Insurance HMOs Try to Keep Advantage over Doctor-Led Rivals

By Goldreich, Samuel | The Washington Times (Washington, DC), January 30, 1997 | Go to article overview

Insurance HMOs Try to Keep Advantage over Doctor-Led Rivals


Goldreich, Samuel, The Washington Times (Washington, DC)


With $20 billion in annual Medicare business at stake, insurance companies are waging a regulatory blitz to lock out rival managed-care networks run by hospitals and doctors.

The fight between the insurer-run health maintenance organizations (HMOs) and the doctor- and hospital-run competitors marks the first battle over who will win and lose as President Clinton and the Congress debate how to contain the growth of Medicare.

Led by the Blue Cross/Blue Shield Association, HMOs warn that senior citizens could be put at risk under proposals to drop a federal requirement that all Medicare managed-care contractors be licensed by the states and be subject to local consumer-protection laws. Many hospital and doctor networks, - known as "provider-sponsored organizations," or PSOs - cannot clear state licensing hurdles, allowing HMOs to dominate the competition for Medicare dollars.

"Medicare is not the place to road-test new, inexperienced, unlicensed health plans or a new, untested federal regulatory responsibility," said Blue Cross lobbyist Mary Nell Lenhard.

But hospital trade groups argue that they are simply trying to gain entry into a business that has essentially been closed to competition.

"The current rules create complete market protectionism for HMOs," said Tom Scully, president of the Federation of American Health Systems, which represents for-profit hospitals.

Similar debates are raging in Maryland and other state legislatures. One of the top priorities of the Maryland Medical Chirurgical Faculty, the state doctors' trade group, is passage of a bill that would allow physicians and hospitals to create their own managed-care groups that can provide coverage directly to employers without contracting with HMOs.

The Maryland Association of Health Maintenance Organizations, meanwhile, is lobbying to make sure that PSOs face the same regulations as HMOs.

A coalition of national hospital groups this week endorsed a bill introduced by Sens. …

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