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Additional Readings
Required Readings
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Lecture Notes
Welcome to Lesson 8, Laws and Regulations in Managed Care. Wow, it is hard to believe that we are at our final lesson. Throughout the course, we have touched on several regulatory acts and guidelines. This lesson will bring all of these concepts together in order to provide the overall framework for the regulation of managed care organizations. Let’s begin this final lesson of managed care.
Managed care organizations are divided into several broad types of structures: HMOs, Point-of-service (POS) plans, Preferred provider organizations (PPOs), and High-deductible health plans (HDHPs). HMOs provide coverage through a network of contracted physicians. Members usually select a primary care physician. Point-of-service plans have similar structure as HMOs. They cover some level of out of network care. The enrollee pays the cost that is not covered by the plan. Preferred provider organizations provide coverage through a contracted network. They also cover out-of-network services. Services outside the network are paid at a lower rate. High deductible health plans use a health savings account (HSA), a healthcare reimbursement account (HRA), or a medical savings account (MSA).
Managed Care Organizations are subject to federal law and oversight by the state. Most of the state regulation is carried out through the Department of Insurance (DOI). The focus is on how managed care is to be provided to individuals, and what can and cannot be done in conducting business. State laws and regulations are to make sure individuals get the coverage they pay for. The State has established requirements for information given to individuals once individuals are enrolled in plans. Enrollees must be provided with evidence of coverage (EOC). An EOC is a document that tells what services are and are not covered. There are other requirements concerning grievances: expected pay from individuals, network doctors, and requirement for preapproval for medical services. The state also requires that an explanation of benefits (EOB) is sent after a claim has been submitted.
The state requires that all health information be protected. An individual’s health information cannot be used without their consent. Any sensitive information regarding health is protected. Individuals must be informed if their health information is compromised. There are also rules regarding utilization, quality, and contraction with providers. There are protections assuring there are adequate providers in the network.
Federal regulations are carried out by a number of agencies. The U.S. Department of Health and Humans Services (DHHS) is responsible for establishing rules and providing oversight of MCOs. They also set the standards for health information privacy and electronic transactions. The U. S. Department of Labor (DOL) sets the rules governing benefits provided by employers and unions. The U.S. Department of Treasury has the authority to enforce tax laws governing health coverage. The U.S. Department of Justice (DOJ) enforces criminal laws and penalties against MCOs.
There are 5 laws that have the most impact on MCOs. The HMO Act provided the first federal recognition of HMOs and set standards for managed care. ERISA establishes rules for employers and union sponsored health coverage. HIPPA is responsible for health information privacy and security. The ACA enacted additional requirement applying to health insurance markets. The federal tax code provides tax preferences to encourage people to purchase health coverage.
There are times when state and federal governments address the same issues. A determination of whether the state or federal law prevails is one of the challenges regarding conflicts. State law may be preempted if they directly conflict with a specific federal requirement. If the MCOs are unable to follow both the state and federal law, the federal requirements prevail. A number of nongovernmental organizations impact MCOs. The first are organizations that establish electronic healthcare transactions. The second are health plan accreditation organizations.
When there are claim disputes involving medical necessity, the state and the ACA require the claim to be reviewed by an independent review organization. The independent review organization is a panel of medical experts. They review the claim and make a determination with the opportunity to present additional information. There is also the National Association of Insurance Commissioners. This is an association of chief state insurance and managed care regulators. This association operates in the 50 states, District of Columbia, and U.S. territories.
Reference
Kongstvedt, P. R. (2016). Health Insurance and Managed Care: What They Are and How They Work (4th ed.). Jones & Bartlett Learning.
