6 HMOs Probed Over Drug Approval Policy

SACRAMENTO — Moving to fulfill a campaign pledge to step up scrutiny of health maintenance organizations, the Davis administration confirmed Wednesday that it is pursuing an “investigation of possible violations” in the way six HMOs approve drugs for patients.

Pending the outcome of the probe, state corporations counsel Brian Bartow sent a letter this week ordering the six HMOs to restore patient access to a “significant number of prescription drugs” that he said have been deleted from the approved state lists, known as drug formularies.

Bartow’s letter, released by the Department of Corporations, went to Kaiser Foundation Health Plan of Oakland; Aetna U.S. Healthcare of California, San Ramon; Health Net, Woodland Hills; Key Health Plan Inc. of Visalia; Molina Medical Centers of Long Beach; and United HealthCare of California, San Francisco.

The companies are cooperating with the probe but deny that they have acted improperly. The state action came in response to consumer complaints that HMOs were removing drugs such as Prozac from their approved formularies and then failing to make the lists public, as required under a state law by Assemblyman Martin Gallegos (D-Baldwin Park) that took effect Jan. 1.

Hailing the the Department of Corporations for responding to the complaints, Gallegos, chairman of the Assembly Health Committee, told a Capitol news conference: “There’s a new cop on the beat. This kind of rapid response would never have happened with the previous administration.”

Under former Gov. Pete Wilson, the Department of Corporations was criticized for lax administration of HMOs. In his campaign for governor, Davis said he favored some reforms and now has asked for a full-scale review of the way the state regulates HMOs.

Despite the review of drug formularies, Gallegos said in an interview that it remains unclear whether the Department of Corporations is best suited to oversee HMOs or whether Davis should push to set up a new regulatory agency.

As part of the investigation, Bartow set a Feb. 12 deadline for the HMOs to respond to 14 questions seeking detailed information on the behind-the-scenes process of creating the drug lists.

Dr. Sharon Levine, speaking on behalf of Kaiser’s physicians, said that the contents of its formulary are determined by practicing physicians and that drugs are reviewed every two or three months.

Levine, a pediatrician, acknowledged that the formulary was not ready Jan. 1 for public dissemination. But Levine maintained that Kaiser is complying with the law and is printing a 900-page list of approved drugs for its members.

Kaiser, she said, recently decided to remove six drugs and add 20 to its list. She said one of the six removed was obsolete.

Levine also denied that Kaiser is trying to skirt other provisions of the law that, starting July 1, will require HMOs to continue to provide drugs to patients--even after the drugs are removed from the formulary--if the drugs are safe and effective and prescribed by a physician.

Ron Yukelson, a spokesman for Health Net, said: “It doesn’t really affect us,” because Health Net has not made changes to its drug list in the new year.

Yukelson said the company made some changes in the last quarter of 1998--including adding nine drugs and deleting one--but those were changes consumers would have been aware of before the start of 1999.

“People signing up would have known. We understand the [Department of Corporations’] concern about classic bait and switch tactics, [but] Health Net would regard such a tactic as bad business and not a good way to build long-term loyalty” among members.

Yukelson said his company had planned on making additional changes to its formulary this quarter--deleting 69 drugs and adding 13--but will await Department of Corporations approval.

Bob Pena, spokesman for Aetna, said Aetna will comply with department requests. But Pena said the changes Aetna made in the new year apply to a small proportion of its HMO plan membership--just 7,000 people. Dr. J. Mario Molina, chief executive officer of Long Beach-based Molina Health Plan, said its pharmacy committee had recommended some changes to its formulary, based on doctors’ recommendations and the efficacy of drugs, to take effect March 1. But the company will hold off, as instructed by the Department of Corporations, he said.

Gladstone reported from Sacramento and Marquis from Los Angeles.