HealthLeaders-InterStudy, a leading provider of managed care industry intelligence, finds that California Insurance Commissioner John Garamendi will be seeking tighter regulation of Preferred Provider Organizations (PPOs), a form of health insurance product favored by consumers in recent years over more-restrictive HMOs. According to the latest issue of California Health Plan Analysis, this will include a requirement that the health plans provide the same common benefits as licensed HMOs in the state.
"PPOs have grown substantially in recent years," said Jane DuBose, HealthLeaders-InterStudy analyst. "Consumers like them because they don't require as many prior approvals for care as traditional HMOs do, and insurers often find that they have lower administrative costs. But regulators have caught on that the majority of the health care insurance business has moved into an area they have only limited influence over."
In his remarks, Garamendi specifically targeted Blue Cross of California, a WellPoint subsidiary, and called it "unconscionable" that its profit margins on certain products have increased 15 to 24 percent in recent years. He also said that large premium rate hikes have contributed to the number of uninsured residents in California, which now total 6.5 million, or just over 20 percent of the non-elderly population, according to the California HealthCare Foundation.
Garamendi is recommending PPOs be required to provide the same common benefits minimums as licensed HMOs provide. That includes prescription drug coverage. He's also calling for strengthening rate review of PPOs with an emphasis on scrutinizing administrative expenses.
Other health plan news in California: * Blue Shield of California has concluded a large pilot program with physicians in its PPO network. * Health Net is buying part of the commercial, Medi-Cal, and Medicare membership of Universal Care. About Health Plan Analysis
Health Plan Analysis identifies key health plan trends, allowing healthcare businesses to create comprehensive strategic plans and sales strategies at state and local levels.
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