Under TIC 843.002, the term "health maintenance organization" refers to which of the following?
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Why C is correct
Under TIC 843.002, a health maintenance organization is a person who arranges for or provides to enrollees on a prepaid basis a health care plan, a limited health care service plan, or a single health care service plan. The two defining features are the prepaid arrangement and the undertaking to provide or arrange the services themselves, rather than merely reimbursing their cost. That is why an HMO is regulated under Insurance Code Chapter 843 instead of being treated as an ordinary indemnity health insurer, and why the document it gives the covered person is called an evidence of coverage rather than a policy.
Why the other options are wrong
- A) Indemnifying for the cost of health care services is expressly distinguished from a health care plan under TIC 843.002; that describes ordinary reimbursement health insurance, not an HMO.
- B) An employer that self-funds its own employees' benefits is not arranging for or providing a health care plan to enrollees on a prepaid basis and is not an HMO under Chapter 843.
- D) Reviewing medical necessity is only one function an HMO may perform; it is not the statutory definition, and an entity that performs utilization review need not be an HMO.
Memory hook
An HMO is prepaid and it provides or arranges the care itself.