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Stanford Report, January 14, 1998

Enthoven helps doctor managed care: 1/14/98

Enthoven commission offers prescription for managed care

A new regulatory authority with expertise in health care management should replace California's Department of Corporations in overseeing health maintenance organizations, a state commission headed by the Business School's Alain Enthoven said in its final report to the governor and legislature on Jan. 5.

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The 77 multi-part recommendations of the California Managed Health Care Improvement Task Force are expected not only to provide a basis for state legislation in 1998 but to influence reform at the national level as well.

"The recommendations taken as a whole could make a significant difference and should help to restore the public's trust in their health care system," said Enthoven, the Marriner S. Eccles Professor of Public and Private Management.

Gov. Pete Wilson asked Enthoven, who is considered the "father of managed competition in health care," to lead the 30-person task force on managed health care reform. The group began meetings and public hearings in April 1997.

One of the most anticipated recommendations concerned ongoing oversight. Currently, health maintenance organizations (HMOs) are regulated by the state's Department of Corporations, which was formed to oversee the securities industry. The final report recommended forming a new body with specific expertise in health issues.

Other recommendations are aimed at improving the market for consumers and ensuring a minimum level of quality of care as well as making competition among health plans fairer.

A separate report on academic medical centers did not make recommendations but pointed to the shortage of financial data necessary to assess the economic impact of managed care on medical training and research in the state's nine academic medical centers, including Stanford. The centers were concerned that demands by government, employers and consumers to slow growth in spending could threaten their missions and traditional use of cross-subsidies. The report's authors conclude that the centers were "financially stable, at least through 1994," but caution that more recent data, if available, could show a different picture.

Some of the highlights of the main report:

*Standards for dispute resolution processes across health plans would be made consistent and patients who complain would receive full explanations for decisions no matter what plans they join. For serious problems, the task force recommended review of complaints by expert, independent third parties.

The task force considered but declined to support a recommendation to expand tort liability of HMOs contributing to medical decisions in the state. Federal law currently exempts HMOs serving self-insured employers from being sued. SR