State RegulationsTX specificDifficulty 3/5
How does a Texas health maintenance organization differ from a traditional indemnity insurer in what it promises the member?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under TIC 843.002, a health maintenance organization is an entity that, in exchange for a prepaid charge, provides or arranges for the provision of health care services to enrollees. Unlike an indemnity insurer, whose promise is to reimburse covered expenses, an HMO's promise is to deliver or arrange the care itself, ordinarily through contracted providers. That structure is why enrollees must generally use network providers and follow the HMO's authorization rules in order to receive benefits.
Why the other options are wrong
- A) HMOs are licensed under Chapter 843, not as life insurers, and they file evidences of coverage rather than life policy forms.
- C) Reimbursing whatever the member incurs describes an indemnity arrangement, not the HMO's prepaid service promise.
- D) Requiring the member to pay in full and then seek indemnification is the reimbursement model; HMO members pay only the copayments and deductibles stated in the evidence of coverage.
Memory hook
An insurer pays you back; an HMO gets you treated.