Michigan HMO Laws
The laws that affect Michigan health maintenance organizations are found in the Michigan Insurance Code. HMOs are overseen by the Department of Insurance and Financial Services, which is a division of the Michigan Department of Labor & Economic Growth. The Department of Insurance and Financial Services undertakes an annual site visit to each HMO in order to assess whether the HMO is complying fully with all requirements.
The Health Maintenance Organization Act outlines the requirements to be licensed as an HMO. These include:
The basic health services that an HMO must provide, including:
- Physician services
- Ambulatory (outpatient) services
- Inpatient hospital services
- Emergency health services
- Outpatient mental health services
- Intermediate and outpatient care for substance abuse
- Diagnostic laboratory services and diagnostic and therapeutic radiology services
- Home health services
- Preventive health services
Guaranteed member representation on the board of directors
- A guarantee that a member's coverage cannot be terminated because of age, sex, health status, national origin or how often they use medical services
- An internal complaint and grievance system so that members can receive a full investigation and timely resolution of any problem
- An initial assessment and a review at least every three years of the qualifications and practice history of health professionals that join the HMO's provider network
- A quality assessment program and a quality improvement program to assess and improve the health care provided to members
- A list of specific information that must be included in the contract between the HMO and its members (your General Provisions and Benefits booklet)
- Financial requirements that must be met to keep the HMO solvent and to protect the member's guarantee of receiving health care services
HMOs that have been in operation for two years must have an open enrollment period lasting at least 30 days at least once during each following 12-month period. For example, if an HMO began operation on March 15, 2001, its first open enrollment period would have to occur sometime between March 15, 2003 and March 14, 2004.
During its open enrollment, an HMO must accept individuals who apply, in the order that they apply for enrollment, up to the limit of its capacity as submitted to the Department of Insurance and Financial Services. Individuals cannot be refused because of preexisting medical conditions, although a waiting-period of up to six months may be applied before services for preexisting conditions will be covered.
The HMO Act requires that every HMO, by the end of its first year of operation, must have a board of directors structured so that a minimum of one-third of its members are adult enrollees of the HMO. These enrollee board members cannot be officers or employees of the HMO, cannot be stockholders of the HMO who own more than 5 percent of the HMO shares and cannot be responsible for or financially interested in the HMO's affairs.
Only the HMO's subscribers can vote for enrollee board members. Those individuals who receive the most votes are elected. Each subscriber has one vote for each open position.
The term of office for enrollee board members is three years. If an enrollee board member must leave the position before the term has expired, a majority of the remaining enrollee board members appoints a replacement individual who also must meet the qualifications for enrollee board members. That replacement enrollee board member serves only for the unexpired portion of the original term. Enrollee board members' terms may be staggered so that they expire on a staggered basis.
Another important set of rights for HMO members is provided by the Patient's Right to Independent Review Act. This law established an additional route for review in two situations:
- If HMO members were dissatisfied with the result of the HMO's internal grievance process
- If their physician certifies that the length of time it would take to use the HMO's internal grievance process would seriously jeopardize the life or health of the member or would jeopardize the member's ability to regain maximum function
The review is undertaken by the Insurance Commissioner (for questions about what are covered benefits or accuracy of coding) or by an independent review organization using health professionals not associated with the HMO (for questions that involve issues of medical necessity or clinical review criteria).
Whenever an HMO reviews a health care service or request for service and decides to deny, reduce or terminate the service, the HMO must send a notice about this decision to the member and must include information on both the HMO's internal grievance procedure and the independent review process. In this instance, Blue Care Network members will receive an explanation of benefits statement which includes this information.