Health Maintenance Organizations

This report discusses the "health maintenance organization", which is an entity that provides specific health services to its members for a prepaid, fixed payment.

JUN 2 8 1983 SEALTH MAINTSNANCZ ORGANIZATIONS (ARCHIVED--01/18/82) ISSUE BRIEF NUMBER 1581077 AUTHOR: Price, Richard 3. E d u c a t i o n and P u b l i c W e l f a r e D ~ v i s i o n THE LIBRARY OF CONGRESS CONGRESSIONAL XESEAZCH SERVICE MAJOR ISSUES SYSTEM COMPLIMENTS OF Gene Snyder DATE ORIGINATED DATS UPDATED FOR ADDITIONAL INFORMATION 3225 ALL 2 8 7 - 5 7 0 0 CRS- 1 ISSUE DEFINITION I n FY81, t h e a u t h o r i t i e s c o n t a i n e d i n T i t l e X I 1 1 of the Public Health provided S e r v i c e (PHs) A c t e x p i r e d . Among o t h e r things, T i t l e XI11 has Federal support f o r t h e development and o p e r a t i o n of health maintenance The R e a g a n Administration. proposed t o phase out o r g a n i z a t i o n s (HMOs) . HMOs. According to the a s s i s t a n c e f o r t h e development and operation of private A d m i n i s t r a t i o n , f u t u r e development of HMOs c a n b e funded t h r o u g h t h e sector. B A C K G R O U N D A N D POLICY ANALYSIS The term " h e a l t h maintenance o r g a n i z a t i o n " g e n e r a l l y d e s c r i b e s a n entity w h i c h p r o v i d e s s p e c i f i c h e a l t h s e r v i c e s t o i t s members f o r a p r e p a i d , fixed payment. In one r e s p e c t , t h i s arrangement is like a traeitional health A monthly payment insures i n s u r a n c e program i n t h e f e e - f o r - s e r v i c e system. that a s u b s c r i b e r may incur some p o r t i o n of t h e c o s t s o f h e a l t h s e r v i c e s Curing a p e r i o d of t i m e . EM0 is different from the fee-for-service system and Xowever, an First, it ~ r a C i t i o n a 1h e a l t h i n s u r a n c e p r o g r a m s i n a t l e a s t t h r e e r e s p e c t s . i s d i f f e r e n t i n i t s approach t o payment t o p r o v i d e r s of h e a l t h c a r e s e r v i c e s . reimbursed for each of the i n a n HMO, p r o v i d e r s a r e a t r i s k a n d a r e n o t s e r v i c e s t h e y p r o v i d e , as p h y s i c i a n s i n t h e f e e - f o r - s e r v i c e system g e n e r a l l y are. health insurance S e c o n d , HMOs c a n b e d i s t i n g u i s h e d f r o m a ' t r a d i t i o n a l program i n the fee-for-service system by either providing directly or HMO subscriber arranging t o have provided those services s p e c i f i e d i n the A member o f a K l u e C r o s s / B l u e S h i e l d p l a n o r o t h e r p r i v a t e heai=h contract. insurance plan i n a fee-for-service arrangeaent does not have services Rather, t h e member secures his own p r o v i d e r or provided by the plan. p r o v i d e r s whom t h e p l a n m i g h t t h e n p a y . often i s allowed to choose his own F i n a l l y , a m e m b e r o f a n HMO m o s t phy-sician within t h e plan. However, t h e member i s n o t a l l o w e d , e x c e p t under from extraordinary circumstances of medical emergency, to seek care physicians or other providers olltside the plan. HMO a capacity T h e s e a s p e c t s o f t h e HMO c o n c e p t a r e a l l e g e d t o g i v e t h e and a f i n a n c i a l i n c e n t i v e t o c o n t r o l t h e u t i l i z a t i o n of h e a l t h s e r v i c e s s o a s t o reduce overall health care costs. ?aul T h e t e r m , h e a l t h m a i n t e n a n c e o r g a n i z a t i o n , was f i r s t a d v a n c e d 2 y D r . models: (1) t h e E l l w o o d i n l.973, a n d was i n t e n d e d t o z n c l u d e t w o b a s i c H M O p r e p a i d group p r a c t i c e model, a n d (2) t h e i n d i v i d u a l p r a c t i c e a s s o c i a t i o n o r I n both models, the HMO receives periodic m e d i c a l c a r e foundation m o d e l . payments of f i x e d amounts i n r e t u r n f o r the services it provides t o HMO members. Under t h e g r o u p p r a c t i c e p r o v i d e d S y p h y s i c i a n s who a r e may b e e i t h e r e m p l o y e e s o f t h e w ~ t h the HXO to contracts model, however, most aedical services are members of a g r o u p p r a c t i c e . Some p h y s i c i a n s EM0 o r nemSers of a s e p a r a t e e n t i t y which 2rovide nedical services to HXO members. CRS- 2 P h y s i c i a n s i n t h e s e arrangements a r e paid i n a v a r i e t y of m o s t ~ c o m m o n b e i n g e i t h e r by s a l a r y , or a s a g r o u p w h e r e g r o u p f i x e d p a y m e n t s p e r member e a c h m o n t h . ways -- t h e the SMO p a y s two the U n d e r t h e i n d i v i d u z l p r a c t i c e a s s o c i a t i o n o r I?A m o d e l , physicians in a c o m m u n i t y , g e n e r a l l y a c o u n t y , o r g r o u p o f c o u n t i e s , c o n t r a c t w i t h t h e HMO t o p r o v i d e medical s e r v i c e s o u t of t h e i r p r i v a t e o f f i c e s , which can be either solo o r group practices. P h y s i c i a n s i n IPAs a r e g e n e r a l l y p a i d on a m o d i f i e d by f e e - f o r - s e r v i c e b a s i s w i t h r e t r o s p e c t i v e a d j u s t m e n t s S a s e d on p e r f o r m a n c e In other words, t h e fewer expenses t h e HMO a n d t h e i n d i v i d u a l p h y s i c i a n . i s likely i n c u r r e d b y t h e HMO b y t h e e n d o f t h e y e a r , t h e h i g h e r t h e i n c o m e t o be f o r physicians a t t h a t time. i s the case f o r G r o u p p r a c t i c e H M O s e i t h e r cwn t h e i r own h o s p i t a l s , a s most K a i s e r Foundation H e a l t h Plans, or arrange for hospitalization for The l a t t e r a r r a n g e m e n t is the members a t o n e o r more community h o s p i t a l s . prevailing practice with m o s t common a m o n g g r o u p p r a c t i c e B M O s , a n d i s t h e i n e i v i d u a l p r a c t i c e a s s o c i a t i o n HMOs. SecaUse p r o v i d e r s I r e a t r i s k and a r e noc reimbursed for each of the for cost s e r v i c e s t h e y p r o v i d G , HMOs a r e i n t u i t i v e l y a t t r a c t i v e a s a m e a n s c o n t r o l because t h e y a l t e r t h e u s u a l economic i n c e n t i v e s i n medical c a r e a n d Zvidence tends t o support t h i s g i v e p r o v i d e r s a s t a p e i n h o l d i n g down c o s r s . to the t h e o r i , p a r t i c u l a r l y x h e n t h e r e s p o n s e t o EM0 i n c e n t i v e s i s c o m p a r e d p r e v a i l i n g system of t h i r d - p a r t y reimbursement f o r p r o v i d e r s . Studies have f b u n d t h a t t h e t o t a l c o s t of m e d i c a l c a r e ( i . e . , premium plus ouc-of-pocket it i s for comparable people W i t h c o s t s ) f o r HMO e r , r o l l e e s i s l o w e r t h a n conventional insurance coverages. The l o w e r c o s t s a r e c l e a r e s t f o r e n r o l l e e s i n BMO g r o u p p r a c t i c e s , w h e r e t o c a l c o s t s a r e f r o m 1 0 % c o 4 0 9 b e l o w t h e costs of c o n v e n t i o n a l i n s u - a n c e e n r o l l e e s . Alchough the evidence i s relatively meagFr, by comparison, costs for enrollees in individual practice a s s o c i a t i o n s a p p e a r no l o w e r - t h a n f o r enrollees in conventional insurance arrangements. founC t o be the result of B o s t o f t h e s e c o s t differences h a v e b e e n h o s p ~ t a l z z a t l o nr a t e % l o w e r t h a n t h o s e of c 0 n v e n t ~ o n a ; l y z n s u r e d p o p u l a t i o n s . And t h e s e l o w e r h o s p ~ t a l ~ z a t ~ or an t e s a r e d u e a l m o s t entirely to lower a d m ~ s s r o nr a t e s ; t h e a v e r a g e l e n g t h o f s t a y of a p e r s o n i n a h o s p ~ t a l shows For l i t t l e d i f f e r e n c e An t h e H M O a s o p p o s e d t c t h e c o n v e n t l o n a l a r r a n g e m e n t . Prepale Health Plans notee, for e x a m p l e , t h e l a s t N a t i o n a l HMO C e n s u s o f 1 9 7 9 , t h e z n p a t l e n t h o s p i ~ a lu t l d ~ z a t l o n r a t e f o r a l l BMO p l a n s was 4 1 2 days This c o m p a r e s t o a n a v e r a g e o f abour 730 days p e r 1 , 0 0 0 members p e r y e a r . p e r 1 , 0 0 0 9 1 u e C r o s s e n r o l l e e s n a t ~ o n a l l y~ n 1 9 7 8 . pians in addition, physician v i s i t s per member per year f o r a l l HYO averaged 3.4, and tot.al h e a l t h p l a n encounters, including those wich the H M O s ' n u r s e p r a c t i t i c l e r s o r p h y s i c i a n s a s s i s t a n c s , p e r member p e r year for a l l p l a n s averaged 4 . 