Chapter 15: Texas Rules for HMOs

Question 1

A ____ _____ ____ is a managed health care plan in which a group of medical providers contracts with a group to provide medical care for its members at prices both agree to and that are lower than the costs of traditional insurance. They are considered pre-paid service organizations.

Answer 1

Health maintenance Organization (HMO)

Question 2

HMOs can be organized in four ways:

____ model – Physicians are employees of the HMO and provide care from the HMO’s clinic or hospital.

____ model – The HMO contracts with one independent medical group to provide medical services to HMO members.

_____ – The HMO contracts with two or more medical groups (instead of one) to provide medical services to HMO members.

____ _____ _____ model – The HMO functions like the group model, except the HMO contracts with medical groups, physicians’ associations, and independent physicians.

Answer 2

Staff
Group
network
Individual practice association

Question 3

TF: A health maintenance organization must pay for emergency care performed by non-network physicians or providers at the usual and customary rate or at an agreed rate.

Answer 3

True

Question 4

It is ____ to unfairly discriminate between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance, annuity, dividends, or other benefits or any other term or condition of the contract. It is _____ to discriminate based on marital status, race, color, national origin, creed, or ancestry.

Answer 4

Illegal
Unfair

Question 5

TF: Discrimination is a necessary part of the insurance business. Underwriters must make distinctions in rates and available policies based on applicants’ ages, predicted expectation of life, health hazards, and similar principles. In other words, they must consider the nature of the risk, the expense of conducting business, the propriety of the plan of insurance, and similar principles. So long as these principles are applied equally to each and every applicant or policyholder, discrimination is fair.

Answer 5

True

Question 6

TF: If the Commissioner believes an act of insurance fraud has occurred or is about to occur may order an investigation. The Department’s insurance fraud unit is responsible for investigating alleged fraud cases and recommend action to the Commissioner.

Answer 6

true

Question 7

Investigators have full access to an insurer’s or agent’s records, including testimony of relevant individuals. Upon determining fraud occurred, the Commissioner may take appropriate disciplinary action and notify other state agencies. Insurers and agents have a duty to report suspected acts of insurance fraud within __ ____ of discovering the act.

Answer 7

30 days

Question 8

TF: A person may not organize or operate a health maintenance organization (HMO) in Texas, or sell or offer to sell or solicit offers to purchase or receive consideration in conjunction with a health maintenance organization, without obtaining a certificate of authority.

Answer 8

True

Question 9

A health maintenance organization must make a certificate of deposit (COD) or proof of securities to protect against insolvencies in the following amounts:

____ for HMOs offering basic services;
_____ for HMOs offering limited services; or
_____ for HMOs offering single plans.

Answer 9

$100K
$75K
$50K

Question 10

A health maintenance organization is required to maintain a fidelity bond of no less than _____ or an amount prescribed by the Commissioner to pay for any loss because of a fraudulent or dishonest act by an employee or officer of the health maintenance organization.

Answer 10

$100K

Question 11

Health maintenance organizations providing basic health care services must maintain a minimum net worth of ____, while HMOs providing limited or single health care services must maintain minimum net worth of _____ and _____, respectively

Answer 11

$1.5M
$1M
$500K

Question 12

If the Commissioner has reasonable belief that the financial condition of a health maintenance organization is a hazard to its enrollees, creditors, or the public, the Commissioner may order the HMO to take corrective action. Violators are subject to a ____ ____ ____.

Answer 12

Class B Misdemeanor

Question 13

Health maintenance organizations must be notified by the Commissioner of any action or warning that is related to a hazardous financial condition and be afforded the opportunity for a hearing. HMOs may request a hearing, to which the Commissioner must file a review within ___ _____ and respond to all parties within ___ ____ of the request.

Answer 13

30 days
10 days

Question 14

TF: The Commissioner may suspend or revoke a health maintenance organization’s certification of authority if it is determined that the financial condition of the HMO is hazardous to its enrollees, creditors, or the public. When an HMO’s license is suspended, it cannot enroll additional members, except for newborns.

