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HEW Certifies Community Health Plan

Health Maintenance Organization

By Stephen A. Herzenberg and Peter R. Reynolds

The Harvard Community Health Plan, an innovative program combining preventive care and health insurance, received certification September 28 from the Department of Health, Education and Welfare, making it the first Health Maintenance Organization (HMO) in Massachusetts.

Recognition came after recent modifications enabled the Harvard organization to fulfill federal guidelines set down in a 1976 amendment to a 1973 law. On the medical side, these standards require any certified HMO to provide regular preventive physical, mental health, drug, and alcohol care.

In administrative areas an HMO must prove its fiscal soundness, offer a standard grievance procedure to its members and allow open enrollment at specific intervals, regardless of the current health of an applicant.

According to Robert L. Biblo, president of the Health Plan. HMOs help reduce health costs by keeping people out of hospitals. They offer regular check-ups, immunization and nutritional counseling as part of the basic program for a fixed monthly fee. HMOs thus encourage members to keep a check on health problems before they become serious, Biblo said yesterday. With traditional insurance programs these preventive health measures are not covered and must be paid for by the member.

Basic Difference

"The very basic difference between the Harvard Plan and conventional health insurance programs is that we combine the financing mechanism and the delivery system. We don't separate the two. We provide more services on an ambulatory basis. People who have the Harvard Plan don't have to worry about heavy out-of-pocket costs," Biblo said.

A July Federal Trade Commission report indicates HMOs not only provide cheaper health care to their members but also apply competitive pressure to other insurance agencies. This pressure forces other programs either to make their health packages more comprehensive or to reduce their premiums.

Significantly, the FTC found Blue Cross maintained its lowest ratio of hospital days per 1000 members where HMOs have the greatest share of the market. The implication drawn by the report is that Blue Cross did indeed respond to HMO competition by including preventive care in their packages and thus keeping their members out of hospitals.

In an effort to keep up with growing demand for their services, the Harvard HMO is continuing with plans to expand facilities and increase membership. With rebuilding of the existing Kenmore Square facility, plus projected new centers on Brookline Ave and two more on Route 128, the program hopes to be able to serve 125,000 to 175,000, instead of the current 65,000, by 1982.

At the ceremony certifying the Harvard Community Health Plan, Senator Edward Kennedy '54 (D.-Mass.) described HMOs as "an important model for the development of future national health insurance programs." The Harvard Plan "has demonstrated that high quality health care can be provided at a reasonable cost, unnecessary surgery can be eliminatedand hospitalizations can be reduced if preventive care is given," Kennedy said

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