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Sutter Health Seeks Approval to Offer HMO in California

Under California's Knox-Keene Health Care Service Plan Act, health plans must obtain a license from the Department of Managed Health Care to operate as HMOs in the state.

September 26, 2012
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Sutter Health has filed an application with the California Department of Managed Care for a license to form a health maintenance organization catering to small and midsize employers.

Under California's Knox-Keene Health Care Service Plan Act, health plans must obtain a license from the Department of Managed Health Care to operate as HMOs in the state.

By forming an HMO, Sacramento, California-based Sutter Health will be better positioned to work directly with patients to better manage their health care needs, according to Peter Anderson, Sutter Health senior vice president of strategy and business development.

"Employers have been asking us to find a way for them to have direct relationships with Sutter Health," he said in a company statement. "We're also seeing the emergence of new delivery models, such as accountable care organizations, and new care approaches from the Centers for Medicare and Medicaid Services. A Knox-Keene license gives us greater flexibility to participate."

With CDMC's approval, Sutter Health will offer a range of HMO products for small and midsize employers, the company statement said. Those products would first become available in the greater Sacramento and Central Valley regions in early 2014, eventually expanding to other parts of Sutter Health's service area.

The Sutter Health network consists of 5,000 member doctors, 24 acute-care nonprofit hospitals, and outpatient and home health care that serves patients in more than 100 Northern California cities and towns.

In addition to offering its own HMO, Sutter Health will continue to contract with and care for patients covered by other commercial health plans, as well as Medicare and MediCal, California's Medicaid program.

Joanne Wojcik writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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