996 report. Consumers are placed at risk because the Department continues not to meet statutory requirements for completing medical surveys. In fact, the Department met the 3-year timeframe for completing surveys in only 1 of the 12 medical surveys we reviewed. Furthermore, for each Medical Survey Report we reviewed, the Department failed to comply with the requirement of publishing the report within 180 days of completing the corresponding medical survey. On average, the Department took more than a year to release Medical Survey Reports. In addition to being dilatory, the Department has made the Medical Survey Reports difficult to understand. The summaries of Medical Survey Reports, meant particularly for the public, have similar weaknesses. They are too long and are almost incomprehensible due to their reliance on medical and legal jargon.
Recommendations
While this report focuses on the Department's public face, equally important are the Department's regulatory efforts that underpin the reports discussed here. Because we did not audit the Department's actual handling of hotline complaints, how medical surveys were conducted, or how HMOs handled grievances, these elements are outside the scope of this report. Furthermore, this report does not consider two other vital Department functions: enforcement actions and financial audits of HMOs. Each of these tasks is critical to ensuring the medical and fiscal soundness of HMOs and are areas in which the Department must make public the scope and nature of its activities.
Governor Davis and his Administration must face a number of critical issues before oversight by the State can catch up to the reality of the health care system in California. The Davis Administration must make the State's regulatory oversight of HMOs credible. To that end, communicating with the consumers of California is key. That is the subject of this report. With the new Administration, the time has come to change course, shift the focus toward educating consumers, and move California into the vanguard of managed care consumer protection and information. Regardless of which state agency is responsible for oversight of HMOs, this report provides guidance to improve its service to California's health care consumers.
