California heats up: will a jury decide the future of medicine? - Managed Care on Trial

Physician Executive, Sept-Oct, 2000 by Earl R. Washburn

The CMA remains silent on the issue of not-for-profit health plans. California's MCOs have been consolidating for the last decade. The three remaining not-for-profit plans of any size are Kaiser, Blue Shield, and Lifeguard. The largest for-profit plans are Blue Cross, PacifiCare. HealthNet--all named in this suit. Other MCOs have relatively low California market penetration. Clearly, physicians and hospitals see the for-profit MCOs as a breed apart. Thus, they are the targets in this suit.

The largest HMO in California is Kaiser, which is also the oldest and operates on a much different basis than all the rest. Kaiser is a closedpanel HMO that contracts exclusively with the Permanente Medical Group. Quite a few PMG doctors are members of CMA. Many of the issues raised by the CMA lawsuit, such as utilization review, clinical practice guidelines, drug formularies, and the like take on a different flavor when they are part of an integrated, closed-panel, not-for-profit HMO such as Kaiser Health Plan. CMA clearly hopes to keep CMA v. Blue Cross et al. focused on the actions of for-profit managed care companies while avoiding the not-for-profit managed care organizations completely.

One to watch

An increasingly nasty and litigious health care environment cannot be comfortable for physicians in general or physician executives in particular. Many physician executives are finding themselves on one side or the other of issues such as these while still having to do business with those on "the other side." Physicians are generally not well trained to deal with this sort of situation. Thus, physician executives need to monitor their own reactions when dealing with the "enemy." These stressful situations call for a calm demeanor and carefully considered dialog.

We can hope that some sort of acceptable early settlement will come out of these class action lawsuits, but, more realistically, we should expect the cases to consolidate and go to trial. Perhaps the plaintiffs will prevail. This happened in the tobacco settlement. A settlement or plaintiff victory scenario will quickly and profoundly change health care funding and delivery. On the other hand, the defendants could triumph. ERISA presents a formidable defense for HMOs. If so, expect more of what we have now for years to come. Either way, the stakes are huge as this drama plays itself out.

This is definitely one to watch.

Note

lam an active member of CMA, but my purpose in writing about this lawsuit is reporting about it rather than advocating its cause. All of the information contained in this article was taken from publicly available sources.

References

(1.) California Mcdical Association. CMA Alert. Deccmber 10, 1998.

(2.) Fisher, Jean P. Catholic Healthcare Sues Blue Cross. Sacramento Bee. June 10, 2000.

(3.) Fisher. Jean P. Health Plans Fall Short In Provider Greup Poll. Sacramento Bee. June 28, 2000.

(4.) Fisher, Jean P. Mercy Takes a Hit in Fight with Union. Sacramento Bee. June 5, 2000.

(5.) Robertson, Kathy. CalPERS Urged to Reconsider its Vote to Exclude HMO. Sacramento Business Journal, June 30, 2000.