St. Mary's Law Journal


This Comment explores why health maintenance organizations (HMOs) such as PacifiCare should be held accountable for the financial instabilities of their delegated networks. Part II discusses the organization of the managed care system and the assessment of Texas laws currently enforcing managed care in the state. Incorporated in this discussion is a look at the risks delegated networks bear when contracting with HMOs to provide payment for individualized care. Part III analyzes the increasing trend of financial instability by presenting the views of the HMOs, the delegated networks, the health care providers, and the consumers enrolled in the health plan. Also explored are the possible methods of resolving the existing problem such as: (1) eliminating the capitation fee system that is predominantly used in managed care; (2) eliminating the delegated network structure; (3) implementing a “double pay” law that forces HMOs to pay twice when their delegated entity fails to pay providers; and (4) establishing a managed care state agency to specifically oversee health care management issues. Capitation must be re-evaluated because it causes more harm than good in an industry where financial motives take over the motivation to improve and preserve care in the of health care industry. Part IV of this Comment concludes that the struggles of delegated networks are a direct result of the lack of oversight by their HMOs. Thus, implementation and enforcement of laws holding HMOs responsible for the financial instabilities of their delegated networks is an immediate solution to the growing problem of placing health care providers at a loss and consumers at risk.


St. Mary's University School of Law