CMA recently submitted comments to the Department of Managed Health Care (DMHC) on the latest draft of its proposed financial solvency regulations. Although CMA has concerns with the proposed regulations, we are pleased that the department has removed language that would mandate full public disclosure of physician groups’ proprietary and confidential financial statements.

These regulations have gone through a number of revisions since the Legislature in 1999 passed a law (SB 260) requiring DMHC to identify medical groups and IPAs on the verge of financial insolvency and take steps to address the solvency problems plaguing California’s physician groups.

CMA successfully sued DMHC in 2001 to prevent the department from disclosing groups’ confidential and proprietary financial statements. CMA argued that the requirement 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 Superior Court in Sacramento struck down the regulation, finding DMHC had failed to address the negative effects that the financial data disclosure would have on contract negotiations.

“CMA has always maintained that SB 260 is not a disclosure statute but rather a regulatory statutue. The law’s purpose was creation of a framework for the DMHC to create and oversee a corrective action plan for troubled medical groups so that risk-bearing organizations and their contracting health plans can work together to constructively solve the significant solvency problems plaguing California’s medical groups,” said Aileen Wetzel, associate director of CMA’s Center for Economic Services. “We believe these revised regulations appropriately put the focus back on the corrective-action-plan process.”

CMA will continue to work with DMHC to ensure that these regulations fairly and effectively address the insolvency facing medical groups and IPAs throughout the state.

Contact: Aileen Wetzel, 916/444-5532 or awetzel@cmanet.org.