Health maintenance organizations; amendments of 1981--Health Resources and Services Administration. Notice of proposed rulemaking

This notice proposes to amend the Public Health Service rules on health maintenance organizations (HMOs) to conform with the 1981 amendments to the HMO statute regarding member protection in the event of insolvency, community rating by class, and primary care within the service area of a non-metropolitan HMO. In addition, this notice proposes: (a) to remove provisions of the rules that are considered unnecessary or burdensome, such as the regulatory specification of contractual provisions, and (b) to increase one of the regulatory limits on copayments to permit HMOs to become more competitive with alternative forms of health insurance.     

Full reporting by health maintenance organizations (HMOs) and competitive medical plans (CMPs) paid on a cost basis--HCFA. Final rule

This rule affects HMOs and CMPs that contract with HCFA to furnish services to Medicare beneficiaries and be paid on a cost basis. It requires a cost HMO or CMP to include in its cost report the costs of hospital and skilled nursing facility (SNF) services even if it has elected (under section 417.532(c) of the HCFA regulations) to have HCFA's intermediary process those claims and pay the hospital or SNF directly. This change is necessary so that HCFA can determine and compare the cost of all services furnished by HMOs and CMPs with the cost of equivalent services paid for under the fee-for-service system. This rule also adds a definition and makes technical changes to clarify and update certain related provisions of subparts O and U of part 417 of the HCFA rules.     

Medicare and state health care programs: fraud and abuse, civil money penalties and intermediate sanctions for certain violations by health maintenance organizations and competitive medical plans--HHS. Final rule

This final rule implements sections 9312(c)(2), 9312(f), and 9434(b) of Public Law 99-509, section 7 of Public Law 100-93, section 4014 of Public Law 100-203, sections 224 and 411(k)(12) of Public Law 100-360, and section 6411(d)(3) of Public Law 101-239. These provisions broaden the Secretary's authority to impose intermediate sanctions and civil money penalties on health maintenance organizations (HMOs), competitive medical plans, and other prepaid health plans contracting under Medicare or Medicaid that (1) substantially fail to provide an enrolled individual with required medically necessary items and services; (2) engage in certain marketing, enrollment, reporting, or claims payment abuses; or (3) in the case of Medicare risk-contracting plans, employ or contract with, either directly or indirectly, an individual or entity excluded from participation in Medicare. The provisions also condition Federal financial participation in certain State payments on the State's exclusion of certain prohibited entities from participation in HMO contracts and waiver programs. This final rule is intended to significantly enhance the protections for Medicare beneficiaries and Medicaid recipients enrolled in a HMO, competitive medical plan, or other contracting organization under titles XVIII and XIX of the Social Security Act.     

Health maintenance organizations--PHS. Final regulations

This rule amends the Public Health Service regulations on qualification of health maintenance organizations (HMOs). Changes are made in the procedural requirements for entities to obtain qualification as federally qualified HMOs. These changes include requirements relating to Freedom of Information requests and deletion of the fair hearing provision. Adoption of these amendments will update the requirements for HMOs seeking Federal qualification.     

Public Health Service--Health maintenance organizations; requirements for a health maintenance organization. Final regulations

This rule amends the Public Health Service regulations by setting forth revised requirements for the organization and operation of federally qualified health maintenance organizations (HMOs). These amendments are made as a result of (1) public comments on the interim regulations published on July 18, 1979, and (2) public comments on the notice of proposed rulemaking (NPRM) governing relationships between federally qualified HMOs and other parties, also published on July 18, 1979.     

Health maintenance organizations--Public Health Service. Final regulations

These rules amend the Public Health Service (PHS) regulations on health maintenance organizations (HMOs) by implementing certain changes made by the Health Maintenance Organization Amendments of 1981. The provision governing repayment of grant funds under certain circumstances is also amended. In addition, this rule amends the requirements for the award of loans or loan guarantees to qualified HMOs for the acquisition or construction of ambulatory health care facilities and the acquisition of equipment for those facilities (Subpart J). The amendments to Subpart J are made as a result of public comments on the interim regulations published on April 9, 1980.     

Medicare program; establishment of an expedited review process for Medicare beneficiaries enrolled in health maintenance organizations, competitive medical plans, and health care prepayment plans--HCFA. Final rule with comment period

This final rule with comment period establishes a new administrative review requirement for Medicare beneficiaries enrolled in health maintenance organizations (HMOs), competitive medical plans (CMPs), and health care prepayment plans (HCPPs). This rule implements section 1876(c)(5) of the Social Security Act, which specifies the appeal and grievance rights for Medicare enrollees in HMOs and CMPs. This rule requires that an HMO, CMP, or HCPP establish and maintain, as part of the health plan's appeals procedures, an expedited process for making organization determinations and reconsidered determinations when an adverse determination could seriously jeopardize the life or health of the enrollee or the enrollee's ability to regain maximum function. This rule also revises the definition of appealable determinations to clarify that it includes a decision to discontinue services.     

