"In an odd regulatory twist, the department has no real authority over the medical groups but is charged with enforcing a new law that requires them to be financially solvent."


San Francisco Chronicle Wednesday, January 28, 2001

New HMO Watchdog Settles In
State agency is unique in U.S.
Victoria Colliver, Chronicle Staff Writer

As head of a new state agency that regulates HMOs, Daniel Zingale takes the "do no harm" part of the Hippocratic oath and applies it to the consumer.

"I'm more interested in preventing harm to a patient rather than putting a price tag on it after the patient has been harmed," said Zingale, director of the Department of Managed Health Care in Sacramento.

It's a philosophy he calls prevention regulation.

"It's more like an emergency operation than an autopsy. You have to save the patient first," he said.

The Department of Managed Health Care, which opened its doors July 1, was created as part of a sweeping package of more than 20 health maintenance organization reforms enacted last year. Among other things, the measures made HMOs liable for malpractice lawsuits and improved their internal grievance process.

With a budget of $40 million and a staff of about 300, Zingale's department has enforcement power over HMOs but not preferred provider organizations (PPOs), doctors groups or hospital systems. It is the only agency in the country dedicated solely to regulating HMOs.

HMO executives and consumer advocates are just starting to take stock of how the HMO czar and his agency are doing. The verdict so far is good, but the department is still in a honeymoon phase and hasn't yet tackled some of the industry's biggest problems.

It's clear the state's health system is in trouble. Physician groups are going out of business, hospital emergency services are draining money and many people distrust managed care. HMOs, in particular, have become synonymous in the minds of many with low-budget, cut-rate care in California, the birthplace of managed care.

STILL A LONG WAY TO GO

Steve Thompson, vice president of government affairs for the California Medical Association, which represents doctors, gives the new agency high marks for its focus on patients. But, he says, it has a long way to go before getting a true handle on the issues.

"They haven't yet come to grips with the basic fundamental financial problems of the health care system," said Thompson, who also serves on the department's advisory board.

That the 40-year-old Zingale's emphasis is on consumer advocacy comes as no surprise.

Most recently he headed AIDS Action in Washington, D.C., and previously worked for Human Right Campaign, the nation's largest gay/lesbian human and civil rights group, as public policy director.

As a gay man with an activist background, Zingale wasn't the most conventional choice to become a government bureaucrat. With his longtime partner, Chuck Supple, Zingale is raising two sons, one 6, the other 13 months.

Zingale comes across as down-to-earth, unassuming. But it's clear where his loyalties lie.

"I don't deny or apologize for my own experience and background, which is as patient advocate," he said.

"Californians have lost faith in managed health care, and the best thing we could do is put the patient first."

The Sacramento native, who graduated from the University of California at Berkeley and has a master's degree in public administration from Harvard University's John F. Kennedy School of Government, also has strong ties to Gov.

Gray Davis. He served as deputy controller and chief of staff from 1987 to 1991 when Davis was state controller.

CHALLENGED TO ROCK BOAT

"He's a loyalist to Davis, but I think he's also dedicated to justice. His biggest challenge is going to be to rock the boat within the administration without falling off," said Jamie Court, advocacy director for Santa Monica's Foundation for Taxpayer and Consumer Rights.

Court, as a consumer advocate, wants Zingale to send the HMOs a message by hitting them hard with fines whenever they err.

"We're looking for this guy to wield a stick and make sure these HMOs behave," he said. "He's a sheriff, and we haven't really seen his star or a gun."

While California now has a state agency dedicated to regulating HMOs, most states incorporate those duties within the department of insurance, health care or another state agency.

California used to regulate HMOs through the relatively obscure state Department of Corporations, which had the primary duty of regulating financial securities.

Not only were consumers unaware the agency existed, it generally did not have the most aggressive reputation for regulating the health plans.

In a survey conducted in June—a month before the Department of Managed Health Care opened its doors—the Kaiser Family Foundation found 90 percent of those surveyed had no idea which state agency regulated HMOs.

It's not as if they didn't have problems with their health plans. The survey found 51 percent of insured Americans have had some trouble with their health plan during the past year and generally gave HMOs a low grade.

The department just leaped through a major hurdle by establishing a system, effective Jan. 1, for conducting independent medical reviews, as required by those more-than 20 reforms passed in 1999.

'LIKE NIGHT AND DAY'

"It's truly like night and day compared to the old regime under the Department of Corporations," said Larry Levitt, a vice president of health policy for the Kaiser Family Foundation who also serves on the department's advisory board. "He (Zingale) has put the department on the map."

In a reference to the previous regulator's obscure identity, Levitt added, "At least you have some chance of finding it in the phone book."

While Zingale doesn't want to spend his time issuing what he calls $5 parking violations, he rejects any notice he has been soft on the health plans.