Answer 14

True

Question 15

The _____ of _____ is a form used to describe the services and benefits of a person covered by an HMO. This form must include information about the HMO plan benefits and limitations, how to obtain services, and how to file complaints or appeal plan decisions. This form must be filed with the Department of Insurance and approved by the Commissioner prior to use.

Answer 15

evidence of coverage

Question 16

The evidence of coverage form must state the grounds for cancellation and nonrenewal of coverage. An HMO may cancel coverage for nonpayment of premium with ____ ____ notice and for intentional misrepresentation or fraud with ____ ____ notice.

Answer 16

30 days
15 days

Question 17

In order to be eligible to enroll in an HMO plan, an individual/subscriber must reside, live or work in the ____ ____

Answer 17

Service Area

Question 18

TF: In regard to group HMO enrollment, all group HMOs must have a period of open enrollment at least once per year where they advertise availability of the HMO to the general public on an individual basis. During the open enrollment period, which lasts 30 days, new individuals are allowed to enroll in the HMO and the HMO may not reject any applicant for health reasons. Pre-existing conditions cannot be excluded. However, some states do have laws that permit HMOs to exclude certain individuals during the enrollment period who are hospitalized or have a chronic illness or permanent injury.

Answer 18

True

Question 19

Health maintenance organizations are required to file an annual report verified by ____ principal officers with the department no later than ____ ____ of the subsequent calendar year.

Answer 19

Two
March 1

Question 20

TF: HMOs must establish procedures to respond and resolve complaints concerning health care services. The complaint system is subject to Insurance Department review.

Answer 20

True

Question 21

The Insurance Department may examine health maintenance organizations as often as necessary and no fewer than once every _____ years. The department’s examiners must have free access to all records related to the insurer’s business and affairs, as well as the testimony of any officer, agent, or employee.

Answer 21

Three

Question 22

The open enrollment period for a group HMO lasts for how many days?
Select one:
a. 15 days
b. 20 days
c. 30 days
d. 60 days

Answer 22

C

Question 23

A health maintenance organization that provides basic health care services must maintain a minimum net worth of:
Select one:
a. $500,000
b. $1.7 million
c. $1.5 million
d. $1 million

Answer 23

C

Question 24

What must a Health Maintenance Organization (HMO) have in order to operate in the state of Texas?
Select one:
a. Permit
b. License
c. Certificate of authority
d. Letter of recommendation from the Commissioner

Answer 24

C

Question 25

All of the following are true in regard to an HMO’s evidence of coverage, EXCEPT:
Select one:
a. The evidence of coverage is a form used to describe the services and benefits of a person covered by an HMO.
b. The evidence of coverage must include information regarding HMO benefits, limitations, and how to obtain services and file complaints.
c. The evidence of coverage form must be filed with the Commissioner prior to use.
d. None of the above

Answer 25

D

Question 26

For health maintenance organizations offering limited services what is the total amount of COD or proof of security the organization must provide to protect against insolvency?
Select one:
a. $25,000
b. $50,000
c. $75,000
d. $100,000

Answer 26

C

Question 27

In order to be eligible to enroll in an HMO plan, an individual/subscriber must:
Select one:
a. Live or work in the service area
b. Have no other health plan
c. Pass the physical
d. All of the above

Answer 27

A

Question 28

If the Commissioner informs an HMO that their financial condition is not meeting standards and the HMO fails to take corrective action, what charge is levied?
Select one:
a. Class A misdemeanor
b. Class B misdemeanor
c. Class A felony
d. Class B felony

Answer 28

B

Question 29

A Health Maintenance Organization (HMO) can be organized in how many ways in Texas?
Select one:
a. 2
b. 3
c. 4
d. 5

Answer 29

C

Question 30

HMOs may be examined by the Texas Insurance Department a maximum of:
Select one:
a. Once a year
b. Twice a year
c. Three times per year
d. As often as necessary

Answer 30

D

Question 31

How much notice must an HMO give before cancelling coverage for nonpayment of premium?
Select one:
a. 15 days
b. 20 days
c. 30 days
d. 31 days

Answer 31

C