The History of HMO Regulation

Health Maintenance Organizations (HMOs) are private or public organizations that deliver specified treatment and preventive care to enrollees who prepay. They are intended to provide an alternative to the traditional fee-for-service model of medical care.

Creation

• Richard Nixon signed the Health Maintenance Organization Act of 1973 in an effort to make affordable health care widely accessible. The Act attempted to balance the interests of consumers, physicians and the federal government. It provided start-up funding for several HMO programs.

HMO Act of 1973 Regulations

• The original HMO Act regulated the way the organizations would charge for services, including how frequently they would require payment and what services should require extra payment.

Stricter Regulations

• Once HMOs began to shift from nonprofit to for-profit entities, more regulation was necessary. Since the 1980s, the federal government has continued to pass legislation that allows federal oversight of private HMO activities. These regulations are meant to ensure that companies provide the care promised in contracts and that they do not make risky investments that could prevent them from providing proper care.