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Integrated Delivery Systems In Managed Care

IDSs & State Oversight

Square Pegs in Round Holes?


Janet D. Olszewski, Chief, Division of Managed Care and Health Facility Development, Michigan Department of Community Health, Medical Services Administration, Lansing, MI.

Brian Atchinson, Superintendent, Maine Bureau of Insurance, Augusta, ME.

Ms. Olszewski described the State regulatory issues involved with integrated delivery systems (IDSs), with a focus on whether, when, and how to license provider networks that assume financial risk for providing health care services to an enrolled population.

In general, State insurance regulators believe that the assumption of such risk means that a system is acting as an insurer and should be regulated as such. Ms. Olszewski noted that this may interfere with State Medicaid agency efforts to contract with special provider networks.

The session noted that States have resolved the debate about IDS licensure in different ways. Some States try to fit new entities into existing categories. Others, like Iowa and Minnesota, have created a new licensure category. At the time of the workshop, Ohio legislators had proposed a new consolidated licensure approach for all managed care organizations, which was subsequently enacted.

Mr. Atchinson outlined key provisions of the National Association of Insurance Commissioners (NAIC) Health Maintenance Organization (HMO) Model Act and described efforts to extend this regulatory framework to IDSs that assume insurance risk through its "CLEAR" initiative (Consolidated Licensure for Entities Assuming Risk). He explained how NAIC has proposed to deal with provider-sponsored networks and offered some guidelines for making decisions about IDS licensing issues facing State policymakers.

Mr. Atchinson also outlined the risks inherent in health organizations and named pricing and obligation risks as the predominant risk for health carriers.


Group Health Association of America. PHOs and the Assumption of Insurance Risk: A 50-State Survey of Regulators' Attitudes Toward PHO Licensure, July 1995, pp. 1-12.

Alpha Center. Provider Service Networks: States Grapple with New Regulatory Challenges, State Initiatives in Health Care Reform, November/December, 1995.

Atlantic Information Services, State Regulation of Physician Hospital Organizations, Major Initiatives, Inc., 1995, pp. 1-13.

National Association of Insurance Commissioners. The Regulation of Health Risk-Bearing Entities, The Risk-Bearing Entities Working Group of the State and Federal Health Insurance Legislative Policy (B) Task Force, December 1996, Draft, pp. 1-42.

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