US Code as of: 01/05/99
US Code: Title 42, Sec. 300e. Requirements of health maintenance organizations
- (a) ''Health maintenance organization'' defined
For purposes of this subchapter, the term ''health maintenance organization''
means a public or private entity which is organized under the laws of any
State and which
- (1) provides basic and supplemental health services to its
members in the manner prescribed by subsection (b) of this section, and
- (2) is organized and operated in the manner prescribed by subsection (c)
of this section.
- (b) Manner of supplying basic and supplemental health
services to members
A health maintenance organization shall provide,
without limitations as to time or cost other than those prescribed by or under
this subchapter, basic and supplemental health services to its members in the
following manner:
- (1) Each member is to be provided basic health services
for a basic health services payment which
- (A) is to be paid on a
periodic basis without regard to the dates health services (within
the basic health services) are provided;
- (B) is fixed without regard to the frequency, extent, or kind of health
service (within the basic health services) actually furnished;
- (C) except in the case of basic health services
provided a member who is a full-time student (as defined by the
Secretary) at an accredited institution of higher education, is fixed
under a community rating system; and
- (D) may be supplemented by
additional nominal payments which may be required for the
provision of specific services (within the basic health services),
except that such payments may not be required where or in such a
manner that they serve (as determined under regulations of the
Secretary) as a barrier to the delivery of health services. Such
additional nominal payments shall be fixed in accordance with the
regulations of the Secretary. If a health maintenance organization
offers to its members the opportunity to obtain basic health services
through a physician not described in subsection (b)(3)(A) of this
section, the organization may require, in addition to payments
described in clause (D) of this paragraph, a reasonable deductible to
be paid by a member when obtaining a basic health service from such a
physician. A health maintenance organization may include a health
service, defined as a supplemental health service by section
300e-1(2) of this title,
in the basic health services
provided its members for a basic health services payment described in
the first sentence. In the case of an entity which before it became a
qualified health maintenance organization (within the meaning of
section 300e-9(d)
of this title) provided comprehensive
health services on a prepaid basis, the requirement of clause (C)
shall not apply to such entity until the expiration of the forty-eight
month period beginning with the month following the month in which
the entity became such a qualified health organization.
The requirements of this paragraph respecting the basic health services
payment shall not apply to the provision of basic health services to a
member for an illness or injury for which the member is entitled to
benefits under a workmen's compensation law or an insurance policy but
only to the extent such benefits apply to such services. For the
provision of such services for an illness or injury for which a member
is entitled to benefits under such a law, the health maintenance
organization may, if authorized by such law, charge or authorize the
provider of such services to charge, in accordance with the charges
allowed under such law, the insurance carrier, employer, or other
entity which under such law is to pay for the provision of such
services or, to the extent that such member has been paid under such
law for such services, such member. For the provision of such services
for an illness or injury for which a member is entitled to
benefits under an insurance policy, a health maintenance
organization may charge or authorize the provider of such services
to charge the insurance carrier under such policy or, to the extent
that such member has been paid under such policy for such services,
such member.
- (2) For such payment or payments (hereinafter in this
subchapter referred to as ''supplemental health services payments'')
as the health maintenance organization may require in addition to the
basic health services payment, the organization may provide to each of
its members any of the health services which are included in
supplemental health services (as defined in section
300e-1(2) of this title).
Supplemental health services
payments which are fixed on a prepayment basis shall be fixed under
a community rating system unless the supplemental health services
payment is for a supplemental health service provided a member who is a
full-time student (as defined by the Secretary) at an accredited
institution of higher education, except that, in the case of an entity
which before it became a qualified health maintenance organization
(within the meaning of section 300e-9(d)
of this title) provided comprehensive health
services on a prepaid basis, the requirement of this sentence shall
not apply to such entity during the forty-eight month period beginning
with the month following the month in which the entity became such a
qualified health maintenance organization.
- (3)
- (A) Except as provided in subparagraph (B), at least 90 percent of
the services of a physician which are provided as basic health
services shall be provided through -
- (i) members of the staff of the health
maintenance organization,
- (ii) a medical group (or groups),
- (iii) an individual practice association (or
associations),
- (iv) physicians or other health professionals
who have contracted with the health maintenance organization for the
provision of such services, or
- (v) any combination of such staff, medical group
(or groups), individual practice association (or associations) or
physicians or other health professionals under contract with the
organization.
- (B) Subparagraph (A) does not apply to the provision
of the services of a physician -
- (i) which the health maintenance organization
determines, in conformity with regulations of the Secretary, are
unusual or infrequently used, or
- (ii) which are provided a member of the
organization in a manner other than that prescribed by subparagraph
(A) because of an emergency which made it medically necessary that
the service be provided to the member before it could be provided
in a manner prescribed by subparagraph (A).
- (C) Contracts between a health maintenance
organization and health professionals for the provision of basic and
supplemental health services shall include such provisions as the
Secretary may require, but only to the extent that such requirements
are designed to insure the delivery of quality health care services
and sound fiscal management.
- (D) For purposes of this paragraph the term ''health
professional'' means physicians, dentists, nurses, podiatrists,
optometrists, and such other individuals engaged in the delivery
of health services as the Secretary may by regulation designate.