Medicare program; payments to HMOs and CMPs and appeals: technical amendments--HCFA. Final rule with comment period

This rule clarifies and updates portions of the HCFA regulations that pertain to payment for services furnished to Medicare enrollees by health maintenance organizations (HMOs) and competitive medical plans (CMPs); appeals by Medicare enrollees concerning payment for those services; and appeals by HMOs and CMPs with regard to their Medicare contracts. This rule completes the special project aimed at the total technical revision of part 417. Part 417 contains the regulations applicable to all prepaid health care organizations, that is, HMOs, CMPs, and health care prepayment plans (HCPPs). These are technical and editorial changes that do not affect the substance of the regulations. They are intended to make it easier to find particular provisions, to eliminate needless repetition and remove obsolete content, and to better ensure uniform understanding of the rules.     

Medicare program; qualified health maintenance organizations: technical amendments--HCFA. Final rule with comment period

This rule clarifies and updates portions of the HCFA regulations that pertain to Federal qualification and continued regulation of health maintenance organizations (HMOs), inclusion of qualified HMOs in employee health benefits plans, and the administration of outstanding loans and loan guarantees that were awarded before October 1, 1986, under the Public Health Service Act (PHS Act). This rule is part of a special project to clarify and update all of 42 CFR part 417, which contains the regulations applicable to all entities that provide prepaid health care, that is, HMOs, CMPs (competitive medical plans) and HCPPs (health care prepayment plans). These are technical and editorial changes that do not affect the substance of the regulations. They are intended to make it easier to find particular provisions, to provide overviews of the different program aspects, and to better ensure uniform understanding of the rules.     

Medicare program; appeal rights and procedures for beneficiaries enrolled in prepaid health care plans--HCFA. Final rule

This final rule modifies or establishes administrative review procedures for Medicare beneficiaries enrolled in health maintenance organizations (HMOs), competitive medical plans (CMPs), and health care prepayment plans (HCPPs). Specifically, it requires that an HMO or CMP complete a reconsideration, requested by a Medicare enrollee for denied services or claims, within 60 days from the date of receipt of the reconsideration request; extends to HMO and CMP enrollees the right to request immediate review by a Utilization and Quality Control Peer Review Organization of an HMO's, CMP's, or hospital's determination that an inpatient hospital stay is no longer necessary; and requires an HCPP to establish administrative review procedures for its Medicare enrollees who are dissatisfied with decisions on denied services or claims.     

Medicaid program; modification of certain requirements for health insuring organizations--HCFA. Final rule

This final rule implements statutory changes which expressly made certain Health Insuring Organizations (HIOs) subject to Medicaid Health Maintenance Organization (HMO) rules. The statute implemented in this rule requires that an HIO which became operational on or after January 1, 1986, and arranges for comprehensive health services for Medicaid recipients on a risk basis be subject to HMO requirements. The statute also provides that exemptions from certain HMO rules are permitted for HIOs which began operation on or after January 1, 1986, if the HIOs are operating under a section 1915(b) waiver obtained prior to that date, or if an HIO is otherwise identified in the law. The exemptions continue as long as the waiver under section 1915(b) of the Social Security Act remains in effect. The statutory provisions implemented in this rule were enacted in section 9517(c) of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended by section 9435(e) of the Omnibus Budget Reconciliation Act of 1986, and section 1895(c)(4) of the Tax Reform Act of 1986.     

Disclosure of children's free and reduced price meals and free milk eligibility information in the child nutrition programs. Final rule

