Portland Metro Health Plan, Inc.:

A Federally Qualified Health Maintenance Organization

HRD-78-89: Published: Aug 8, 1978. Publicly Released: Dec 21, 1983.

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The Department of Health, Education, and Welfare (HEW) certified Portland Metro Health Plan, Inc., as a qualified health maintenance organization (HMO) in July 1976. Portland Metro received a direct operating loan of $1 million from HEW and began providing health services to its members in January 1, 1976. It contracts with an individual practice association--Portland Metro Health Physicians--to provide health care services to members.

Portland Metro appears to be providing comprehensive prepaid health care in accordance with the Health Maintenance Organization Act of 1973. However, it has not enrolled members broadly representative of its service area, and its policies and practices tend to discourage enrollment of low income, old, sick, and pregnant individuals. Portland Metro does not have a fiscally sound operation as required by the authorizing legislation. In its first 12 months of operation, it realized only 48 percent of projected income and incurred operational losses of $835,080 which was $380,954 more than projected in its initial loan application. Unless the plan increases premium rates and reduces costs, it will not be fiscally sound. It is doubtful that Portland Metro has the ability to do this, and it probably will be unable to operate beyond its loan subsidy period without additional Federal assistance. On June 30, 1978, HEW formally notified Portland Metro of its intent to withdraw Federal qualification because of its failure to have a fiscally sound operation.

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