"I don't think anyone in any plan thinks we have a weak regulator or an inactive regulator on our hands," said Walter Zelman, president of the California Association of Health Plans, an HMO trade group. "They are hopeful we have a thoughtful regulator who will keep an open eye and keep an open ear."

Zelman said the plans are more worried about erratic and inconsistent regulation than they are about strong regulation.

Since its inception, the department has issued eight fines totaling $275, 000. But fines aren't the only enforcement tools in the department's arsenal. It also can suspend or revoke licenses. And, in one recent case involving Healthdent of California Inc., the department turned the HMO over to a conservator because of the plan's severe financial problems.

A RECORD FINE

From Jan. 1, 2000 to July 1—before the new department was in place but while Zingale was director designee—the Department of Corporations issued four fines totaling $1.1 million.

Of that amount, $1 million was levied against Kaiser Permanente in what is considered one of the largest fines ever involving a single patient. Zingale said he was involved in the decision and has upheld the fine.

"While the outcome isn't always what we'd desire, I have found they're very open," said Patricia Siegel, senior vice president of quality, member and regulatory services for Kaiser Permanente's California division. She declined to discuss the fine.

"The tone has been set for a cooperative working relationship. We understand they are the regulator, and, if they have to, they will take the hard actions," she said. "As a health plan, that's OK with us."

Michael Chee, spokesman for Blue Cross of California, commended the agency for its open-door policy.

"Next to the power crisis, we think he (Zingale) has the toughest job in the state," Chee said. "Health care is one of the most complex issues to deal with because of the personal impact, the financial impact—it touches everyone's lives."

Zingale is proud of the department's HMO Help Center, a 24-hour hot line staffed by about 75 people, including customer service representatives, nurses, lawyers and administrators.

The Sacramento help center, which opened the same day as the department, hasn't been overwhelmed with calls because it's still relatively unknown. But it has proven effective in resolving consumer questions and complaints.

In January 2000, when HMO questions were still being handled by the Department of Corporations, 69 percent of calls remained open, or unresolved, after 30 days. By November, four months after the department's inception, that percentage had been reduced to 14. As of Dec. 31, only 5 percent of calls were unresolved.

The help center, which can be reached toll-free at (888) 466-2219, received 13,939 calls in December. About half simply concerned how to contact the HMO and could be answered through an automated system. But others have potential health consequences.

For example, after Blue Cross and Sutter Health hospitals reached an impasse in contract negotiations last month, a Blue Cross member called to say the health plan initially refused to cover a pending operation scheduled with a Sutter-affiliated doctor. But the procedure was approved after the department's help center intervened.

"What surprises me is how often the calls we make are in favor of the patient," Zingale said, adding the vast majority of problems are resolved on the spot or within 24 hours.

As disruptive as the Blue Cross and Sutter dispute has been to patients, the department has no enforcement role in the dispute other than to step in when a patient's rights have been violated or a law has been broken.

CONFERENCE CALL PROGRAM

The center recently started a pilot program with PacifiCare that puts a center representative, the patient and a HMO official on the phone at the same time rather than having the department call the plan on a patient's behalf. The program is to be extended with Kaiser Permanente at the end of the month.

While the help center may be an improvement in patient outreach, health care experts say the department's biggest challenge will be to get the doctors groups and hospital systems in better financial shape.

In an odd regulatory twist, the department has no real authority over the medical groups but is charged with enforcing a new law that requires them to be financially solvent.

Zingale said he already has proposed requirements that medical groups conduct financial audits and submit them to the department.

"A surprising number of medical groups don't do financial audits," he said. "We currently hold those who sell frozen yogurt to higher financial standards than we hold medical groups."

Thompson, of the California Medical Association, admits that physician groups are wary about handing over their financial data to a government agency.

But he says something has to be done to restore financial solvency to the system. To the doctor groups, the main problems lie with the low rates the health plans and the federal government pay providers. The HMO groups, meanwhile, contend many hospitals and physician groups charge too much.

Thompson said the new department has a long way to go to resolve the complex problem.

Zingale realizes he won't get anywhere by painting the HMOs as the bad guys and pitting them against consumers.

"Everyone is recognizing this is a new era, and I include the plans in this, " he said.

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HMO Rights You have the right to:
• Choose a primary care doctor and, in most cases, see one within 15 miles or 30 minutes of your home.



• See a health care professional when necessary and keep your doctor if you have an acute condition, are hospitalized or are three months pregnant.



• See a specialist when medically necessary.



• Receive emergency care at any time.



• Get a second opinion.



• Sue your health plan or appeal a decision when a benefit is denied.

If you suspect your rights have been violated:
• Contact your HMO first and file a grievance if necessary.



• Call the HMO Help Center if the dispute cannot be resolved. 24-hour hot line number: (888) 466-2219. Web site: www.hmohelp.ca.gov.

Source: Department of Managed Health Care

E-mail Victoria Colliver at vcolliver@sfchronicle.com.

copyright 2001 San Francisco Chronicle