This final rule establishes requirements for the disclosure of children's free and reduced price meals or free milk eligibility information under the Child Nutrition Programs. The Child Nutrition Programs include the National School Lunch Program, School Breakfast Program, Special Milk Program, Summer Food Service Program, and Child and Adult Care Food Program. Within certain limitations, children's free and reduced price meal or free milk eligibility information may be disclosed, without parental/guardian consent, to persons directly connected to certain education programs, health programs, means-tested nutrition programs, the Comptroller General of the United States, and some law enforcement officials. Additionally, officials also may disclose children's free and reduced price meal or free milk eligibility information to persons directly connected with State Medicaid (Medicaid) and the State Children's Health Insurance Program (SCHIP) when parents/guardians do not decline to have their information disclosed. These regulations affect State agencies and local program operators that administer the Child Nutrition Programs and households which apply for and/or are approved for free and reduced price meals or free milk. The final rule reflects the disclosure provisions of the Healthy Meals for Healthy Americans Act of 1994 and comments received on the proposed rule published in anticipation of implementing those provisions. Additionally, this final rule includes the regulatory disclosure provisions implementing the Agricultural Risk Protection Act of 2000 and comments received on the interim rule issued to implement those provisions. This final rule also implements nondiscretionary provisions of the Child Nutrition and WIC Reauthorization Act of 2004, allowing certain third party contractors access to children's eligibility status and will allow school officials to communicate with Medicaid and SCHIP officials to verify that children are eligible for free and reduced price school meals or free milk. The disclosure provisions are intended to reduce paperwork for administrators of certain programs that target low-income households and for low-income households which may benefit from those programs by allowing some sharing of household's free and reduced price meal eligibility information. This rule also includes several technical amendments.     

Competition versus regulation: some empirical evidence

In response to dramatic rises in health care costs, policymakers have been debating the relative merits of regulatory and competitive strategies as a means of containing costs. One major activity espoused by proponents of competition is the growth of health maintenance organizations (HMOs) which, in their opinion, will result in the market better determining efficient levels of utilization and costs. Extending this argument, the larger the percent of the population in a market area who enroll in HMOs, the greater the market-forcing effect of HMOs in reducing overall hospital expenditures; that is, if HMOs are providing lower-cost care, then the fee-for-service system will be forced to reduce costs in order to be competitive. The authors studied the 25 largest SMSAs from 1971-1981, and controlling for environmental conditions in each market, they examined the impact of both HMO growth and regulatory activity on costs and utilization. They conclude that neither competition nor regulation had a significant impact in reducing overall hospital costs. While there may have been some impact in specific communities, no generalizable effect could be observed. However, the authors did find that increases in costs and utilization were essentially driven by supply factors such as the number of hospital beds or medical specialists in a given community.     

The competitive impact of health maintenance organizations on hospital finances: an exploratory study

In this study we explore whether HMO-induced competition has contained expenditures in Minneapolis/St. Paul hospitals. Specifically, we assessed the impact of HMOs on revenue, cost, and net income per admission in Twin Cities hospitals from 1979 to 1981. Some HMOs have obtained negotiated discounts from hospitals. We found that hospitals which gave larger discounts did not have lower costs per admission. This finding suggest that discounts do not force hospitals to operate more efficiently. In addition, hospitals with a large share of patients from HMOs or government Medicare and Medicaid programs did not have lower costs per admission than other hospitals during the years from 1979 to 1981. This finding casts doubt on the claim that discounts are justified by lower costs for HMO or government patients. Finally, neither HMO market share nor discounts had an adverse effect on hospital profits. During the three years studied, hospital profits in the Twin Cities showed an upward trend. This study concludes that if competition is to succeed it must encompass more than HMOs. HMOs may be important, but they are only one agent in the market. Thus, public policy created to induce competition must go beyond the simple stimulus of HMO growth.     

Evaluating health planning: empirical evidence on HSA regulation of prepaid group practices

The regulation of HMOs by health planning agencies serves as a "tracer" to aid in evaluating HSAs, and as a source of empirical evidence for the heretofore largely theoretical health policy debate between market reformers and regulators. Two complementary studies (the authors' 1979 survey investigating the hospitalization policies of prepaid group practices, and AMPI 's study of all HMO applications submitted to HSAs from 1975 through mid-1978) provide information about the extent of HMO applications to planning agencies, the rate of rejections, the burden of the planning process of HMOs, and the possibility that negative perceptions of regulation may have led HMOs to refrain from activities requiring planning approval. Both studies reveal that health planning review was detrimental to 20 to 30 percent of HMOs. Thus data collected during the period of extensive HSA regulation of HMOs seem to justify the current policy that gives HSAs only very limited authority over HMOs.     

HMO enrollment of Medicare recipients: an analysis of incentives and barriers

Although there has been increased interest in use of the health maintenance organization (HMO) model to resolve a variety of problems relating to provision of health care to older individuals, less than 2 percent of Medicare beneficiaries are currently enrolled in HMOs. This paper examines both legislative and operational barriers to HMO enrollment of the elderly. Legislative reforms, HMO organizational structures, and marketing strategies thought to encourage enrollment of the elderly are discussed.