The Health Service Plan of Pennsylvania, Inc.:

A Federally Qualified Health Maintenance Organization

HRD-78-86: Published: Sep 26, 1978. Publicly Released: Oct 27, 1983.

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The Health Service Plan of Pennsylvania, Inc. (HSP) is authorized under the laws of the Commonwealth of Pennsylvania to provide prepaid health services. In March 1976, HSP applied for certification as a qualified health maintenance organization (HMO), and in April 1976, the Department of Health, Education, and Welfare (HEW) transitionally qualified HSP. As a transitionally qualified HMO, HSP must implement a plan which provides for bringing subscriber contracts into compliance with the Health Maintenance Organization Act of 1973 within 3 years.

HSP generally has met the organizational and operational requirements of the HMO Act. Its membership was not broadly representative of its area, however, and compliance with the community rating requirement was unclear because HEW has not yet published program guidelines. Because it is unlikely that HSP will hold open enrollment in the near future, HSP membership will become more broadly representative only if it obtains contracts to service medicaid and medicare recipients. HSP has made considerable effort to identify and cultivate its market; its projections and revenues and expenses were soundly based, and actual operating experience as of June 30, 1977, was better than originally projected. Employers who offer a dual choice generally reported no significant effect on their costs as a result of including HSP in their benefit programs. HSP fully implemented, and in some instances expanded, the quality assurance program described in its qualification application.

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