What was the main purpose of the Health Maintenance Organization Act of 1973 the Federal HMO Act significantly changed certain reimbursements in the US?

A Health Maintenance Organization (HMO) is a type of network health insurance plan which focuses on prevention and coordinated care by a primary care physician (PCP). The PCP coordinates members’ care with in-network specialists, so members must receive a PCP’s referral to see any specialist. Out-of-network care generally isn’t covered at all, except in an emergency.

What Is a Health Maintenance Organization (HMO)?

A Health Maintenance Organization is a health insurance plan that focuses on prevention and provides integrated care by requiring a referral from an in-network primary care physician in order to visit an in-network specialist.

With most HMO plans, patients must receive care and services from in-network primary care physicians, specialists, hospitals, clinics, and pharmacies unless it is for out-of-area urgent care or emergency care.

There are a few other points of consideration regarding HMO insurance plans:

  • Many services require a referral or prior approval.

  • If patients receive care from outside the network, services may not be covered.

  • In most cases, prescription drugs are covered.

What Is the Purpose of a Health Maintenance Organization?

The purpose of a Health Maintenance Organization is to focus on overall patient wellness and preventive healthcare while keeping costs low for its members by only covering in-network physicians and facilities.

What Is One Advantage of an HMO?

One advantage of an HMO is that they typically offer lower monthly premiums and out-of-pocket costs (deductibles, copays, and coinsurance) than other types of insurance plans. An HMO is especially affordable for people who only need basic medical care such as annual checkups and immunizations.

In addition to lower costs, there are other advantages of an HMO:

  • HMOs in just about every part of the U.S. have large networks of doctors, including specialists.

  • HMOs often honor the networks of associated plans (such as plans run by the same insurance carrier in other states). Members who travel can call the plan to ask about in-network care on the road.

  • There are no restrictions on the number of primary care visits.

  • Drug costs are kept low (generally requiring only a small co-payment) and both generic and brand name drugs are available.

  • Usually, patients will not be required to submit claims to the insurance company.

  • They offer an appeal process if a claim is denied.

There are, however, a few disadvantages of an HMO:

  • Patients will only get insurance coverage if they visit an in-network physician and facility.

  • If a primary care physician leaves the network, patients will need to change doctors.

  • Patients must get a referral from their primary care physician before seeing a specialist (unless it’s an emergency).

Is It Better to Have a PPO or HMO?

Whether or not it is better to have a PPO or an HMO depends on several factors, including the general health of the plan’s members, the desired amount of flexibility in choosing doctors and healthcare facilities, and budget constraints.

A Preferred Provider Organization (PPO) offers more flexibility in doctors and facilities than HMOs because members have more options. Members don’t need a primary care physician’s referral to visit a specialist and also have the option to visit out-of-network healthcare providers, albeit, at a higher out-of-pocket cost. Also, PPOs generally come with higher co-payments and/or deductibles.

PPO:

  • Does not require a primary care physician.

  • Members may select any doctor, even out-of-network (at a higher cost).

  • There is no need to get a referral to see a specialist.

  • Members may need to submit an insurance claim for out-of-network care.

  • The plan costs are generally higher.

HMO:

  • A primary care physician coordinates all healthcare decisions and makes referrals to specialists and for hospital visits (except in the case of an emergency).

  • Members are not required to file claims, since the insurance company pays the provider directly.

  • The costs are generally lower.

When deciding between the two plans, it basically comes down to the greater flexibility of a PPO plan versus the lower cost of an HMO plan.

Health Maintenance Organization Act of 1973

What was the main purpose of the Health Maintenance Organization Act of 1973 the Federal HMO Act significantly changed certain reimbursements in the US?
Long titleAn 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.
NicknamesCommission on Quality Health Care Act
Enacted bythe 93rd United States Congress
EffectiveDecember 29, 1973
Citations
Public law93-222
Statutes at Large87 Stat. 914
Codification
Acts amendedPublic Health Service Act of 1944
Titles amended42 U.S.C.: Public Health and Social Welfare
U.S.C. sections created42 U.S.C. ch. 6A § 300e et seq.
Legislative history

  • Introduced in the Senate as S. 14 by Edward M. Kennedy (D-MA) on January 4, 1973
  • Committee consideration by Senate Labor and Public Welfare, House Interstate and Foreign Commerce
  • Passed the Senate on May 15, 1973 (69-25)
  • Passed the House on September 12, 1973 (369-40, in lieu of H.R. 7974)
  • Reported by the joint conference committee on December 12, 1973; agreed to by the House on December 18, 1973 (agreed) and by the Senate on December 19, 1973 (83-1)
  • Signed into law by President Richard M. Nixon on December 29, 1973

Major amendments
Health Maintenance Organization Amendments of 1976, P.L. 94-460, 90 Stat. 1945[1]
Health Maintenance Organization Amendments of 1978, P.L. 95-559, 92 Stat. 2131
Omnibus Budget Reconciliation Act of 1981, P.L. 97-35, 95 Stat. 357
Health Maintenance Organization Amendments of 1988, P.L. 100-517, 102 Stat. 2578
Health Insurance Portability and Accountability Act (HIPAA), P.L. 104-191, 110 Stat. 1936

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, 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 health maintenance organizations (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).

