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| | Special Interest Spending Showdown
By Robert Warne - October 21, 2002The San Jose Mercury News ran a story over the weekend about an inconspicuous battle between hospitals and insurers last year over the passage of AB 1177. It focused on the money poured into political candidates’ coffers when pending bill issues have significant financial stakes.
The AB 1177 showdown involved control over fee schedules, fueled by the growing popularity of a controversial spinal fusion procedure.
The bill authored by then chairman of the Assembly's insurance committee, Thomas Calderon (D-Montebello) authorized health care providers and employers or carriers to contract for reimbursement rates different from the official medical fee schedule (OMFS).
Leading up to the Sept. 5, 2001 passage of the bill, Calderon and Governor Gray Davis reeled in a significant wad of cash from parties on both sides of the legislation.
Hospital owner, Michael Drobot, donated $200,000 in one day to Davis’ campaign through four of his companies. Drobot, the majority owner of Pacific Hospital in Long Beach and other hospitals such as the Community Hospital of Los Gatos, owned by Tenet Healthcare, that perform titanium-cage spinal fusion, could have lost out on millions of dollars if the bill was vetoed.
On the other side of the issue, donating to the same candidates where insurance carriers. Half of the 27 insurers that belong to the California Workers' Compensation Institute donated a total of about $1 million to the Davis campaign. Fireman’s Fund and Zenith Insurance accounted for $732,500 of the $1 million, according to The Mercury News.
Insurers wanted the bill vetoed so that costs could be kept down for all medical procedures covered by workers’ compensation, but especially spinal fusion surgery that can cost upwards of $100,000.
Insurers lost that battle, but on a positive note, the bill was only a temporary fix to the pricing issue. AB 1177 is a placeholder and will be superseded when the administrative director of the Division of Workers’ Compensation adopts an official medical fee schedule. |
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