Health Systems Agencies: Public Health Service. Amendment to final rule

This regulation amends the Department's regulation governing the designation and funding of health systems agencies (HSAs) to provide that HSAs will no longer be required to conduct appropriateness reviews, conduct reviews of the proposed uses of Federal funds, or collect, and make available to the public, the rates charged for each of the twenty-five most frequently used hospital services in their States. The intended effect of this regulation is to reduce the functional burden on HSAs during a period of reduced funding.     

The competitive effects of health maintenance organizations: another look at the evidence from Hawaii, Rochester, and Minneapolis/St. Paul

There has been much discussion about the potential cost-containing impact of HMOs upon the local medical care market. Three areas have been identified by various observers as experiencing such beneficial effects: Hawaii, after the development of Kaiser in the late 1950s; Rochester, New York, which experienced rapid HMO growth and declining Blue Cross hospital use in the late 1970s; and Minneapolis/St. Paul, which has been the focus of vigorous HMO competition in the last decade. While comprehensive data on health care expenditures are not available, bits of evidence can be pieced together to develop case studies of each area. Careful review of the available data often identifies internal inconsistencies and contradictions, but in none of the three sites is there a reduction in hospital use that is most plausibly attributed to HMO competition. Instead, the reported reductions are in each case attributable to other factors--including biases in data, long-term trends predating HMOs, indirect effects of other policy changes, and other forms of competition.     

Consumer beliefs and health plan performance: it's not whether you are in an HMO but whether you think you are

Surveys that rate how persons enrolled in HMOs and other types of health coverage feel about their health care are used to bolster claims that HMOs provide inferior quality care, providing justification for patient protection legislation. This research illustrates that the conventional wisdom regarding inferior care in HMOs may color how people assess their health care in surveys, resulting in survey findings biased toward showing HMOs provide inferior care and reinforcing existing stereotypes. Using merged data from the Community Tracking Study Household and Insurance Followback surveys, we identify privately insured persons who correctly and incorrectly know what kind of health plan they are covered by. Nearly a quarter misidentified their type of health coverage. Differences between responses by HMO and non-HMO enrollees to questions covering satisfaction with health care and physician choice, the quality of the last physician's visit, and patient trust in their physician shrink or disappear when we control for beliefs about what type of plan they are covered by. Results suggest that researchers and policy makers should be cautious about using consumer surveys to assess the relative quality of care provided under different types of health insurance.     

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.     

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.     

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.     

Health maintenance organizations--PHS. Final rule

This rule amends the Public Health Service regulations on health maintenance organizations (HMOs) to elaborate on 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, the rule removes regulatory provisions that are considered unnecessary or burdensome, such as the specification of contractual provisions, and increases one of the regulatory limits on copayments to permit HMOs to become more competitive. These amendments are made after consideration of public comments on the notice of proposed rulemaking (NPRM) published on March 22, 1983.     

Strategies for building representative HSAs: the impact of legal structure

The goal of having local health planning agencies represent their communities is considered. A basic premise is that the legal structure of an agency is related to how well a community is represented. This premise is tested, and two strategies are presented for building HSAs which will include strong representation of traditionally under-represented or under-served groups: (1) increasing competition for governing-body membership by requiring all planning agency governing bodies to be small (30 members or less); and (2) increasing the organizational simplicity of the HSA.     

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.     

Health systems agency and state health planning and development agency reviews; certificate of need programs--PHS

The Assistant Secretary for Health, with the approval of the Secretary of Health and Human Services, amends the regulations governing certificate of need reviews by State health planning and development agencies (State Agencies) and health systems agencies (HSAs). The amendments accomplish two tasks: (1) To implement amendments to the Public Health Service Act made by the Health Programs Extension Act of 1980 (Pub. L. 96-538) and the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35), and (2) to reduce Federal regulatory burdens. Under the provisions of Title XV of the Public Health Service Act, the planning agencies are required to administer certificate of need programs consistent with the Department's regulations, under which they review and determine the need for proposed capital expenditures, institutional health services and major medical equipment. These regulations change the requirements for satisfactory certificate of need programs.     

