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1. IHC Care, Inc.
In January 1985, Health Plans organized Care as a nonprofit
affiliate for the purpose of establishing a federally qualified
direct contract model HMO.4 Health Plans was Care’s sole
corporate member.
Care was licensed to operate an HMO in the State of Utah and
was subject to regulation by the Utah Insurance Commissioner.
Care used the same network of health care providers used by
Health Plans.
3(...continued)
obtain insurance: (1) for the cost of providing a member with
more than $5,000 in basic health services for any one year; (2)
for the cost of basic health services provided to a member by a
source outside the HMO due to an emergency; and (3) for not more
than 90 percent of the amount by which its costs for any fiscal
year exceeds 115 percent of its income. Additionally, the
section states that HMOs may enter into arrangements under which
physicians and/or health care institutions assume all or part of
the risk on a prospective basis for the provision to enrollees of
basic health services.
4 The Health Maintenance Organization Act of 1973 (the HMO
Act), Pub. L. 93-222, 87 Stat. 914, codified a number of
provisions governing the organization and operation of federally
qualified HMOs. Under the HMO Act, an HMO was required to
satisfy both State licensing requirements and additional
federally mandated conditions pertaining to benefits,
availability and accessibility of services, fiscal soundness, and
quality assurance. The HMO Act provided federally qualified HMOs
with certain marketing advantages. In particular, under 42
U.S.C. sec. 300e-9 (1976), a provision referred to as the so-
called dual-choice mandate, certain employers (generally those
with more than 25 employees) were obligated to offer their
employees the option of enrolling in a federally qualified HMO.
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Last modified: May 25, 2011