A Fort Worth man applies for individual HMO coverage and the HMO declines him because he neither lives nor works in its approved service area. He argues this is discrimination. How does Texas law treat this decline?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under 28 TAC 11.502, the filing that accompanies an HMO's application for a certificate of authority must include the evidence of coverage forms together with a description of the HMO's service area, and the service area defines the territory the HMO is approved to serve. Limiting enrollment to persons who live or work in that approved service area is a legitimate, neutral eligibility rule, and it applies to individual and group enrollment alike. The applicant's argument fails because geography, not health status, is the basis of the decline; protections against health-based refusal to issue health coverage come from federal law, not from a Texas service-area rule.
Why the other options are wrong
- A) An HMO is not required to accept every Texas resident; it serves the service area described in its TDI-approved filings.
- C) Preexisting conditions are not the test here; geography is the permissible criterion and health status is not.
- D) Service-area limits apply to individual and group enrollment alike, not only to group coverage.
Memory hook
Geography can limit HMO enrollment; an HMO serves only its approved service area.