Principles[edit]

President Richard Nixon signed bill S.14 into law on December 29, 1973.[2]

It included a mandated Dual Choice under Section 1310 of the Act.[3]

Health Maintenance Organization (HMO) is a term first conceived of by Dr. Paul M. Ellwood, Jr.[4] The concept for the HMO Act began with discussions Ellwood and his Interstudy group members had with Nixon administration advisors[5] who were looking for a way to curb medical inflation.[6] Ellwood's work led to the eventual HMO Act of 1973.[7]

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[edit]

  • 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[edit]

To become federally qualified, the HMO must meet these requirements:

  • Deliver a more comprehensive package of benefits;[8]
  • 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[edit]

  • Federal Financial Assistance for developing HMOs—Assisted individual HMOs in obtaining endorsement (referred to as qualification) from the federal government[9]
  • 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[edit]

  • Definition of "Medical Group"[10]
  • Comprehensive Benefits and Limitations on Copays
  • Open Enrollment and Community Rating
  • Mandatory "Dual Choice"
  • Delay in Implementation

Amendments to the HMO Act of 1973[edit]

  • October 8, 1976: Health Maintenance Organization Amendments of 1976, P.L. 94-460, 90 Stat. 1945[11]
  • 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

Further reading[edit]

  • 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[edit]

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.[12]

References[edit]

  1. ^ L. R. Gruber; Shadle, M.; Polich, C. L. (1988). "From movement to industry: the growth of HMOs". Health Affairs. 7 (3): 197–208. doi:10.1377/hlthaff.7.3.197. PMID 3215617.
  2. ^ Kant Patel; Mark Rushefsky (2006). Health care politics and policy in America (3rd ed.). Armonk, N.Y.: M.E. Sharpe. ISBN 0-7656-1478-2.
  3. ^ Ellen Thrower; John M. Manders (December 1988). "Legislated Market Access: The Historical and Legislative Evolution of the Dual Choice Mandate in the Federal HMO Act". Journal of Insurance Regulation. 7 (2): 191. ISSN 0736-248X.
  4. ^ Arnold J. Rosoff (Fall 1975). "The Federal HMO Assistance Act: Helping Hand or Hurdle?". American Business Law Journal. 13 (2): 137. doi:10.1111/j.1744-1714.1975.tb00971.x. ISSN 0002-7766.
  5. ^ Nixon, Richard. "Transcript of taped conversation between President Richard Nixon and John D. Ehrlichman (1971) that led to the HMO act of 1973". wikisource.org. Wikisource. Retrieved 30 March 2018.
  6. ^ "Ellwood: HMO seer". Modern Healthcare: 40. August 7, 2006.
  7. ^ Charles S. Lauer (February 14, 2000). "Celebrating three visionaries". Modern Healthcare: 29.
  8. ^ Arnold J. Rosoff (Fall 1975). "The Federal HMO Assistance Act: Helping Hand or Hurdle?". American Business Law Journal. 13 (2): 137. doi:10.1111/j.1744-1714.1975.tb00971.x. ISSN 0002-7766.
  9. ^ David Strang; Ellen M. Bradburn (2001). Campbell, John L. (ed.). "Theorizing Legitimacy or Legitimating Theory?". The Rise of Neoliberalism and Institutional Analysis. Princeton, NJ: Princeton University Press: 129–158. ISBN 0-691-07086-5.
  10. ^ Arnold J. Rosoff (Fall 1975). "The Federal HMO Assistance Act: Helping Hand or Hurdle?". American Business Law Journal. 13 (2): 137. doi:10.1111/j.1744-1714.1975.tb00971.x. ISSN 0002-7766.
  11. ^ L. R. Gruber; Shadle, M.; Polich, C. L. (1988). "From movement to industry: the growth of HMOs". Health Affairs. 7 (3): 197–208. doi:10.1377/hlthaff.7.3.197. PMID 3215617.
  12. ^ Mark A. Hall; Mary Anne Bobinski; David Orentlicher (c. 2008). The law of health care finance and regulation. New York: Aspen Publishers. ISBN 978-0-7355-7299-7.

What was the main purpose of the HMO Act of 1973 quizlet?

The Health Maintenance Organization Act of 1973 was designed to provide an alternative to the traditional fee-for-service practice of medicine. It was aimed at stimulating the growth of HMOs by providing federal funds to establish new HMOs.

What is the purpose of a health maintenance organization HMO )?

HMOs are a type of managed care designed to maintain the health of their patients cost-effectively. A primary method HMOs use to achieve these goals is to coordinate health services and care provided to patients.

What were the main features of the HMO Act?

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.

What is a health maintenance organization HMO )? What is the effect of an HMO in the market for healthcare services quizlet?

A health maintenance organization (HMO) contracts with select doctors and hospitals to be a health care provider for its members. Enrollees in the HMO receive services for a fixed premium paid in advance. Emergency care must be provided when needed, so many plans waive the deductible and coinsurance.