5 i n 1979. The n a t i o n a l a v e r a g e was a b o u t 5 physician v i s i t s per person per year. I t should be noted t h a t al=hough t h e r e i s s u b s t a n t i a l evidence cf lower by Harold Luft, "Trends in t o t a l c o s t s f o r HMG e n r o l l e e s , a r e c e n t s t u d y M e d i c a i C a r e C o s t s : Do HMOs L o w e r t h e 3 a t e f o r G r o w t h ? , " i n d i c a t e s t h a t t h e r e i s l i t t l e e v i d e n c e c h a t c o s t s i n HMOs a r e growing l e s s r a p i d l y than in the suggest that EM'S overall health care sector. T h i s s t u d y anC i t s f i n e i n g s may n o t h a v e t h e s o 1 u : i o n t o t h e proBlem of e s c a l a t i n g m e d i c a l costs wich-n t h e prevailing third-party reinbursement system. CRS- 3 I t s h o u l d a l s o b e n o t e d t h a t i t i s n o t p r e c i s e l y c l e a r why HMOs produce t h e c o s t s a v i n g s t h e y d o f o r t h e ~ re n r o l l e e s . Some p e r s o n s h a v e suggested But st.udies t h a t HMOs s e r v e a y o u n g e r , h e a l t h i e r , a n d w e a l t h i e r p o p u l a t i o n . I n f a c t , some s t u d i e s have a r e not all t h a t conclusive about t h i s subject. f o u n d n o s t a t i s t i c a l l y s i g n i f i c a n t d i f f e r e n c e s S e t w e e n HMO m e m b e r s a n d p e o p l e w i t h conventional t h i r d - p a r t y c o v e r a g e . T h i s i s c h a r a c t e r i s t i c o f t h e HMO l i t e r a t u r e i n general. I t is seldom conclusive. T h i s c a n i n p a r t b e e x p l a i n e d by t h e n a t u r e o f t h e s u b j e c t u n d e r the HMO or prepaid group i n v e s t i g a t i o n ; t h e r e i s no o n e s i n g l e model f o r In addition, practice. T h a t i s , t h e r e a r e g r o u p p r a c t i c e H M O s a n d I ? A XMOs. In HMOs v a r y i n s i z e f r o m a f e w t h o u s a n d e n r o l l e e s t o m o r e t h a n 1 m i l l i o n . population, s u c h as a u n i v e r s i t y some c a s e s , e n r o l l e e s a r e a homogeneous faculty. In other cases, t h e population i s heterogeneous. The geographic such as Columbia, b a s e o f e n r o l l m e n t may b e c o n c e n t r a t e d i n a s i n g l e t o w n Maryland, o r dispersed through s e v e r a l metropolitan a r e a s , such as in the Kaiser plans i n California. Available data vary i n I n a d e i t i o n , t h e l i t e r a t u r e on HMOs i s i n c o m p l e t e . d e p c h a n d q u a l i t y , a n d b y f a r t h e m a j o r i t y o f s t u d i e s o n HMOs r e l a t e t o a f e w large, well-established plans. F i n a l l y , t h e r e e x i s t no r a n d o m i z e d , c o n t r o l l e d experiments t h a t involve t h e assignment of a r e p r e s e n t a t i v e group of p e r s o n s to a range of health Therefore, while it is possible t o say that costs i n s u r a n c e p l a n s and HMOs. a r e lower i n one situation than in another, because of lower hospital are admission r a t e s , i t i s not possible t o determine whether the differences t h e r e s u l t of t h e g e n e r a l c h a r a c t e r i s t i c s of p l a n s , of t h e unique f e a t u r e s of t h e p r o v i d e r s , o r t h e d i f f e r e n c e s among t h e p e o p l e s e l e c t i n g e a c h p l a n . T I T L E X I 1 1 O F T H E P U B L I C HEALTH SERVICE A C T T i t l e X I 1 1 o f t h e P u b i i c H e a l t h S e r v i c e A c t was established w h e n Congress F.L. 93-222. The e n a c t e d t h e H e a l t h M a i n t e n a n c e O r g a n i z a t i o n Acc o f 1 9 7 3 , a u t h o r i t y was e x t e n d e d a n d r e v i s e 6 t w i c e -- o n c e i n 1 9 7 6 (P.L. 94-460) and a g a i n i n 1 9 7 8 ( P . L . 9 5 - 5 5 9 ) -- b e f o r e i t s t h i r d r e v i s i o n i n 1 9 8 1 . has provided Federal support for the Among o t h e r t h i n g s , T i t l e X I 1 1 Grants and c o n t r a c t s have been awarded d e v e l o p m e n t a n d o p e r a t i o n of HMOs. f o r f e a s i b i l i t y s u r v e y s a n d f o r t h e p l a n n i n g a n d initial d e v e l o p m e n t o f HYOs o r f o r t h e expansion of existing HMOs. Loan g u a r a n t e e s have a l s o been a v a i l a b l e f o r planning and i n i t i a l development. In a d d i t i o n , loans and loan of their operation. g u a r a n t e e s a r e a v a i l a b r e t o HMOs f o r t h e f i r s t 5 y e a r s F i n a l l y , another s e c t i o n i n T i t l e X I I I provides loans and loan guarantees f o r t h e a c q u i s i t i o n and c o n s t r u c t i o n of ambulatory h e a l t h c a r e f a c i l i t i e s . of XMOs. T i t l e XI11 a l s o establishes standards for Federal qualification To q u a l i f y u n d e r T i t l e X I I I , a n HMO m u s t provide cerkain specifiee basrc health services. I t m u s t b e o r g a n i z e d i n a c e r t a i n f a s h i o n a n d t h e HMO m u s t be f i s c a l l y sound. I n a d d i t i o n , p r i o r t o r e v i s i o n s m a d e i n 198:, t h e payment f o r e n r o l l m e n t i n a n HMO c o u l d b e f i x e d o n l y u n d e r a c o m m u n i t y r a t i n g s y s t e m . G e n e r a l l y , u n d e r a c o m m u n i t y - r a t i n g s y s t e m , t h e same premium is charged f o r t h e same b e n e f i t s t o a l l i n d i v i d u a l s o r g r o u p s regardless of age, sex composition, and c o s t e x p e r i e n c t of t h e i n s u r e d . Under e x p e r i e n c e r a t i n g , on group t h e o t h e r hand, premiums v a r y a c c o r d i n g t o t h e c o s t e x p e r i e n c e of each served. Members o f some g r o u p s p a y h i g h e r a v e r a g e premiums t h a n members of o z h e r g r o u p s u n d e r t 3 i s r n e t h ~ b . The u s e o f e x p e r i e n c e r a t i n g h a s i n p r a c t i c e highest risk t e n d e d t o make h e a l t h s e r v i c e s m o s t e x p e n s i v e f o r grouzs at and/or t h e h i g h e s c u t i l i z e r s of s e r v i c e s , such a s the aged o r chronically ill. Under t h e community r a t i n g s y s t e m o f T i t l e X I I I , on t h e o t h e r h a n d , t h e HMO m u s t p r i c e i t s s e r v i c e s a c c o r d i n g t o t h e e x p e r i e n c e i n utilization that i t h a s haC w i t h i t s e n t i r e e n r o l l e d m e m b e r s h i p . In addition, p r i o r t o revisions made in 1981, Title XI11 required a q u a l i f i e d HMO t h a t h a d p r o v i d e d c o m p r e h e n s i v e h e a l t h s e r v i c e s on a prepaid basis f o r a t l e a s t 5 y e a r s o r had a n e n r o l l m e n t o f a t l e a s t 5 0 , 0 0 0 members t o 3ave an open enrollment period. D u r i n g o p e n e n r o l l m e n t , t h e HMO was r e q u i r e d t o a c c e p t i n d i v i d u a l s f o r membership w i t h o u t r e g a r d t o p r e e x i s t i n g i l l n e s s e s , medical