Then, in closing, I will describe some of my concerns about health care reform as it is envisioned under Clinton's proposal. While the reform plan does not specifically deal with vulnerable populations at this time, there are important issues on the table for public policymakers as they grapple with alternative approaches. It is my hope that through such discussion we can avoid some serious pitfalls that could reverse the improvements to date in how we deliver health care to vulnerable populations.

The Philadelphia HealthPASS Program, for those of you who are not aware of it, is an 82,000-member health insuring organization that is exempt through grandfather clause from the federal 75/25 rule. * HealthPASS serves Medicaid recipients only. HealthPASS has had a controversial history, mostly because it was one of the pioneers in the early eighties, taking aggressive action to move Medicaid recipients out of the traditional fee-for-service Medicaid system into a managed care environment. Many political and operational mistakes were made in the early eighties. However, today I consider the HealthPASS Program to be one of this nation's state-of-the-art programs.

HealthPASS is a mandatory Medicaid managed care program in south and west Philadelphia. Traditional fee-for-service does not exist for Medicaid patients in the HealthPASS demonstration area. There are approximately 110,000 Medicaid recipients in the demonstration area, and there are three health plan options that a Medicaid recipient can choose: two commercial HMOs and the HealthPASS Program, which is a state-owned program managed by a private contractor.

The HealthPASS Program is also the default HMO, meaning that if a Medicaid recipient does not voluntarily choose one of the two HMOs, they are automatically placed into the HealthPASS Program. The private contractor for the HealthPASS Program (which was Healthcare Management Alternatives or HMA when I was there) is at full risk.

For those of you who have a preconceived notion that managed care is only successful if it skims the healthy population for membership, I should tell you that HealthPASS, because it was the default HMO, could not skim membership. By the way, I do not believe that HMOs

* The 75/25 rule is a federal statute that states that any federally qualified HMO serving Medicaid patients must have at least a 25 percent private pay enrollment.

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