Health Maintenance Act

Posted in Human Resources Terms, Total Reads: 785

Definition: Health Maintenance Act

Health Maintenance Act was enacted on 29th December, 1973. It is informally known as federal HMO Act. This law encourages and promotes the HMOs (Health Maintenance Organizations) by conducting a trial federal program. Sen. Edward M. Kennedy was the principal sponsor of the federal HMO Act.

The concept of HMO began during the time when biggies like Paul M. Ellwood Jr and Nixon Administration advisors were looking for a way to reduce medical inflation. This act provides al the economic benefit to start a Health Maintenance Organization. The federally qualified HMOs were relieved of a few state restrictions by the act. It required employers with 25 or more employees to offer certified HMO option if traditional health insurance was being offered to employees.

Benefits offered to Federally qualified HMOs

• Money was offered for development

• Employees were relieved of specific state laws

• A special HMO plan was being offered to employees as art of their employee benefits package

Qualifications of a Federally qualified HMO

• The HMO must deliver a comprehensive package of benefits

• It should be available to broad representative population

• Must be offered on a just basis

• Increase the consumer participation

• These all should be done at the same or lower price than insurance coverage

Effects of the Act

• There was financial assistance to develop HMOs – it assisted individual HMOs to obtain funds or financial requirements from the federal government

• Marketing Support – Companies were to offer coverage from at least one federally qualified HMOs to all the employees of the company (dual choice).

The HMOs must provide the following supplement health services:

• Long term care facilities

• Vision care should not be included as a basic health service

• Dental service are not to be included a basic health service

• Mental health service are not to be included as a basic health service

• Long term physical rehabilitation centers which should include physical therapy

• Drugs prescription


Hence, this concludes the definition of Health Maintenance Act along with its overview.

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