1. What are the most critical components of state regulation for managed care organizations? Which federal regulations also bring specific requirements for the operation of such entities? Discuss state and federal regulation of MCOs.
State oversight of managed care generally focuses on two aspects: the techniques and processes used by a payer, and in particular an HMO, to deliver or arrange for the delivery of health care services to enrollees, and the organizational structure of the payer. (Kongstvedt 596)
Much of the state regulation of managed care is based on the Health Maintenance Organization Model Act released by the National Association of Insurance Commissioners (NAIC) in 1972. The NAIC is the national association representing state insurance regulatory agencies. (Kongstvedt 597)
States have also enacted other NAIC model laws and regulations affecting managed care and payers including requirements for the individual and small group insurance markets, utilization review provisions, standards for health care provider networks, and consumer protections such as procedures for resolving claims appeals and grievances. (Kongstvedt 597)
1973-HMO Act -established conditions for the operation of federally qualified HMOs and provided loans and loan guarantees for HMO startup costs. Federally qualified HMOs were required to provide “basic” and “supplemental” health services to their enrollees, including inpatient, outpatient, home health, laboratory, preventive, and emergency care.8 The Act required federally qualified HMOs to meet solvency standards, provide procedures for handling member grievances, and establish programs for quality assurance.9 In addition, the HMO Act required employers that offered health benefits to their employees through a federally qualified HMO to not financially discriminate against employees that choose the HMO option (i.e., the employer’s contribution toward the cost of coverage had to be reasonable and designed