HMOs propose standards for operation, financing of health plans

February 15, 1994|By New York Times News Service

WASHINGTON -- Health maintenance organizations, which now serve 45 million Americans, proposed uniform federal standards yesterday for the operation and financing of health plans across the country.

The HMOs, concerned about the possibility of 50 different sets of state regulations, would go much further than President Clinton's health care plan in trying to establish uniform national standards.

Under Mr. Clinton's proposal, no health plan could do business unless it was first certified by one or more states. The states would set criteria for the quality of care, "the financial stability" of health plans and the reporting of data to measure their performance.

The Group Health Association of America, a trade group for the nation's HMOs, proposed standards that would eliminate much of the variation among states. It would also require that all networks of doctors and hospitals meet the same stringent standards as HMOs.

Without waiting for action by Congress, hospitals and doctors and insurance companies already are linking up to form the health care networks that the president has proposed as the foundation of a new medical system.

Some of these networks are HMOs, which provide a wide range of services for a monthly fee, set in advance. Others give patients a strong incentive to choose doctors and hospitals from a list of "preferred providers" who agree to accept lower fees in return for more patients.

Mr. Clinton proposed that all health plans have at least $500,000 in capital. The Group Health Association said this was too small to protect consumers or to guarantee the stability of health plans.

The association proposed that HMOs and other health plans have a minimum of $1.5 million in capital, plus 2 percent of annual premium revenue, or $3 million for the first $150 million of premiums.

James Walworth, president of the Health Alliance Plan of Michigan, a 450,000-member HMO, said: "Key characteristics of health plans need to be standardized at the federal level. National standards would provide a uniform level of protection to consumers and would permit health plans to move easily from state to state."

The Group Health Association would set higher capital standards for health plans that permitted patients to get care from doctors and hospitals outside the plan. In such cases, the association said, costs are less predictable.

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