IHC Health Plans, Inc. - Page 11

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          direct contract model HMO.4  Petitioner was Care’s sole corporate           

          4    HMOs are defined for purposes of Federal law under 42 U.S.C.           
          sec. 300e(a) (1994) which provides:                                         
               (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.                                                       
               42 U.S.C. sec. 300e(b)(1) (1994) provides in pertinent part            
          that an HMO generally will provide basic health services to its             
          members without limitations as to time or cost for a fixed                  
          payment from each member that is determined under a community               
          rating system and is paid on a periodic basis without regard to             
          the dates health services are provided.  42 U.S.C. sec.                     
          300e(b)(2) (1994) provides that HMOs may also provide members               
          with supplemental health services (defined in 42 U.S.C. sec.                
          300e-1(2) (1994)) for a separate fee that is fixed under a                  
          community rating system.                                                    
               42 U.S.C. sec. 300e(b)(3)(A) (1994) provides that at least             
          90 percent of physician services provided as basic health                   
          services to an HMO enrollee shall be provided through:  (1) the             
          members of the HMO’s physician staff (staff model HMO); (2) a               
          medical group (medical group model HMO); (3) an individual                  
          practice association (IPA model HMO); (4) physicians who have               
          contracted with the HMO for the provision of such services                  
          (direct contract model HMO), or (5) any combination of these                
          models.  See Health Care Plan, Inc. v. Aetna Life Ins. Co., 966             
          F.2d 738, 739 n.3 (2d Cir. 1992); 42 C.F.R. sec. 417.100 (1991)             
          (definitions); Boisture, Assessing The Impact Of Health Care                
          Reform On The Formation Of Tax-Exempt Health Care Providers And             
          HMO’s, 62 Tax Notes 1181, 1184 (Feb. 28, 1994).                             
               42 U.S.C. sec. 300e(c)(1) (1994) provides that HMOs shall              
          have a fiscally sound operation, adequate provision against the             
          risk of insolvency, and assume full financial risk on a                     
          prospective basis for the provision of basic health services.               
          However, 42 U.S.C. sec. 300e(c)(2) (1994) provides that HMOs may            

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