Health Maintenance Organization Act of 1973

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
Effective	December 29, 1973
Citations
Public law	93-222
Statutes at Large	87 Stat. 914
Codification
Titles amended	42 U.S.C.: Public Health and Social Welfare
U.S.C. sections created	42 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

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).

Principles

President Richard Nixon signed bill S.14 into law on December 29, 1973.^[1]

It included a mandated Dual Choice under Section 1310 of the Act.^[2]

Health Maintenance Organization (HMO) is a term first conceived of by Dr. Paul M. Ellwood, Jr.^[3] 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.^[4] Ellwood's work led to the eventual HMO Act of 1973.^[5]

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;^[6]
• 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^[7]
• 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"^[8]
• 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^[9]
• 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.^[10]

References

1. 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.
2. 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.
3. 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.
4. "Ellwood: HMO seer". Modern Healthcare: 40. August 7, 2006.
5. Charles S. Lauer (February 14, 2000). "Celebrating three visionaries". Modern Healthcare: 29.
6. 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.
7. 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.
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. 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.
10. 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.