While CMA supports disclosure, the association leadership believes that DMHC has misinterpreted SB 260. CMA successfully sued DMHC in 2001 to prevent the implementation of the department’s disclosure regulations. CMA argued that the regulations would give health plans an unfair advantage when negotiating contracts with medical groups, increasing the likelihood of physician group bankruptcies and the resulting disruptions in patient care. The judge struck down the regulation, stating that DMHC had failed to address the effects that the financial data disclosure would have on contract negotiations.

In January, DMHC issued a new set of regulations that again required full public disclosure of risk-bearing medical groups’ financial statements. In its objections to the new regulation, CMA emphasized to DMHC that the 1999 financial solvency legislation was not a disclosure statute but rather a framework for DMHC to collect financial information that would help it address the solvency problems plaguing California’s physician groups.

CMA-supported SB 261 would require DMHC to collect medical group financial information and disclose to the public whether or not risk-taking physician groups are meeting the four financial solvency standards already in law. However, the bill clarifies that detailed proprietary financial statements are to be kept confidential. Should a group not meet the four standards, the bill would require DMHC to report how close the group is to meeting the standards and whether the group’s financial status is improving.

SB 261 would also require groups to report to DMHC the percentage of their claims that are paid on time by health plans. CMA’s experts believes this additional data will provide a more accurate picture of a group’s financial situation. The bill also includes clarification on the "corrective action plan" process to ensure the DMHC implements a system by which groups can resolve payment and contract problems with health plans.

As long as the regulations are on hold, DMHC will not be collecting or disclosing physician groups’ financial information.

Contact: For information on DMHC regulations and reporting requirements, contact Elizabeth McNeil, 415/882-3395 or emcneil@cmanet.org. For information on SB 261, contact Shannon Smith-Crowley, 916/444-5532 or ssmith-crowley@cmanet.org.