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Bulletin No. 2005-18-INS
In the matter of Health Maintenance Organizations Inability to Participate Directly in County Health Plans
Issued and entered
this 10th day of August 2005
by Linda A. Watters
In 2000, the Michigan Legislature enacted Public Act 252 that added Chapter 35 to the Insurance Code of 1956, 1956 PA 218, MCL 500.3501 to 500.3580. Section 3571 of the Insurance Code provides:
"A health maintenance organization is not precluded from meeting the requirements of, receiving moneys from, and enrolling beneficiaries or recipients of, state and federal health programs."
Section 3571 permits health maintenance organizations (HMOs) to participate in and enroll members of state and/or federal health programs, such as Medicaid and Medicare, which have benefit packages that are different from the basic health services defined in Section 3501(b) that HMOs are required by law to provide to their enrollees.
A question has arisen as to whether Section 3571 of the Insurance Code allows HMOs to participate with and enroll members of county sponsored health programs, such as Ingham County's Advantage Plan, Muskegon County's Access Health, and Wayne County Health Choice. These are known as "three-share" plans, whereby employers and employees each pay 30 percent of the cost of the program and the community, through the county, pays the remainder.
The coverage under three-share plans is more limited than the basic health services and other mandated benefits that Michigan HMOs are required by law to provide. This can be confusing to HMO providers participating in both traditional HMO and limited coverage county sponsored programs because they do not fully understand the differences between the limited coverage of these county sponsored programs and traditional HMO products.
Although these county health programs receive funds from the state and federal governments, they are generally administered by a nonprofit corporation under the auspices of a county government. Unlike the Medicaid and Medicare programs, they are not directly administered by a state or a federal governmental agency nor overseen by the State Legislature and the U.S. Congress. Consequently, OFIS does not consider these county sponsored health programs to be state or federal health programs for purposes of Section 3571.
Therefore, HMOs are not permitted to directly participate in these limited coverage county sponsored programs. If an HMO wants to provide services to such a county sponsored health program, OFIS does not object if the HMO does so through an affiliate or subsidiary, such as a third party administrator or a preferred provider organization, provided these entities comply with all the applicable provisions of the Insurance Code.
Any questions regarding this bulletin should be directed to:
Office of Financial and Insurance Services
Supervisory Affairs and Insurance Monitoring Division
611 West Ottawa
P.O. Box 30220
Lansing, MI 48909-7720
Phone: (517) 373-0246
Toll Free: (877) 999-6442
Linda A. Watters
Commissioner of Financial and Insurance Services