c o n d i t i o n , o r degree of d i s a b i l i t y . There i s f o r HMOs an i n c e n t i v e t o seek q u a l i f i e d s t a t u s under Title XI11 and t o meet t h e s e and o t h e r requirements. O n c e a n HMO i s qualified, it is a b l e t o t a k e a d v a n t a g e of what i s known as the dual choice requirement. Under c h i s p r o v i s i o n o f T i t l e X I I I , a n employer which i s subject to the ainimum wage p r o v i s i o n s o f t h e F a i r L a b o r S t a n d a r d s A c t a n d which e m p l o y s a t l e a s t 25 p e r s o n s i s r e q u i r e d t o i n c l u d e i n i t s h e a l t h b e n e f i t s plan (if it h a s o n e , t h a : i s ) t h e o p t i c 1 1 o f j o i n i n g a f e d e r a l l y q u a l i f i e d HMO s e r v i n g t h e area. the country serving As o f J a n u a r y 1 9 8 1 , t h e r ? w e r e 2 4 2 HMOs i n million people. I n i 9 7 1 , t h e r e h a d b e e n o n l y 39 H M O s serving 3.9 people. over 9 million A s u r v e y c o n d u c t e d by I n t e r S t u d y , a r e s e a r c h organizat~oc in Minnescta, f o u n d o p e r a t i n g 3x3s t o b e d i s t r l b u c e 5 a m o n g = h e S t a t e s , a s f o l l o w s , f o r 2 u l 5' 1980: CRS- 5 TABLE 1 State . I381077 UPDA12-01/22/32 Operating H M O s b y State. J u l y 1 9 8 0 Number of plans .................................. .................................. 4 ............................... 3 2 ................................. 6 .............................. 7 ..................... 3 .................................. 8 .................................. 2 ................................... 2 .................................... 1 ................................. 12 .................................. 2 ..................................... 1 ................................. 4 ................................ 3 .................................... 2 ................................. 11 ............................. 10 ................................. 1 0 ................................. 1 0 ................................. 5 ................................. 2 ............................ i ................................ 9 ................................ 2 ................................. 12 ............................. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ................................... 8 ............................. 10 .............................. 4 ........................... 1 .................................... 8 ..................................... 2 Washington ............................... 7 West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Guam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Total .................................... 236 Alabama Arizona California Colorado Connecticut District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Missouri Nebraska New H a m p s h i r e New Jersey New Mexicc New York North C a r o l i n a . . . . . . . . . . . . . . . . . . . . . . . . . . . North D a k o t a Ohio Oregon Pennsylvania Rhode Island Soutn C a r o l i n a Texas Utah Membership July 1980 1 7 A. A 9.183. 3 9 7 Of t h e 2 4 2 o p e r a t i o n a l H M O s , 1 2 0 a r e f e d e r a l l y qualified. h a v e a membership of over 6 millioc persons. As o f the end of F Y 8 0 , 6 1 7 g r a n t s had been T 5 e s e g r a n t s totaled $127.5 million. awarded under These 120 the HMO EMOs Act. By t h e end o f F Y 8 0 , 8 1 HMOs had received direct loans, totaling $168.6 m i l l i o n a n d 4 B M O s had received l o a n g u a r a n t e e s xotaling $7.8 million. Of t h e 1 2 0 c u r r e n t l y qualified H M O s , 0 3 h a v e received g r a n t s and l o a n s , 1 9 h a v e received g r a n t s o n i y , 7 have received i o a n s O n l y , 3 h a v e received lozn g u a r a n t e e s , and 2 8 have received n o assistance. A u t h o r i z a t i o n and a p p r o p r i a t i o n s for T i t l e X I 1 1 a r e i n d i c a t e d i n t a S l e 2. T A B L E 2. Budge?, history f o r T i t l e X I I I Authorizations* $ 3 1 million Appropriations $ $65 million $ 3.0 million $1.5 m i l l i o n $8.5 million (technical a s s i s t a n c e ) (program s u p p o r t ) <3.8 million (grai-its) million $9.2 million (technical a s s i s t a n c e ) (program support) 31.5 CY8i $68 milllon (grants) A p p r o p r i a c l o n s Sill not y e t enacted * f o r g r a n t s and c o n t r a c t s on: CURRENT ISSUES On Mar. 1 0 , 2 9 8 1 , t h e R e a g a n Administration proposed the f o l l o w i n g of f u n d i n g for the T i t l e X I I I X M O program. levels P r o p o s e d S u C g e t Authority (in m i l l i o n s of d o l l a r s ) T h e proposal for $27.6 m i l l ~ o n ~n 1 9 8 1 a n d $8.2 million :n 1 9 8 2 r e q u i r e d a r e s c i s s i o n of $ 2 8 m ~ l l i o n f o r 1 9 8 1 and a f u r t h e r r e c u c t ~ o nof $ 2 0 m i i l i o n ~n 1 9 8 2 f o r t h e T i z l e X I I I aut5orlty. CRS- 7 I381077 U?DATE-01/22/82 A c c o r d i n g t o c h e Xeagan A d m i n i s t r a t i o n , g r a n t f u n d s and l o a n s would be p r o v i d e d i n 1 9 8 1 t o c o m p l e t e t h e l a s t s t a g e o f d e v e l o p m e n t o f new XMOs o r t h e T h e 2 e a g a n p r o p o s a l WOEld e x p a n s i o n o f a l i m i t e d n u m b e r sf e x i s t i n g H M O s . According t o t h e Administration, h a v e t e r m i n a t e d a l l g r a n t s t o HMOs by 1 9 8 2 . f u r t h e r d e v e l o p m e n t o f HMOs c a n b e f u n d e d t h r o u g h t h e p r i v a t e s e c t o r . A t a t i m e of increasing concern about t h e need t o l i m i t Federal e x p e n d i t u r e s t o b a l a n c e t h e F e d e r a l budget, q u e s t i o n s have Seen r a i s e d about An e x a m i n a c i o n t h e e x t e n t o f p r i v a t e s e c t o r i n v o l v e m e n t i n HMO d e v e l o p m e n t . reveals that there were 226 of a v a i l a b l e d a t a on d e v e l o p i n g HMOs p r e o p e r a t i o n a l HMOs i n t h e c o u n t r y a s of February 1981. According to a s u r v e y c o n d u c t e d by I n t e r S t u d y , 8 2 o f t h e s e a r e f e d e r a l l y f u n d e d HMOs a n d 144 are privately funded. Table 3 indicates the distribution of these p r e o p e r a t i o n a l p l a n s by S t a t e . InterStudy a l s o attempted t o determine t h e source of support f o r p r i v a t e l y A very rough and preliminary survey of these funded p r e o p e r a t i o n a l HMOs. p i a n s i n d i c a t e s t h r e e major s o u r c e s of funding. These a r e i n d i c a t e d i n Table 4. CRS- TABLE 3 . 8 Known p r e o p e r a t i o n a l p i a n s b y S t a t e a s o f - F e b r u a r y 1 9 8 1 State Total .......... . A r i z o n a .......... A r k a n s a s ......... Alabama Alaska.......... .... ..... ....... .......... California... Colorado......... Connecticut. Delaware.. Florida Georgia .......... Hawaii........... Idaho............ Illinois......... I n d i a n a .......... Iowa... .......... Kansas ........... Kentucky.. Louisiana........ Maine. ........... Maryland ......... Massachusetts.... Kichigan Minnesota........ K i s s i s s i p p i ...... Yissouri......... Montana.......... Nebraska..,...... Nevada........... New X a m p s h i r e . . . . New J e r s e y New Mexico.. ....... ......... Federally funded 2 1 0 1 5 0 3 0 3 2 0 0 1 1 0 1 0 0 1 2 5 1 1 1 2 Privately funded* .................. ................. ..................... GP .................. IPA; 1 n e t w o r k ...... ..................... IPA; 1 s t a f f ........ ..................... s t a f f ; 3 u n k n o w n .... IPA ................. ..................... ..................... I P A ; 1 GP; 1 s t a f f . . staff ............... ..................... I P A ; 3 G? . . . . . . . . . . . ..................... ..................... I?A ................ IPA ................. I P A ; 2 G? . . . . . . . . . . . I P A ; 1 GP ........... s t a f f ............... I P A ; 1 G? . . . . . . . . . . . I P A ; 1 G I ; 1 s t a f f .. GP IPA 2 GP 1 unknown 6 I P A ; 1 GP; 0 9 I P A ; 6 GP; 1 2 1 1 1 1 5 I P A ; 1 GP; 1 u n k n o w n network IPA; 1 G? I P A ; 1 GP; 2 u n k n o w n 6 I P A ; 1 GP; 1 u n k n o w n 1 IPA; 3 unknown G 2 IPA; 1 unknown GP,;' 1 u n k n o w n ..................... 1 s t a f f ........ IPA; 3 s t a f f ........ staff .............. GP . . . . . . . . . . . . . . . . . . GP . . . . . . . . . . . . . . . . . . ............*........ 3 1 2 1 7 1 1 1 2 1 2 1 3 0 0 1 IPA; ..................... 2 GP; 1 unknown. ..................... IPA . . . . . . . . . . . . . . . . . unknown ............. GP; 1 s t a ' f I P A ; 3 G? . . . . . . . . . . . plans 3 unknown 0 2 1 2 5 Ncrth Carolina... North Dakota..... Ohio............. Oklahoma......... Oregon ........... P e n n s y l v a n i a ..... Xhode I s l a n d . . . . . South Carolina... South Dakota..... Tennessee........ Texas............ Utah............. Vermont.......... V i r g i n i a ......... Washington West V i r g i n i a Wisconsin........ Wyoming . . . . . . . .2 2 5 I?A 1 G?; 1 unknown 0 New Ysrk......... Totals. IPA; 1 unknown unknown I P A ; 1 GP; 1 u n k n o w n IPA; 1 G?; 1 unknown GP; 1 unknown IPA 1 I?A; 3 5 ....... .... .......... 2 unknown 0 0 1 IPA; ....... ..... 1 network ......... ..................... I P A ................. IPA; 1 unknown ...... IPA ................. G?; 1 u n k n o w n ....... I P A ; 1 GP; i u n k n o w n I P A ; 2 GP; 2 u n k n o w n I P A ; 1 GP I P A ; 2 GP; 1 u n k n o w n G? G?; IPA; 1 cnknown 2 unknown I?A 0 0 2 2 1 1 2 :PA; 3 C P ; 4 u n k n o w n I P A ; 2 GP; 3 u n k n o w n unknown GP I?A; 1 GP 3 IPA; 8 2 p l a n s ( 2 4 C-P; 3 6 IPA; 1 network; 1 4 144 p l a n s 1 unknown ( 5 8 I P A ; 3 5 G> 38 unknown) 2 network; CRS- 9 s t a f f ; 7 unknown) * I n c l u d e s p r e f e a s i b i l i t y stage (GP) r e f e r s t o a n H M C t h a t c o n t r a c t s with a G r o u p P r a c t i c e Model g r o u p of h e a l t h p r o f e s ~ i o n a l f~o r t h e provision of health s e r v i c e s to H M O members. T h e health p r o f e s s i o n a l s work o u t of a c o m m o n f a c i l i t y , pool t h e i r i n c o m e f r o m p r a c t i c e a s m e m b e r s o f t h e g r o u p , d i s t r i b u t i n g it a m o n g t h e m s e l v e s a c c o r z i n g to a pre-arranged plan. If t h e H M O e m p l o y s i t s physicians o n a s a l a r i e d b a s i s , i t i s a l s o r e f e r r e d to a s a staff model. Staff Model H M O i s similar t o t h e prepaid g r o u p practice HMO model e x c e p t tha: t h e physicians a r e e m p l o y e e s of t h e H M O , r a t h e r than i n d e p e n d e n t contractors. -- An IPA i s a n I n d i v i d u a i P r a c t i c e Association Model (IPA) organized g r o u p of i n d e p e n d e n t p r a c t i t i o n e r s and/or s m a l i s r o u D s of p h y s i c i a n s g a t h e r e d together f o r t h e p u r p o s e of d e c i d i n g o n what basis they s h a l l c o n t r a c t f o r their services. In a n IPA-type H M O , the H E 0 entity contracts with t h e IPA o r g a n i z a t i o n o r d i r e c t i y with i n d i v i d u a l health p r o f e s s i o n a l s w h o a g r e e to p r o v i d e health s e r v i c e s to H M O m e m b e r s i n a c c o r d a n c e wich a c o m p e n s a t i o n agreement. The h e a l t h p r o f e s s i o n a l s work o u t of . c h e i r i n d i v i d u a l o f f i c e s and a r e u s u a l l y r e i m b u r s e d by the IPA o n a fee-for-service basis. Network Model -- T h e network 9 M O c o n t r a c t s witc m o r e than o n e m e d i c a l g r o u p and/or IPA o r g a n i z a t i o n to d e l i v e r c a r e to H M O members i n d i f f e r e n t geographic locations. Each m e d i c a l g r o u p o r I?A p r o v i d e s a f u l l r a n g e of c o m p r e h e n s i v e b e n e f i t s and i s The c o n t r a c t u a l l y l i n k e d to a central point of a c c o u n t a b i l i t y . b e n e f i t p a c k a g e a n d premiums f o r each of the m e d i c a l g r o u p s a n d :?As i n a n e t w o r k a r e often i d e n t i c a l . T h e prepaid g r o u p p r a c t i c e n e t w o r k i s c h a r a c t e r i z e d by s e p a r a t e a n d i n d e p e n d e n t d e l i v e r y p o i n t s , of which t h e H M O member s e l e c t s o n e to r e c e i v e a l l health services. Most o f t h e network p r o g r a m s in e x i s t e n c e w e r e d e v e l o p e d by B l u e C r o s s and B l u e S h i e l d Plans. The EM0 Act does n o t s p e c i f i c a l l y r e c o g n i z e this model and c l a s s i f i e s s u c h p r o g r a m s a s IPAs. TASLE 4 . E s t i m a t e s of f u n d i n g s o u r c e s f o r p r i v a t e l y Zeveloping XMOs. February 1 9 8 1 ~ s o u r c e s of funding/sponsor NumSer o f developing plans ............................................... .................................. ............................. ................................................. Icsurers (5) Insurer & medical society Other n a t i o n a l f i r m (Medserco) subtotal Blue Blue 34ue -Blue ~ l u Biue Blue 91ue 15 Cross plans ........................................... S h i e l d p l a n s .......................................... Cross & Blue Shield Cross & medical s o c i e t y ec r o s s & h o s p i t a l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shield & hospital S h i e l d & group p r a c t i c e & h o s p i t a l .................... Cross & 31ue S h i e i d & group p r a c t i c e .................. ................................... ............................... ..................................... .......................................... ............................. ...................................... ............................................... ................................................ .................................. ................................................. .................................. ................................................. Medical s o c i e t i e s Multi-specialty group p r a c t i c e E o s p i t a l s (1 o r m o r e ) Corporations Foundations Academic m e d i c a l c e n t e r s University Ccunty medical c e n t e r ...................................... P a r t n e r s h i ? of p h y s i c i a n s Subtotal Total 11 1 3 . ...................................................... A 3 1d. 8 7 3 1 1 -1 1 2 37** 70 * T h i s l i s t d o e s n o t i n c l u d e a p p r o x i m a t e l y 5 0 p l a n s WhicE a r e i n t h e " p r e f e a s i b i l i t y s t a g e " of Cevelopment and a b o u t 20 p l a n s f o r whom t h e f u n d i n g s o u r c e i s u n k n o w n . * * Of t h e s e p l a n s i t may Se e x p e c t e d t h a t t h e S u l k o f t h e dev?lopment c a p i t a l i s coming from t 3 e s p o n s o r i n g agency i t s e l f . M o s - o f t h e s e 3 7 f i r n s a r e h e a l t h p r o v i d e r s who p l a n t o u s e e x i s t i n g health faci1i:ies. s t a f f . anZ a d m i n i s t r a t o r s t o s e r v e t 3 e SXO a n d who c h u s r e q u i r e l e s s s e e e m o n e y . I t i s n o t uncommon. h o w e v e r , f o r m e d i c a l s o c i e t i e s , hospitals, a n d g r o u p p r a c t i c e s t o s o l i c i t l o c a l e m p l o y e r s a n d u n i o n s f o r r e l a t i v e l y small amounts of adciitional funding. B e y o n d a s s u m p t i o n s a b o u t p r i v a t e s e c t o r i n v e s t m e n