- (4) Basic health services (and only such supplemental
health services as members have contracted for) shall within the area
served by the health maintenance organization be available and
accessible to each of its members with reasonable promptness and in
a manner which assures continuity, and when medically necessary be
available and accessible twenty-four hours a day and seven days a week,
except that a health maintenance organization which has a service area
located wholly in a nonmetropolitan area may make a basic health service
available outside its service area if that basic health service is not a
primary care or emergency health care service and if there is an
insufficient number of providers of that basic health service within the
service area who will provide such service to members of the health
maintenance organization. A member of a health maintenance organization
shall be reimbursed by the organization for his expenses in securing
basic and supplemental health services other than through the
organization if the services were medically necessary and immediately
required because of an unforeseen illness, injury, or condition.
- (5) To the extent that a natural disaster, war, riot,
civil insurrection, or any other similar event not within the control
of a health maintenance organization (as determined under
regulations of the Secretary) results in the facilities, personnel,
or financial resources of a health maintenance organization not being
available to provide or arrange for the provision of a basic or
supplemental health service in accordance with the requirements of
paragraphs (1) through (4) of this subsection, such requirements only
require the organization to make a good-faith effort to provide or
arrange for the provision of such service within such limitation on its
facilities, personnel, or resources.
- (6) A health maintenance organization that otherwise
meets the requirements of this subchapter may offer a high-deductible
health plan (as defined in section 220(c)(2) of title 26).
- (c) Organizational requirements Each health maintenance
organization shall -
- (1)
- (A) have -
- (i) a fiscally sound operation, and
- (ii) adequate provision against the risk of insolvency, which is
satisfactory to the Secretary, and
- (B) have administrative and
managerial arrangements satisfactory to the Secretary;
- (2) assume full financial risk on a prospective basis for
the provision of basic health services, except that a health
maintenance organization may
- (A) obtain insurance or make other
arrangements for the cost of providing to any member basic health
services the aggregate value of which exceeds $5,000 in any year,
- (B) obtain insurance or make other arrangements for
the cost of basic health services provided to its members other than
through the organization because medical necessity required their
provision before they could be secured through the organization,
- (C) obtain insurance or make other arrangements for
not more than 90 per centum of the amount by which its costs for any of
its fiscal years exceed 115 per centum of its income for such fiscal
year, and
- (D) make arrangements with physicians or other health
professionals, health care institutions, or any combination of such
individuals or institutions to assume all or part of the financial risk
on a prospective basis for the provision of basic health services by the
physicians or other health professionals or through the institutions;
- (3)
- (A) enroll persons who are broadly representative of the various
age, social, and income groups within the area it serves, except that in
the case of a health maintenance organization which has a medically
underserved population located (in whole or in part) in the area it
serves, not more than 75 per centum of the members of that organization
may be enrolled from the medically underserved population unless the
area in which such population resides is also a rural area (as
designated by the Secretary), and
- (B) carry out enrollment of members
who are entitled to medical assistance under a State plan approved under
title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) in
accordance with procedures approved under regulations promulgated by
the Secretary;
- (4) not expel or refuse to re-enroll any member because of
his health status or his requirements for health services;
- (5) be organized in such a manner that provides meaningful
procedures for hearing and resolving grievances between the health
maintenance organization (including the medical group or groups and other
health delivery entities providing health services for the organization)
and the members of the organization;
- (6) have organizational arrangements, established in
accordance with regulations of the Secretary, for an ongoing quality
assurance program for its health services which program
- (A) stresses health outcomes, and
- (B) provides review by physicians and other health
professionals of the process followed in the provision of health services;
- (7) adopt at least one of the following arrangements to
protect its members from incurring liability for payment of any fees
which are the legal obligation of such organization -
- (A) a contractual arrangement with any hospital that
is regularly used by the members of such organization prohibiting
such hospital from holding any such member liable for payment of any
fees which are the legal obligation of such organization;
- (B) insolvency insurance, acceptable to the Secretary;
- (C) adequate financial reserve, acceptable to the
Secretary; and
- (D) other arrangements, acceptable to the Secretary,
to protect members, except that the requirements of this paragraph
shall not apply to a health maintenance organization if applicable State
law provides the members of such organization with protection from
liability for payment of any fees which are the legal obligation of
such organization; and
- (8) provide, in accordance with regulations of
the Secretary (including safeguards concerning the confidentiality of
the doctor-patient relationship), and effective procedure for
developing, compiling, evaluating, and reporting to the Secretary,
statistics and other information (which the Secretary shall publish and
disseminate on an annual basis and which the health maintenance
organization shall disclose, in a manner acceptable to the Secretary, to
its members and the general public) relating to
- (A) the cost of its
operations,
- (B) the patterns of utilization of its services,
- (C) the
availability, accessibility, and acceptability of its services,
- (D) to the extent practical, developments in the health status of its
members, and
- (E) such other matters as the Secretary may require. The
Secretary shall issue regulations stating the circumstances under which the
Secretary, in administering paragraph (1)(A), will consider the resources of
an organization which owns or controls a health maintenance organization.
Such regulations shall require as a condition to consideration of resources
that an organization which owns or controls a health maintenance
organization shall provide satisfactory assurances that it will assume the
financial obligations of the health maintenance organization.
- (d) Application of rules by certain health maintenance
organizations
An organization that offers health benefits coverage
shall not be considered as failing to meet the requirements of this section
notwithstanding that it provides, with respect to coverage offered in
connection with a group health plan in the small or large group market (as
defined in section 300gg-91(e) of this title), an affiliation period consistent
with the provisions of section 300gg(g) of this title.