Question

Discuss the federal agencies that are responsible for the oversight of HMOs, and discuss when federal regulations or state regulations would apply to situations, such as HIPAA privacy standards. According to the McCarran-Ferguson Act and the Health Maintenance Organization (HMO) Act, oversight of health insurance regulation for HMOs is left to the states. Based on your understanding of HMO oversight, do you believe the states should have such authority?

Answer 1

Managed care is a term that generally means a system of payment or delivery arrangement where the health plan attempts to control or coordinate use of health services by its enrolled members in order to control spending and promote improved health. Like fee-for-service insurance, managed care arrangements accept financial responsibility for a defined set of health care benefits in return for a premium paid by or on behalf of each enrolled member. Unlike fee-for-service insurers, managed care arrangements directly provide or arrange for health care services, through affiliated physicians, hospitals and other providers, instead of simply paying bills. The enrollees covered by the managed care plan agree to obtain all covered services, except emergency and out-of-area care4, from or with the authorization of the managed care plan or its affiliated providers. The MCO may reduce unnecessary hospitalizations, diagnostic tests, or speciality referrals, either through programs to review the use of services or by giving participating physicians a financial stake in the cost of the services they order. It may also select low-cost providers of services or negotiate discounted rates from providers.

At one time, the only type of arrangement that offered managed care was a health maintenance organization (HMO). Today, managed care coverage is provided by an array of entities, such as preferred provider organizations (PPOs) and provider-sponsored organizations (PSOs), many of which offer more open-ended coverage than do traditional HMOs. As in traditional HMOs, these arrangements provide covered services through provider networks. Enrollees are given financial incentives to use services within the plan’s provider network, but still, receive some coverage even if they decide to obtain care from outside providers.

The regulation of a managed care plan depends on who is its issuer. In general, the federal government regulates private sector employer health plans, including managed care plans that are sponsored by a private employer. The states regulate the business of insurance, which includes an HMO or other types of MCO that sells a health insurance policy to an individual, employer, or other purchasers. States also oversee plans sponsored by state and local governments. If a private sector employer sponsors a plan that is not purchased from an MCO (i.e., the plan is self-insured), then the plan is regulated solely by the federal government.

The Department of Human health and services has had the primary responsibility affecting the managed care including HIPAA, GINA, and the ACA

• The Centers for Medicare and Medicaid Services (CMS), Center for Consumer Information and Insurance Oversight (CCIIO), which enforces the HIPAA, GINA, MHPAEA, and ACA insurance market requirements.
• The CMS Office of E-Health Standards and Security (OESS), which is responsible for HIPAA electronic transaction standards
• The Office for Civil Rights (OCR), which has been responsible for HIPAA health information privacy and data.

McCarran-Ferguson Act of 1945

This Act ratified legislation in all states to conform to federal law; however, Congress still concluded that state regulation of insurance made the most sense from a consumer's standpoint. Under this act, the business of insurance is primarily regulated by the states, allowing the federal government to regulate in addition to, but not to supersede state insurance laws. Since insurance is considered to be interstate commerce, federal law regulates such business in addition to state regulation.

Health Maintenance Organization Act of 1973

• This act was passed out of concern for escalating healthcare costs. The law was intended to provide an alternative to fee for service by stimulating the growth of HMOs
• Was supposed to stimulate competition for enrollees → reducing costs

This act aims to promote HMOs and set standards for these organizations.

But this Act failed. In my view, I am not believing that presently the states should not have such authority