t i n BMOs, other issues IncerStudy's preliminary a r i s e w i t h r e g a r d t o t h e l o c u s of t h i s i c v e s t m e n t . survey does not provide d e t a i l e d information about the location of the it is likely they w i l l be service areas for these projected HMOs, but developed i n metropolitan areas. Questiocs a r i s e about whether this leaves f o r t h e F e d e r a l Government a r o l e t o p r o v i d e a s s i s t a n c e f o r t h e e s t a b l i s h m e n t to o r expansion of HMOs i n a r e a s where t h e p r i v a t e s e c t o r h a s been r e l u c t a n t Some w o u l d i n v e s t r e s o u r c e s , n a m e l y r u r a l a r e a s a n d l o w - i n c o m e communities. of a r g u e t h a t money c a n n o t b e p r o d u c t i v e l y i n v e s t e C i n s u c h a r e a s b e c a u s e HMO to become the difficulty i n securing enrollments sufficient for the financially viable. O t h e r s , however, s u g g e s t t h a t with c a r e f u l p l a n n i n g and s e l e c t i o n HMOS c a n be s u c c e s s i u l i n such a r e a s a n d , i n t h e p r o c e s s , s e r v e a s i m p o r t a n t p r o v i d e r s of h e a l t h c a r e s e r v i c e s i n t h e s e communities. introduce legislation The A d m i n i s t r a t i o n a l s o i n d i c a t e d i t s i n t e n t i o n t o qualification of XMOs. t h a t would amend r e q u i r e m e n t s f o r t h e F e d e r a l It w o u l d do s o c c i n c r e a s e i n c e n t i v e s for private sector investment in t3e d e v e l o p m e n t i n BMOs. S i n c e t h e e s t a b l i s h m e n t of t h e t i t i e X I I I a u t 3 o r i t y in 9ave argued that the 1 9 7 3 , e x i s t i n g HMOs a n d p o t e n t i a l d e v e l o p e r s o f B M O s qualification have various requirements s p e c i f i e d i n t i t l e XIII f o r FeCeral produced b a r r i e r s t o developmect and have prevented HMOs from competing e f f e c t i v e l y with t h e t r a d i t i o n a l fee-for-service system. There have Seen, f o r i n s t a n c e , p r o p o s a l s t o amend t i t l e X I I I ' s specifilations for community r a t i n g , opec enrollment, and b a s i c b e n e f i t s , and t h e 1976 and 1978 r e v i s i o n s modified these requirements. Most recently, of t h e t i t l e X I P I a u t h o r i t y t h e r e have a g a i n been p r o p o s a l s t o modify t h e s e and o t h e r requirements for A t hearings before the House E n e r g y a n d Commerce Federal qualification. the Sealth I n s u r a n c e ~ . s s o c i a t i o n of America C o m m i t t e e o n Mar. 1 9 , 1 9 8 1 , t e s t i f i e d t h a t both the comprehensive b e n e f i t p a c k ~ i g e and . t h e community X I 1 1 d o n o t a l l o w t h e XMO t o compete equitably r a c i n g r e q u i r e m e n t s of ti:le with t r a d i t i o n a l h e a l t h i n s u r a n c e p l a n s t h a t do n o t f a c e such r e q u i r e m e n t s o r A s a r e s u l t , " t h e g o a l of i n j e c t i n g c c m F a t i t i o n i n t o t h e system regulations. may b e t h w a r t e d i f H M O s a r e e f f e c t i v e l y p r o h i b i t e d f r o m c o m p e t i n g . " Others, s u c h a s Group H e a l t h A s s o c i a c i o n of America, an organization represenzing HMOs a c r o s s t h e c o u n t r y , s u g g e s t t h a t requirements such a s these provide and a r e a necessary part of the d i s t i n g c i s h i n g c h a r a c t e r i s t i c s t o HMOs r e g u l a t o r y f r a m e w o r k f o r p r o v i d i n g F e d e r a l q u a l i f i c a t i 3n t o an organziation ics healch w h i c h c a n :hen r e q u e s t a n e m p l o y e r t o i n c l u d e i t a s a n o p t i o n i n S e n e f i t p l a n under t h e d u a l c h o i c e p r o v i s i o n s of t i t l e X I I I . Finaliy, as Congress considered legislation extending + 1; + XI11 a u t h o r i t y , o t h e r i s s u e s a b o u t t h e f i s c a l soundness of f e d e r a l l y a s s i s t e e XMOs arose. In 1978, t h e General Accounting O f f i c e (GAC) i s s u e d a report on 14 HMOs t h 2 t i t had examined. GAS f o u n d t h a z o n l y 3 o i t h e 1 4 h a d a g o o C c h a n c e of achieving f i n a n c i a l independence within t h e i r f i r s t 5 years of operaticn a f t e r q u a l i f i c a t i o n and b e f o r e t h e end of their eiig'bility for opera:ing assistance. F i v e had o n l y a f a i r chance of f i n a n c i a l independence, and six had a poor chance. More r e c e n t l y , t h e O f f i c e of Sealth Maintenance D e p a r t m e n t o f H e a l t h a n d Human S e r v i c e s i n d i c a t e d c h a t experiencing financial problems serious enough to w i t h title XI11 requirements for fi noncompliance a d e i t i o n , 10 q - a l i f i e d X M O s h a v e g o n e c u t o f b u s i n e s s i Organizations of the are 29 q u a l i f i e d H H C s be considered in scal soundness. in c the l a s t 2 years. U n d e r s u c h circumstances, q u e s t ~ o n sw e r e r a ~ s e da S o u t = h e effectiveness cf fcr award~ng Federal t h e s c r o e n i n q p r o c e s s d e v e l o p e d Sy t h e O f f l c e o f 3 x 0 s a s s i s t a n c e to a p p l i c a n t s and for q u a l i f y i n g BMOs. O t h e r s suggested tha: suc!? f i n d i n g s i n d i c a t e t h a t the F e d e r a l Governsent simply can n o t m a k e d e c i s i o n s a s e f f e c t i v e l y a s ;he private s e c t o r about a p p r o p r i a t e investments in f i n a n c i a l l y v i a b l e HMOs. S o m e p e o p l e s u g g e s t e d that t h e f i n a n c i a l d i f f i c u l t i e s of HMOs mlght be part a t l e a s t , by t h e various r e q u i r e m e n t s for F e d e r a l qualification. F o r e x a m p l e , d o e s o p e n enrollment a n d i t s i m p l i c a t i o n s f o r a n over age 6 5 Create H M O being required to a c c e p t a c h r o n i c a l l y i l l person f ~ n a n c i a ld i f f i c u l t i e s f o r the H M O ? T o what extent d o e s t h e c o m m u n i t y r a t i n g r e q u i r e m e n t o f title X I 1 1 r e s u l t i n higher premiums f o r H M O s a n d t h e r e f o r e f e w e r e n r o l l e e s w h o d e c i d e to c h o o s e the less e x p e n s i v e experience-rated the premium o f = h e Blue C r o s s plan? W h a t i m p a c t d o t h e s e e n r o l l e e s have o n r e v e n n e s a n 5 e x p e n s e s of HMOs? explained, i n T h e C o n g r e s s considered l e g i s l a t i o n which proposed to p h a s e o u t g r a n t a s s i s t a n c e to H M O s a n d to amend r e q u i r e m e n t s for the Federal q u a l i f i c a t i o n o f HMOs,On May 6 , 1 9 8 1 , the S e n a t e C o m m i t t e e on Labor and Human 3esources marked u p S. 1 0 2 9 and ordered t h e bill favorably reported wich amendments. O n May 1 2 , 1 9 8 i , t h e H o u s e C o m m i t t e e o n Energy and C o m m e r c e marked u p a c l e a n This b i l l , H.R. 3 3 9 8 , and ordered i t f a v o r a b l y reporred with amendments. 