Medicaid program; contracts with health maintenance organizations and prepaid health plans--HCFA. Proposed rules.

These proposed amendments would-- (1) Make it possible for Medicaid agencies to contract on a risk basis with health maintenance organizations (HMOs) other than those that meet all the requirements for a Federally qualified HMO; (2) Ease requirements that limit the proportion of HMO enrollees that may be persons eligible for Medicare or Medicaid; and (3) Permit States to continue to provide Medicaid, for a period of up to 6 months from the date of enrollment in a Federally qualified HMO, even if the enrollee loses Medicaid eligibility before the end of that period. These regulations are necessary to implement section 2178 of the Omnibus Budget Reconciliation Act of 1981. They also include changes made as part of regulatory reform. The intent is to encourage and enable Medicaid agencies to make greater use of HMOs and other prepaid health plans (PHPs) to provide cost-effective health care to Medicaid recipients. In addition, as part of our regulatory reform effort, we are eliminating several existing regulatory requirements and simplifying others to provide greater flexibility for States in contracting with prepaid health care organizations.