The California legislature is mulling a bill that would slap a moratorium on limited Knox-Keene licenses, which allow physician groups and practice management companies to manage hospital risk, as do HMOs. Accusing physicians of "practicing insurance without a degree," the Foundation for Consumer and Taxpayer Rights, a watchdog group, is behind the bill, which was drafted after the crashes of FPA Medical Management and MedPartners.
Physician groups, forced by HMOs to accept risk, seek limited Knox-Keene HMO licenses so they can also manage hospital dollars. Currently, 22 have applications on file. The foundation argues that state regulations are so flawed that the insolvency protection implied by Knox-Keene is a "mirage."