3982 passed bill was i n c l u d e d i n t h e House R e c o n c i l i a t i o n Act of 1 9 8 1 , H.R. J u n e 2 6 , 1981. S. 1 0 2 9 ' s authorizations were i n c l u d e d i n t h e S e n a t e ' s R e c o n c i l i a t i o n Act passed J u n e 25. S u m m a r i e s of t h e s e bills follow under LEGISLATION. F i r s t , a d e s c r i p t i o n i s provided o f t h e v a r i o u s a m e n d m e n t s o f t h e T i t l e XIII a u t h o r i t y made by t h e O m n i b u s B u d g e t B e c o n c i l i a t i o n Act of 1981. LEGISLATION 97-35, included T h e O m n i b u s B u d g e t R e c o n c i l i a t i o n Act of 1 9 8 1 , P.L. r e v i s i o n s a n d e x t e n s i o n s of t h e T i t l e X I I I , H M O a u t h o r i t y . Among other t h i n g s , i t a u t h o r i z e s for f i s c a l y e a r s 1 9 8 2 , 1 9 8 3 , a n d 1 9 8 4 $ 2 0 million for g r a n t s a n d c o n t r a c t s f o r f e a s i b i l i t y surveys and f o r the planning and i n i t i a l d e v e l o p m e n t o f H M O s which r e c e i v e d s u c h a s s i s t a n c e d u r i n g o r b e f o r e 1P81. It a u t h o r i z e s $ 1 million for each o f t h e f i s c a l y e a r s 1 9 8 2 t h r o u g h 1984 f o r t e c h n i c a l a s s i s t a n c e a n d management training. T h e R e c o n c i l i a t i o n Act also a u t h o r i z e s such s u m s a s necessary f o r f i s c a l y e a r s 1 9 8 2 through 1 9 8 4 i n . o r d e r to a s s u r e t h a t t h e H M O loan f u n d h a s a balance of a t l e a s t $ 5 million a t . t h e end of each f i s c a l y e a r and to meet t h e o b l i g a t i o n s of this f u n d , i n c l u d i n g t h o s e r e s u l t i n g from d e f a u l t s on loans. F i n a l l y , i t extends t h e a u t h o r i t y o f l o a n s a n 9 l o a n g u a r a n t e e s f o r i n i t i a i costs of o p e r a t i o n and extends e l i g i b i l i t y f o r such a s s i s t a n c e t o p r i v a t e , for p r o f i t HMOs. P.L. 9 7 - 3 5 a l s o a m e n d s the v a r i o u s r e q u i r e m e n t s f o r F e d e r a l q u a l i f i c a t i o n of HMOs. It deletes t h e l i s t of supplemental h e a l t h s e r v i c e s which a q u a l i f i e d HMO c a n o f f e r a n d s p e c i f i e s t h a t these s e r v i c e s mean any health s e r v i c e which i s n o t i n c l u d e d i n t h e definition of b a s i c h e a l t h services. It r e v i s e s t h e c o m m u n i t y rating r e q u i r e m e n t s f o r q u a l i f i e d H M O s to a l l o w H M O s to rn u s e a c o m m u n i t y r a t i n g system o r a c o m m u n i t y rating by class system. ;he o p e n e n r o l l m e n t r e q u i r e m e c t f o r q u a l i f i c a t i c n i s repealed. Federally qualified 3 M O s would a l s o be r e q u i r e d to d e m o n s t r a t e every 2 y e a r s (or s u c h l o n g e r period a s r e g u l a t i o n s may prescriSe) to t h e S e c r e t a r y that t h e y c o n t i n u e to m e e t the s t a n d a r d s f o r qualification. 3 x 0 s a r e a l s c r e q u ~ r e d to a d o p t an a r r a n g e m e n t s a t i s f a c t o r y to t3e S e c r e z a r y to p r o t e c t t h e ~ rmembers fr3m ~ n c z r r l n g I l a S ~ l i t y f o r a n y fees which a r e t h e l e g a l r e s p o n s ~ b i l i t y of the HXC. These a-rangements may used by include hold harmless c o n t r a c t s with any h o s p i t a l t h a t IS r e g u l a r l y or other t h e HMO m e m b e r , i n s o l v e n c y i n s u r a n c e , a d e q u a t e f i n a n c i a l r e s e r v e s , arrangements acceptable t o the Secretary. X.R. 3398 (Waxman e t a i . ) I n c l u d e d i n t h e House Omnibus R e c o n c i l i a t i o n A c t o f 1 9 8 1 , R . 3982, as passed. A u z h o r i z e s f o r e a c h o f t h e f i s c a l y e a r s 1 9 8 2 - 8 4 s u c h s u m s a s may be n e c e s s a r y f o r g r a n t s and c o n t r a c t s f o r t h e p l a n n i n g and i n i t i a l development To a s s u r e t h a t t h e HMO o f H M O s w h i c h r e c e i v e d T i t l e X I I I a s s i s t a n c e i n TY81. l o a n fund has a b a l a n c e of a t l e a s t $5 m i l l i o n a t t h e end of each f i s c a l y e a r and t o meet t h e O b l i g a c i o n s of t h i s fund, including those resulting from d e f a u l t s on l o a n s , a l s o a u t h o r i z e s f o r each of t h e f i s c a l y e a r s 1982 throuqn as may Se necessary for these 1 9 8 4 , $40 m i l l i o n , o r such g r e a t e r amount purposes. Authorizes loan guarantees for planning and r n ~ t r a l development to the pur2cses and under =he c o n t r n u e t c b e m a d e b e t w e e n 7 P 8 2 a n d PY384 f o r c ~ r c u m s t a n c e sc 3 r r e n t l y s p e c r f l e d ~ n T i t l e X I I I and wr2houc regare to :he e n c i t y h a v r n g r e c e i v e e a s s a s t a n c e i n PY8l. Extends e l i g i b i l i t y f o r l o a n s and loan g u a r a n t e e s f o r t h e i n i c i a l c o s t s of private, for-profit EMOs. Increase; the aggregate o 3 e r a t i o n of HMOs t o a m o u n t o f p r i n c i p a l o f l o z n s made o r g u a r a n t e e d o r boch f o r i n i t i a l c o s t s of o p e r a t i o n from $ 4 . 5 m i l l i o n t o $7 m i l l i o n and i n c r e a s e s t h e amount of such $3 l o a n s w h i c h may b e d i s b u r s e d i n a n y 1 2 - m o n t h p e r i o d f r o m $2 m i l l i o n to nillion. Extends t h e authority for these loans through FY86. Repeals to c u r r e n t r e s t r i c t i o n s c n t h e a m o u n t o f l o a n g u a r a n t e e s w h i c h :an b e made f o r - p r o f i t HMOs i n a n y f i s c a l y e a r . Extends e l i g i b i l i t y f o r loans and loan guarantees for ambulatory health For loans and loan guarantees c a r e f a c i l i t i e s t o p r i v a t e , f o r - p r o f i t 9MOs. for ambulatory health care facilities, requires that the HMO provide certification t h a t i t s r e v e n u e s e x c e e d i t s c o s t o f o p e r a t i o n . Also requirss of the loan or loan t h e 3x0 t o p r o v i d e a s s u r a n c e s t h a t d u r i n g t h e p e r i o d guarantee i t s revenues w i l l exceed i t s c o s t s of operation (including t h e c o s t loan of r e p a y i n g t h e l o a n ) . A l s o r e q u i r e s t h e HMO t o ? r o v i d e a s s i r a n c e s f o r marker, a s s i s t a n c e t h a c i t had been u n a b l e t o s e c u r e a l o a n from t h e p r i v a t e l0a5 without a n d f o r a l o a n g u a r a n t e e , c h a t i t would Se u n a b l e t o s e c u r e a the Federal guarantee. loans A m e n d s p r o v r s i o n s o f T r t l e X I I I w h i c h s p e c r i y t h e ~ n c e r e s tr a c e f o r on a w a r d e d t o HMOs t o a l l o w t h e S e c r e t a r y t o c h a n q e e rate cf rnterest C ~ s S u r s e m e n t s o f l o a n s , a f t e r a n r n ~ t ~ da ~l s b u r s e m e n t , t o a rate prevall~ng f o r m a r k e t a b l e o b l r g a t ~ o n so f ~ h U e n ~ t e dS t a t e s w z t 5 c o n p a r a S l e m a t u r l z l e s . Extends t h e a u t h o r i t y f o r t h e National Health Ma~ntenance Organization I n t e r n P r o g r a m a n d f o r t h e p r o v a s i o n o f t e c h n r c a l a s s ~ s t a n c eS y t h e Secretary = o HMOs. A u t h o r i z e s f o r t h e s e p u r p o s e s $1 million f o r each of the frscal y e a r s 1982-84. C l a r i f i e s T i t l e X I i I 1 s r e q u i r e m e n t t h a t a n EM0 S e a i e g a l e n t i t y w ? ~ i : h , i t s primary p u r p o s e , p r o v i d e s h e a l t h s e r v i c e s i n a s p e c i f i e d ma3ner. as R e p e a l s t h e r e q u i - e m e n c t h a t a n 3x0 h a v e a n o p e n e n r o l l m e n t p e r i o e . Also r e p e a l s t h e r e q u i r e m e n t t h a t o n e - t h ~ r d of che poiicy-nak;?g bcdy of a prrva;.o i the aeVrs0ry S o a r 5 of a EM0 S e m e m b e r s o f t h e HMO a c t t h a t one-ti-.:rd p u b l i c HYO b e members o f t h e HMO. I n a d d i t i o n , eliminates r e q u i r e m e n t s and policy-making of t h e HMO h a v e a r o l e f o r m e m b e r s i n t h e p l a n n i n g organization. that the a D e l e t e s from t h e d e f i n i t i o n of t h e term b a s i c health services which q u a l i f i e d 9 x 0 m u s t o f f e r (1) s h o r t - t e r m outpatient evaluative and c r i s i s treatment and r e f e r r a l i n t e r v e n t i o n mental h e a l t h s e r v i c e s and (2) medical alcohol and drugs. ~ d d s the s e r v