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Health Maintenance Organization Act of 1973

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Effective
  
December 29, 1973

Statutes at Large
  
87 Stat. 914

Public law
  
93-222

Health Maintenance Organization Act of 1973

Long title
  
An Act to amend the Public Health Service Act to provide assistance and encouragement for the establishment and expansion of health maintenance organizations, and for other purposes.

Nicknames
  
Commission on Quality Health Care Act

Enacted by
  
the 93rd United States Congress

The Health Maintenance Organization Act of 1973 (Pub. L. 93-222 codified as 42 U.S.C. §300e) is a United States statute enacted on December 29, 1973. The Health Maintenance Organization Act is informally known as the federal HMO Act is a federal law that provides for a trial federal program to promote and encourage the development of HMOs. The federal HMO Act amended the Public Health Service Act, which Congress passed in 1944. The principal sponsor of the federal HMO Act was Sen. Edward M. Kennedy (MA).

Contents

Principles

President Richard Nixon signed bill S.14 into law on December 29, 1973.

It included a mandated Dual Choice under Section 1310 of the Act.

Health Maintenance Organization (HMO) is a term first conceived of by Dr. Paul M. Ellwood, Jr. The concept for the HMO Act began with discussions Ellwood and his Interstudy group members had with Nixon administration advisors who were looking for a way to curb medical inflation. Ellwood's work led to the eventual HMO Act of 1973.

It provided grants and loans to provide, start, or expand a Health Maintenance Organization (HMO); removed certain state restrictions for federally qualified HMOs; and required employers with 25 or more employees to offer federally certified HMO options IF they offered traditional health insurance to employees. It did not require employers to offer health insurance. The Act solidified the term HMO and gave HMOs greater access to the employer-based market. The Dual Choice provision expired in 1995.

Benefits offered to Federally qualified HMOs

  • Money for development
  • Override of specific restrictive State laws
  • Mandate offered to specific employers to offer an optional HMO plan as part of their employee benefits package

    • Qualifications of a Federally qualified HMO

    To become a certified as a federal qualified HMO, the HMO must meet the following requirements:

  • Deliver a more comprehensive package of benefits;
  • Be made available to more broadly representative population;
  • Be offered on a more equitable basis;
  • More participation of consumers;
  • All at the same or lower price than traditional forms of insurance coverage

    • Effects of the act

  • Federal Financial Assistance for developing HMOs—Assisted individual HMOs in obtaining endorsement (referred to as qualification) from the federal government
  • Marketing Support through Dual Choice Mandate—Required employers to offer coverage from at least one federally qualified HMO to all employees (dual choice).

    • Problem areas

  • Definition of "Medical Group"
  • Comprehensive Benefits and Limitations on Copays
  • Open Enrollment and Community Rating
  • Mandatory "Dual Choice"
  • Delay in Implementation

    • Amendments to the HMO Act of 1973

  • October 8, 1976: Health Maintenance Organization Amendments of 1976, P.L. 94-460, 90 Stat. 1945
  • November 1, 1978: Health Maintenance Organization Amendments of 1978, P.L. 95-559, 92 Stat. 2131
  • July 10, 1979: Joint resolution to amend the Public Health Services Act and related health laws to correct printing and other technical errors, P.L. 96-32, 93 Stat. 82
  • August 13, 1981: Omnibus Budget Reconciliation Act of 1981, P.L. 97-35, 95 Stat. 357
  • October 24, 1988: Health Maintenance Organization Amendments of 1988, P.L. 100-517, 102 Stat. 2578
  • August 21, 1996: Health Insurance Portability and Accountability Act (HIPAA), P.L. 104-191, 110 Stat. 1936

    • Additional reading

  • Hall, Mark A.; Bobinski, Mary Anne; Orentlicher, David (February 20, 2008). The law of health care finance and regulation. New York: Aspen Publishers. p. 648. ISBN 978-0-7355-7299-7. OCLC 183928753. 
  • Leiyu Shi; Douglas A. Singh (2010). Essentials of the U.S. health care system (2nd ed.). Sudbury, Mass.: Jones and Bartlett Publishers. ISBN 978-0-7637-6380-0. 
  • J. L. Dorsey (January 1975). "The Health Maintenance Organization Act of 1973 (P.L. 93-222) and prepaid group practice plans.". Medical care. 13 (1): 1–9. doi:10.1097/00005650-197501000-00001. PMID 803289. 
  • Richard M. Nixon (December 29, 1973). "Statement on Signing the Health Maintenance Organization Act of 1973". Online by Gerhard Peters and John T. Woolley: The American Presidency Project. 

    • Definitions

    A Health Maintenance Organization (HMO) is a managed care plan that incorporates financing and delivery of an inclusive set of health care services to individuals enrolled in a network.

    References

    Health Maintenance Organization Act of 1973 Wikipedia
    (Text) CC BY-SA