The impact of health maintenance organizations and competition on hospitals in Minneapolis/St. Paul

The Healthcare Educational and Research Foundation (HERF) in Minneapolis undertook a two-year research project to study the effects of health maintenance organizations (HMOs) and competition on the hospital industry in Minneapolis/St. Paul. This article summarizes HERF's major findings surrounding three key questions: (1) do the HMOs in Minneapolis/St. Paul use fewer hospital resources relative to conventional payers?; (2) do recent overall community trends in inpatient use suggest evidence of hospital utilization-reducing effects attributable to HMOs?; and (3) given the highly visible competitive process among Minneapolis/St. Paul providers, do hospital cost and revenue data suggest any evidence of cost-containment? The findings (based on data through 1982) indicate that for comparable patients, Twin Cities HMOs appear to use fewer medical care resources per hospitalized patient. There was, however, no clear evidence of community-wide, utilization-reducing effects directly attributable to the "competitive effect" of HMO introduction and development in the market. In addition, there was no empirical evidence that HMOs (which had enrolled 25 percent of the consumer market by 1982), or other large buyers of inpatient services, have selected hospitals on the basis of price as hypothesized by competition advocates.     

Health maintenance organizations--Public Health Service. Interim rule with request for comments

This notice amends the Public Health Service regulations on Federal qualification of health maintenance organizations [HMOs]. The purpose is to provide greater flexibility for already existing prepaid health care delivery systems to become transitionally qualified HMOs. Adoption of this amendment wil allow entities operating these systems to satisfy the requirement that basic health services be provided to members by demonstrating that members enrolled at the time of transitional qualification receive hospital services or are insured for hospital services through an arrangement not made by the HMO.     

Health systems agency and state health planning and development agency reviews; certificate of need programs--PHS. Notice of proposed rulemaking

The Assistant Secretary for Health, with the approval of the Secretary of Health and Human Services, proposes to amend the regulations governing certificates of need reviews by State health planning and development agencies (State Agencies) and health systems agencies (HSAs). The proposed amendments would accomplish two tasks: (1) Implement amendments to the Public Health Service Act made by the Health Programs Extension Act of 1980 (Pub. L. 96-538) and the Omnibus Budget Reconciliation Act of 1981 (Pub. L. 97-35) and (2) reduce Federal regulatory burdens. Under the provisions of Title XV of the Public Health Service Act, the planning agencies are required to administer certificate of need programs consistent with the Secretary's regulations, under which they review and determine the need for proposed capital expenditures, institutional health services and major medical equipment. These regulations set forth proposed changes to the requirements for satisfactory certificate of need programs. Interested persons are invited to submit written comments and recommendations concerning these proposed rules as well as suggestions for alternative methods of implementing any of the provisions of the amendments that affect the requirements for certificate of need programs.     

What is the HMO Act and what is its impact on employers?

The explosion in health care costs has spurred the development of Health Maintenance Organizations (HMOS). It is predicted that $180 billion will be spent on health care this year. The search for more economical alternatives to the traditional fee-for-service type of care has naturally focused attention on HMOs. Evidence indicates that the cost of HMO services can be one-fourth to one-third less than the cost of traditional care. Such figures make HMOs one of the most important, and least understood, topics confronting employers today.     

The politics of health care regulation: the case of the National Health Planning and Resources Development Act

This paper examines the political and bureautic dynamics of health regulation under the National Health Planning and Resources Development Act and, to a lesser extent, the Carter Cost Proposal now before Congress. A number of underlying issues that affect the day-to-day exercise of health planning are considered, including the contest between state and local and federal government for program control, jurisdictional conflict between state and local planning agencies, and the unsettled roles to be played by professional planners, consumers, and providers. When we assess regulatory policy in health, these complicating factors must be added to the long list of handicaps that already exist. One important finding is that local planning agencies have embraced the task of health regulation somewhat more fully than had generally been expected. A number of explanations for this are offered. In short, the controlling factors in health planning are political, not technical, and there is more occurring at the state and local levels than many had predicted, although any impact is not likely to be dramatic.     

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; 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.     

Information regarding requirements for health maintenance organizations--HRSA. Notice; information regarding requirements for qualified health maintenance organizations

This notice amends information relating to the requirements for federally qualified health maintenance organizations (HMOs) that was published in the Federal Register on April 29, 1980. The amendment deletes the requirement for a cancellation clause in contracts between an HMO and another party performing the HMO's marketing activities.     

Any-Willing-Provider laws: their financial effect on HMOs

Any-Willing-Provider (AWP) legislation requires that health plans accept any health care provider who agrees to conform to the plan's conditions, terms, and reimbursement rates. Many states have adopted such legislation, raising questions about its effect on the managed care market. Those favoring this legislation argue that it will reduce restrictions on choice of provider, while opponents argue that it will reduce competition by increasing administrative and medical costs for managed care plans. Using cross-sectional time-series data for the period 1992-1995 (the period during which many of these laws were enacted), this study investigates the effect that these laws have on HMO financial performance. Our results show that "all-provider" AWP laws have a very limited effect on the financial performance measures we examine. "Pharmacy" AWP laws have a more significant effect, but neither type of law appears to affect the overall profitability of HMOs.