i c e s f o r t h e a S u s e o f a n d addiction t o s p e c i f i c a t i o n t h a t a n e m p l o y e r o f f e r i n g a f e d e r a l l y q u a l i f i e d HMO may r e q u i r e t h e HMO t o o f f e r c h e s e s e r v i c e s , f o r s u c h p a y m e n t a s t h e H M O d e t e r m i n e s t o b e necessary t o cover these services. D e l e t e s t h e l i s t o f s u p p l e m e n t a l h e a l t h s e r v i c e s w h i c h a q u a l i f i e d HMO c a n o f f e r and s p e c i f i e s t h a t t h e term "supplemental h e a l t h s e r v i c e s w means any included in the definition of basic health h e a l t h s e r v i c e whlch i s n o t services. Revises Title XIII's requirements for community rating to ailow a q u a l i f i e d HMO t o d e t e r m i n e i t s r a t e s e i t h e r u c d e r t h e c o m m u n i t y r a t i n g s y s t e m o f c u r r e n t l a w o r on a n a c t u a r i a l p e r c l a s s b a s i s . to require an employer Amends t h e d u a l c h o i c e p r o v i s i o n s o f T i t l e X I I I or controlled w h i c h i n c l u d e s i n a h e a l t h b e n e f i t s p l a n a n HMO t h a t i s owned carrier (such a s Blue b y a c o m m e r c i a l i n s u r a n c e c a r r i e r o r by a n o n p r o f i t C r o s s / ~ l u eS h i e l d ) , e i t h e r of which provides coverage to a substantial p e r c e n t a g e of t h e r e s i d e n t s o f t h e s e r v i c e a r e a o f t h e HMO, t o a l s o i n c l u d e 25 o n e o t h e r q u a l i f i e s HMO w h i c h p r o v i d e s s e r v i c e s i n a n a r e a w h e r e a t . l e a S t e m p l o y e e s r e s i d e a n d i n t h e same manner i e through a staff/group or IPA o r i n d i v i d u a l p h y s i c i a n s u n d e r c o n c r a c t ) a s t h e Owned o r c o n t r o l l e d HMC (if s u c h a n HMO e x i s t s ) . , . Amends t h o s e d u a l choice provisions of Title XI11 which require an employer t o i n c l u d e i n i t s h e a l t h benefits plan more than one f e d e r a i l y For p u r p o s e s of a n employer b e i n g r e q u i r e d t o o f f e r a staff q u a i i f i e d HMO. provide o r g r o u p HMO i n i t s h e a l t h b e n e f i t s . p l a n , r e q u i r e s t h i s 3 x 0 m o d e l t o or other more t h a n one-half of i t s b a s i c h e a l t h s e r v i c e s t h r o u g h p h y s i c i a n s h e a l t h p r o f e s s i o n a l s who a r e m e m b e r s o f t h e s t a f f o r g r o u p . For purposes of benefits plzn, a n e m p l o y e r b e i n g r e q u i r e d t o o f f e r a n IPA-HMO i n i t s h e a l t h a amends T i t l e X I 1 1 s p e c i f i c a t i o n s t o a l l o w t h e e m p l o y e r t o o f f e r a n IPA, o r plan providing b a s i c h e a l t h s e r v i c e s through i n d i v i d u a l physicians and other combination of IPA, h e a l t h p r o f e s s i o n a l s u n d e r c o n t r a c t w i t h a n HMO, o r a s t a f f , o r physicians under concract. it Repeals the requirement that a f t e r the f i r s t four f i s c a l years after becomes q u a l i f i e d , a n 3MO can n c t e n t e r i n t o c o n t r a c t s w i t h p h y s i c i a n s other t h a n members o f t h e s t a f f , m e d i c a l g r o u p s , o r IPAs i f t h e a m o u n t s p a i d under those contracts with other physicians for basic or supplemental health total s e r v i c e s p r o v i d e C by p h y s i c i a n s e x c e e d i 5 % ( 3 0 % i n r u r a l a r e a s ) o f t h e e s t i m a t e d amount t o be p a i d i n t h a t f i s c a l y e a r t o such p h y s i c i a n s ' s e r v i c e s . R e p e a l s p r o v i s i o n s w h i c h g i v e p r i o r i t y f o r a s s i s t a n c e t o HMOs w h i c h serve medically underserved populations. The m e a s u r e a l s o r e g e a l s p r o v i s i o n s w h i c h r e q u i r e a s e t - a s i d e of a p p r o p r i a t i o n s f o r HMOs s e r v i n g n o n m e t r o p o l i t a n a r e a s . be availabie and Amends t h e c u r r e n t l a w r e q u i r e m e n t t h a t S a s i c s e r v i c e s a c c e s s i b l e t o a n H M O ' s m e m b e r s w i t h i n = h e a r e a s e r v e d b y t h e HMO p r o m p t l y , i n a m a n n e r w h i c h a s s u r e s c o n t i n u i c y , a n d when n e d i c a l l y n e c e s s a r y , a v a i l a b l e 2 4 hours a day. A l l o w s a n HMO w h o s e service area i s located wholly in a n o n m e t r o p o l i t a n a r e a to make a b a s i c health service a v a i l a b l e o u t s i d e its s e r v i c e a r e a i f t h e s e r v i c e i s n o t a primary or emergency health s e r v i c e and i f there i s an insufficient number o f providers of the s e r v i c e i n t h e a r e a served by t h e HMO. Amends t h e r e q u i r e m e n t s s p e c i f y i n g t h a t a n XMO a s s u m e f c l l f i n a n c i a l r l s k o n a p r o s p e c t i v e basis f o r the p r o v i s i o n of basic health s e r v i c e s to p r o v i d e t h a t a n H M O may m a k e a r r a n g e m e n t s with physicians or other health p r o f e s s i o n a l s , health c a r e i n s t i t u t i o n s , or a n y c o m b i n a t i o n of t h e s e to a s s u m e a l l o r p a r t o f the f i n a n c i a l risk o n a p r o s p e c t i v e basis for the provision of b a s i c h e a l t h services. Amends r e q u i r e m e n t s f o r f i n a n c i a l d i s c l o s u r e by q u a l i f i e d HMOs. Amends T i t l e XV of t h e P u b l i c Health S e r v i c e A c t , Eealth P l a n n i n g , sec. 1 5 2 7 , which p r o h i b i t s a S t a t e from r e q u i r i n g a certificate-of-need for t h e i n s t i t u t i o n a l health s e r v i c e s offered by an H M O , o r c o m b i n a t i o n of H M O s , which has more than 5 0 , 0 0 0 members. Amends t h i s section to prohibit a S t a t e , e f f e c t i v e J u l y 1 , 1 9 8 2 , from r e q u i r i n g a certificate-of-need f o r t h e i n s t i t u t i o n a l h e a l t h s e r v i c e s of an H M O l r e g a r d l e s s o f t h e number of members of the 3MC. E.R. 3 3 9 3 i n t r c C u c e d May 1 , 1 9 8 1 ; referred to C o n m i t c e e on nergy and Commerce. O r d e r e d t o be r e p o r c e d May 1 2 , 1961. Included i n c h e H o u s e O m n i b u s R e c o n c i l i a t i o n Act of 1 9 8 1 , H.R. 3 9 8 2 , passed by t h e H o u s e J u n e 25, l96i. S. 1 0 2 9 (Hatch) C o n t i n u e s F e d e r a l a s s i s t a n c e o n l y for t h o s e a p p l i c a n t s which receivec. 1, 1981. Specifically ertends t h ~ f u n d i n g u n d e r T i t l e X I I I prior to Oc:. a u t h o r i t i e s f o r g r a n t s , c o n t r a c t s , and l o a n g u a r a n t e e s for t h e p l a n n i n g and i n i t i a l d e v e l o p m e n t o f H M O s which r e c e i v e d a s s i s t a n c e prior to Ocz. 1 , 1 9 8 1 . Continues for such applicants the authority fcr loans and loan guarantees for such loans t h e i n i t i a l c o s t s of operation a n d a l l o w s the i n t e r e s t r a t e s for t o vary f r o m t i n e to time so as to r e f l e c t c h a n g e s in t h e r a t e of interest prevailing f o r m a r k e t a b l e o b l i g a t i o n s of t h e United S t a t e s with comparable maturities. A u t h o r i z e s f o r such g r a n t s a n d c o n t r a c t s $ 1 5 m i l l i o n a n d f o r t h e D e l e t e s p r o v i s i o n s which g i v e 2 r i o r i t y for H M O lcan fund $35 million. a s s i s t a n c e to H M O s which s e r v e medically underserved populatirns. Also d e l e c e s p r o v i s i o n s which r e q u i r e a s e t - a s i d e of a p p r o p r i a t i o n s for HMOs s e r v i n g n o n m e t r o p o l i t a n areas. R e p e a l s the c o m m u n i t y rating and open e n r o l l m e n t r e