CMA sues managed care agency over financial disclosure

The California Medical Assn. objects to a state rule forcing physicians to release financial records.

By Julie A. Jacob, AMNews staff. Oct. 1, 2001.

The California Medical Assn. is suing the California Dept. of Managed Health Care in an attempt to stop the state agency from releasing financial information on medical groups. The CMA asserts that such data will give health plans the upper hand in negotiating contracts and will confuse patients.

The CMA filed the lawsuit Sept. 5 in the Superior Court of California in Sacramento County. The state medical association is seeking an injunction to prevent the managed care department from implementing regulations that would make the financial data from medical groups available to patients, the media and the general public. The regulations were scheduled to go into effect Oct. 1. A ruling on the injunction had not been made at press time.

The CMA says that the DMHC is incorrectly interpreting California Senate Bill 260, a law passed in 1999 that requires medical groups to provide financial information to a "single external party" as a way to flag medical groups that may be on the verge of financial instability. The law, however, also states that such information should not be used in a way that will "adversely affect the integrity of the contract negotiation process."

The California Legislature passed the bill on the heels of the financial failures of numerous independent practice associations and physician practice management companies. It turned out that these groups accepted risk contracts with rates too low to be sustainable, and their failures resulted in millions of dollars in unpaid bills to doctors and affected millions of consumers whose access to their doctors was dictated by contracts with those organizations. [...]