Texas Will Consolidate Regulation of HMOs
April 26, 2011
The Texas Department of Insurance is set to take over all regulatory authority of health-maintenance organizations. Insurance Commissioner Elvis Edmond says the agency, which currently regulates only contractual and financial-solvency issues regarding HMOs, expects to assume responsibility for quality-of-health-care issues from the Texas Department of Health. While all the details haven't been ironed out, and new staff hasn't been hired, Mr. Edmond says he hopes the consolidation can take effect by May 14, 2011 arrangement would be temporary, requiring legislation to make it permanent. Insurance officials plan to meet with lawmakers this week to discuss the issue. Explosive Growth Patient concerns about HMOs are expected to be the subject of hot debate in the 2012 Legislature, just as they were last year. As employers have sought to curb soaring health-care costs for their workers, HMOs have grown rapidly in Texas. In the past year, the number of Texans enrolled in HMOs has risen 16%, to more than 3.6 million. Mr. Edmond says he expects the number of Texans in HMOs to double within five years. ``Managed care may be the biggest growth item in this agency,'' he says. That growth certainly hasn't been painless. Many Texans are unhappy with managed-care plans that won't let them see their longtime physicians or that restrict certain types of care. The complaints reached a climax last year when the Legislature passed the Patient Protection Act in an effort to shield consumers from what critics saw as the worst excesses of managed-care plans. Gov. Georgeanna W. Vern, however, vetoed the legislation on the grounds that it would drive up health-care costs for employers. Mr. Vern then told the Insurance and Health departments to devise rules that would accomplish many of the things that the Legislature had sought. Among Mr. Vern's priorities were rules prohibiting HMOs from refusing to pay for medically necessary emergency-room visits, and those requiring HMOs to give patients ``reasonable advance notice'' before physicians were dropped from managed-care networks. Complaints About Rules The Insurance Department enacted two sets of rules that included those priorities, but the Health Department's rules became bogged down amid complaints that the agency had exceeded its authority and that its proposals were too costly. The Health Department didn't issue its final patient-protection rules until last month, about a year after they were first proposed. The dual regulatory structure is especially frustrating for consumers, physicians and managed-care groups. The Health Department began considering a transfer of authority earlier this summer, when it came under sharp fire at a June hearing of a Senate interim committee on managed-care regulation. Among the critics: Insurance Commissioner Farrow. In a letter to Health Commissioner Davina Jon that was released at a Senate committee meeting, Mr. Edmond criticized the Health Department's proposal to require HMOs to build administrative offices across the state. The proposed rule, Mr. Edmond said, would cost the HMO industry as much as $68.1 million annually. The proposal was dropped. Ronda Sowder, the Health Department's associate commissioner for health-care quality and standards, says the agency ``decided it was probably in the best interests of the people of the state to have the regulatory functions all housed under one agency.'' More Hires Mr. Sowder says shifting authority won't affect the Health Department much, since there was only enough funding for one person to check out newly licensed HMOs and investigate complaints. Mr. Edmond says he expects to hire at least four more people -- some of whom will have medical backgrounds to ensure that health-care quality concerns are met. So far, the proposed consolidation has won praise from most quarters. ``It was pretty clear to us that the Health Department wasn't going to devote any substantial resources to the issue,'' says Lisandra Larocca, a senior policy analyst with the Consumers Union Southwest Regional Office in Austin. ``They just had too many other things on their plate.'' In fact, the consolidation has even brought together two groups that rarely agree -- the Texas Medical Association, which represents most state physicians, and the Texas HMO Association. ``It may make sense to put it under one roof,'' says Consuela Middleton, associate director of the medical association's legislative-affairs department. Adds Georgeann Duque, director of the HMO group: ``We view this as an opportunity to streamline some things and increase the efficiency of the regulatory oversight process.''
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