Health Maintenance Organization Act of 1973
The Health Maintenance Organization Act of 1973 (Pub. L. 93-222 codified as 42 U.S.C. §300e) is a United States statute enacted on December 29, 1973. The Health Maintenance Organization Act, informally known as the federal HMO Act, is a federal law that provides for a trial federal program to promote and encourage the development of health maintenance organizations (HMOs). The federal HMO Act amended the Public Health Service Act, which Congress passed in 1944. The principal sponsor of the federal HMO Act was Sen. Edward M. Kennedy (MA). Principles. President Richard Nixon signed  bill S.14 into law on December 29, 1973. It included a mandated Dual Choice under Section 1310 of the Act. Health Maintenance Organization (HMO) is a term first conceived of by Dr. Paul M. Ellwood, Jr. The concept for the HMO Act began with discussions Ellwood and his Interstudy group members had with Nixon administration advisors who were looking for a way to curb medical inflation. Ellwood's work led to the eventual HMO Act of 1973. It provided grants and loans to provide, start, or expand a Health Maintenance Organization (HMO); removed certain state restrictions for federally qualified HMOs ; and required employers with 25 or more employees to offer federally certified HMO options IF they offered traditional health insurance to employees. It did not require employers to offer health insurance. The Act solidified the term "HMO" and gave HMOs greater access to the employer-based market. The Dual Choice provision expired in 1995. Benefits offered to Federally qualified HMOs. Qualifications of a Federally qualified HMO. To become federally qualified, the HMO must meet these requirements: Definitions. A Health Maintenance Organization (HMO) is a managed care plan that incorporates financing and delivery of an inclusive set of health care services  to individuals enrolled in a network.