The Ohio Department of Insurance has drafted legislation to put risk-bearing providers under the same regulations as insurance plans and HMOs.
The Managed Care Uniform Licensure Act, introduced in the state House last week and in the Senate earlier this month, would require physician-hospital organizations and other delivery networks to register with the state. Those providers that accept risk and contract directly with employers would have to meet the same solvency requirements and other mandates as health plans.
Ohio would be the first state to implement such a comprehensive mandate, said David Randall, deputy superintendent of the insurance department.
The measure would delete five chapters of Ohio law and create one chapter that would require all risk-assuming "health insuring corporations," or HICs, to obtain a certificate of authority from the Department of Insurance to conduct business. Such entitites would include HMOs, PPOs, PHOs, physician groups and other organizations.
Risk-assuming HICs would have to establish minimum capital and surpluses of $1 million to ensure that funds are available to pay consumer claims.
Those organizations that do not assume risk would have to register with the department.
"I think more than anything the goal on our end is to clarify these relationships as the marketplace evolves," Randall said.
He said few providers in the state have entered risk contracts with employers. Those that have were told to stop or obtain an HMO license, Randall said.
The Ohio Hospital Association has several concerns about the proposal, including redundancy in quality and utilization oversight by the Ohio Department of Health, the extent providers must give uncompensated care if a health plan becomes insolvent and the lack of a cap on net worth requirements.
The association also would like to see a limited license category, which would allow delivery networks to serve Medicaid and Medicare populations without meeting the same solvency requirements and other regulations as health plans.
Mary Yost, the OHA's senior director of public affairs, said the OHA wants to make sure the legislation does not pose an unnecessary burden on PHOs and other providers.
The Ohio State Medical Association is concerned that the legislation might force physician networks out of the market, said Carol Mullinax, public affairs director.
"We think it takes too much of a one-size-fits-all approach, where physician networks, regardless of how much risk they assume, will have to face the same kinds of requirements as a huge HMO," Mullinax said.
The Ohio HMO Association has not taken a stand but supports the insurance department's efforts "to provide equal protection for all Ohioans, bring equivalent regulation of all risk-bearing entities at the state level," said President Gady DeGiralomo.
She pointed out that the bill will eliminate some current regulations on HMOs, such as prior approval of group rates and provider contracts.
Randall said he expects to have the bill on the governor's desk by the end of the year.