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
Federal law is the body of law created by the federal government of a country. A federal government is formed when a group of political units, such as states or provinces join in a federation, delegating their individual sovereignty and many po ...
that provides for a trial federal program to promote and encourage the development of
health maintenance organization
In the United States, a health maintenance organization (HMO) is a medical insurance group that provides health services for a fixed annual fee. It is an organization that provides or arranges managed care for health insurance, self-funded healt ...
s (HMOs). The federal HMO Act amended the
Public Health Service Act
The Public Health Service Act is a United States federal law enacted in 1944. The full act is codified in Title 42 of the United States Code (The Public Health and Welfare), Chapter 6A (Public Health Service).
Contents
The act clearly establis ...
, which Congress passed in 1944. The principal sponsor of the federal HMO Act was
Sen. Edward M. Kennedy (MA).
Principles
President
Richard Nixon
Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was ...
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
In the United States, a health maintenance organization (HMO) is a medical insurance group that provides health services for a fixed annual fee. It is an organization that provides or arranges managed care for health insurance, self-funded healt ...
(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 federally qualified, the HMO must meet these 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
Health, according to the World Health Organization, is "a state of complete physical, Mental health, mental and social well-being and not merely the absence of disease and infirmity".World Health Organization. (2006)''Constitution of the World H ...
P.L. 94-460
* November 1, 1978:
Health Maintenance Organization Amendments of 1978
Health, according to the World Health Organization, is "a state of complete physical, Mental health, mental and social well-being and not merely the absence of disease and infirmity".World Health Organization. (2006)''Constitution of the World H ...
P.L. 95-559
* July 10, 1979:
P.L. 96-32
* August 13, 1981:
Omnibus Budget Reconciliation Act of 1981
The Omnibus Budget Reconciliation Act of 1981 is the federal budget enacted by the 97th United States Congress and signed into law by U.S. President Ronald Reagan. The bill established federal expenditures for fiscal year 1982, which ran from 1 O ...
P.L. 97-35
* October 24, 1988:
Health Maintenance Organization Amendments of 1988
Health, according to the World Health Organization, is "a state of complete physical, mental and social well-being and not merely the absence of disease and infirmity".World Health Organization. (2006)''Constitution of the World Health Organiza ...
P.L. 100-517
* August 21, 1996:
Health Insurance Portability and Accountability Act
The Health Insurance Portability and Accountability Act of 1996 (HIPAA or the Kennedy– Kassebaum Act) is a United States Act of Congress enacted by the 104th United States Congress and signed into law by President Bill Clinton on August 21, 1 ...
(HIPAA)
P.L. 104-191
Further reading
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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.
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References
{{DEFAULTSORT:Health Maintenance Organization Act Of 1973
1973 in law
Act
United States federal health legislation