q u i r e m e n t s f 3 r qualification. Federal Adds a " c o n t r a c t u a l m o d e i v to t h e s t a f f , g r o u p ? r a c t i c e , and +.ndependent p r a c t i c e a s s o c i a t i o n models a l r e a d y delineated i n T i t l e X I I I = o be eligible for F e d e r a l qualification. S p e c i f i e s t h a t under the c o n t r a c t u a l -odel, the c o n t r a c c with i n d i v i d u a l p h y s i c i a n s to p r o v i d e 3 a s i c h e a l t h H M O could s e r v i c e s s o l o n g a s t h e s e p h y s i c i a n s a g r e e d not to hold members of the HMO f i n a n c i a l l y a n d personally l i a b l e f o r payment o f s e r v i c e s provided S u t nCk p a i a f o r by t h e H M O i n t h e event o f the H M O ' s eefault. Amends the s e p a r a t e c o r p o r a t e e n t ~ t yr e q u l r e m e n c of T l t l e XI;I to a l l o w a n H M O = o be part of a n o t h e r cor?orate entrty ~f t h a t e n t ~ t yp r o v ~ d e s a s s u r a n c e s s a t ~ s f a c t o r yto the S e c r e t a r y t h a t the H M O w l l l remaln f i n a n c ~ a l l yv ~ a b l ef o r the duratzon of ~ t s c e r t ~ f Zatlon f o r F e d e r a i q U & l ~ f l C a t l O n . R e q u i r e s H M O s to a s s u r e chat m e m b e r s would n c t be held liable for :he c o s t s o f s e r v i c e s p r o v i d e d b y h o s p ~ t a l sr e g u l a r l y u s e d b y t h e XMC. Provides "hold harmlessw c o n t r a c t s w ~ t h such t h a t t h e HMO c o u l d e i t h e r e n t e r I n t o hospitals, or secure default l ~ s u r a n c e for such proteccion, or malnta~n as t h e Secretary a d e q u a t e f ~ n a n c ~ ar el s e r v e s , o r t a k e o c h e r s u c h m e a s u r e s considers a p p r o p r i a t e f o r such 2urposes. Specif-es chat this requlremenc to take "hold w o u l d n o t a p p l y I n S t a t e s w h e r e l a w a l r e a d y r e q u i r e s a n HMO h a r m l e s s " m e a s u r e s t o p r o t e c t i t s members. R e q u i r e s t h a t H M O s p e r i o d i c a l l y d e m o n s t r a t e t o t h e D e p a r t m e n t of Health a n d Human S e r v i c e s , b u t n o m o r e f r e q u e n t l y t h a n e v e r y 2 y e a r s , t h a t t h e y a r e i n compliance with requirements specified for qualification. Allows the Secretary t o delegate t o the States the responsibility for this accreditation b u t o n l y t o t h e e x t e n t he f l n d s t h a t a S t a t e i s a b l e and w i l l i n g t o do s o . Healch Maintenance Organization Extends t h e a u t h o r i t y f o r t h e National Authcrizes for these I n t e r n program a n d f o r t e c h n i c a l a s s i s t a n c e t o HMOs. p u r p o s e s $1 n i l l i o n f o r e a c h o f t h e f ~ s c a ly e a r s 1 9 8 2 t h r o u g h 1 9 8 4 . S . 1 0 2 9 i n t r o d u c e d A p r . 2 9 , 1 9 8 1 ; r e f e r r e d t o C o r n m i c t e e o n L a b o r a n c Human Authorizations Resources. R e p o r t e d w i t h a m e n d m e n t s f a v o r a b l y Kay 1 5 , 1 9 8 1 . f c r S. 1029 were i n c l u d e d i n t h e c o m m i t t e e ' s R e c o n c i l i a t i o n package for the S e n a t e Budget Committee a n d i n t h e S e n a t e Omnibus R e c o n c i l i a t i o n A c t o f 1 9 8 1 , S . 1 3 7 7 , p a s s e d by t h e S e n a t e J u n e 25, 1 9 8 1 . HEARINGS U.S. Congress. House. C o m m i t t e e o n E n e r g y a n d Commerce. 3 e a l t h maintenance Subcominitzee on S e a l t h a n d E n v i r o n m e n t . Hearings, 97th Congress, i s t session. organizations. Washington. Not y e t p r i n t e d . Mar. l E a n d 1 9 , 1 9 8 1 . U.S. Congress. Senate. C o m m i t t e e o c L a S o r a n d Human 2 e s o u r c e s . Health maintenance organizations. Hearings, 97th Congress, 1st session. Apr. 22, 1981. Washington. Not y e t p r i n t e d . CHRONOLOGY OF EVENTS 07/11/61 --- 07/30/81 -- 06/26/81 -- 05/25/81 -- S e n a t e p a s s e e Omnibus Z e c o n c i l i a t i o n A c t o f 1 9 8 1 , S. 1377, cor'taining a u t h o r i z a t i o n s f o r S. 1029. 06/10/8l -- S e n a t e L a b o r a n d Human R e s o u r c e s C o r n m i c t e e r e p o r t e d Reccnciliation package containing auth3riZatiOns f o r S. 1029. 05/12/91 -- House Comrnitzee 08/13/81 H.R. 3 9 8 2 was s i g n e d i n t o law a s P.L. 9 7 - 3 5 . S e n a t e p a s s e d c c n f e r e n c e r e p o r t on 5 . 2 . 3 9 8 2 , t h e Omnibus Budget X e c o n c l l i a t i o n Act of 1981. House p a s s e d c o n f e r e n c e r e p o r = on H . 3 . 3udget B e c o n c i l i a t i o n Act of 1981. 3 9 8 2 , t h e Omnibus H o u s e p a s s e d ' O m n i b u s R e c o n c i l i a t i o n Ac: o f 1 9 8 1 , H . R . 3982, a s p a s s e d , c o n t a i n i n g p r o v i s i o n s of H.R. 3398. 03 E n e r g y a n d Commerce a a r k e d o s E . R . 3 3 9 8 a n d o r d e r e d :he S i l l f a v o r a 5 l y r e p o r r e 5 w i t h amendments ( 5 . R e p t . 97-88) . 05/06/81 -- S e n a t e Committee o n L a b o r a n d Human R e s c u r c e s m a r k e d up S. 1029 a n d o r d e r e d t h e b i l l f a v o r a b l y r e p o r t e d w ~ t ha m e n d m e n t s ( S . R e p t . 9 7 - 1 2 7 ) . 04/29/81 -- H o u s e E n e r g y a n d Commerce S u b c o m m i t t e e o n H e a l t h a n d Environment marked up H . R . 2480 a n d o r d e r e d a c l e a n b i l l f a v o r a b l y r e p o r t e d w i t h amendments. 04/27/81 -- 03/17/81 -- 03/11/91 -- S . 1 0 2 9 i n t r o d u c e d by S e n a t o r H a t c h a n d r e f e r r e d t o C o m m i t t e e o n L a b o r a n d Human R e s o u r c e s . B.R. 2 5 5 0 i n t r o d u c e d by R e p r e s e n t a t i v e s M a d i g a n a n d B r o y h i l l a n d r e f e r r e d t o t h e Committee on Energy a n d Commerce. H.R. 2480 in:roduced Grarnrn a n 8 r e f e r r e d 20 S y Z e p r e s e n t a i i v e s Waxman a n d t h e Committee on Znergy a n d Commerce. 03/10/81 -- The Reagan A d m i n i s t r a t i o n p r o v i d e d d e t a i l s a S o u t i t s 9 Y 8 1 a n d PY82 B u d g e t P r o p o s a l s f o r H M O s a n d i n d i c a t e d i t s i n t e n t i o n t o i n t r o d u c e l e g i s l a t i o n amending t h e t i t l e XI11 a u t h o r i t y . i u f t , Harold S. A s s e s s i n g t h e evidence on H Y 3 performance. Milbank Memoriai Fund q u a r t e r l y . Special issue: SMC promise and p e r f o r m a n c e , v . 5 8 , no. 4 , F a l l 1980: 531-536. ----- How d o h e a l t h maintenance o r g a n i z a t i o n s a c h i e v e c h e i r "savingsv? Zhetoric and evidence. New E n g l a n d j o u r n a l o f medicine, v . 2 9 8 , 1 9 7 8 : 1 3 3 6 - 1 3 4 3 . ----- T r e n d s i n m e d i c a l c a r e c o s t s : d o HMGs l o w e r t h e r a t e o f growth? Medical c a r e , v. 1 8 , 1980: 1-16. U.S. G e n e r a l A c c o u n t ~ n g G f f ~ c e . Can h e a l t h m a l n t e n a n c e o r g a n i z a t i o n s S e s u c c e s s f u l ? -- a n a n a l y s i s o f 1 4 f e d e r a l l y q u a l ~ f i e d"YMGs"~; r e p o r t c o C o n g r e s s b y t h e C o m p t r o l l e r General of t h e United S t a t e s . W a s h ~ n g t o n ,U.S. Govt. P r i n t . Off., June 30, 1978. ( ? u b l ~ c a t ~ oNo. n HRD-78-125) U.S. D e p a r t m e n t o f H e a l t 3 a n d Human S e r v i c e s . J u s t i f i c a t ~ o no f a p p r o p r i a t i o n e s t i m a t e s f o r C o m m i t t e e on A p p r o p r ~ a t i o n s , f i s c a l y e a r 1982. v . 4 , amendea March 1 9 8 1 . 2 . . D e p a r t m e n t o f B e a l t h a n d Zuman S e r v i c e s . O f f i c e of H e a l t h Maintenance G r g a n ~ z a t i o n s . 5 t h a n n u a i repor: t o t h e C o n g r e s s , W a s 3 i n g t o n , U . S . G o v t . P r i n t . Cfi., i 9 8 1 . f i s c a l year 1979. Publication No. ( P H S ) 8:-5C138.