Texas HMO rules for the life and health exam

Only three Texas questions cover HMOs, but they draw on a short list of definitions and rules from TIC Chapter 843 and 28 TAC Chapter 11.

Questions and answers, explained

All 12 questions above, with the correct answer and why it is correct. Everything here is on texas hmo rules for the life and health exam.

1. Which feature distinguishes a preferred provider organization (PPO) plan from a traditional HMO?

   • AMembers may receive covered care from out-of-network providers, at a higher out-of-pocket costCorrect
   • BMembers must choose a gatekeeper primary care physician who controls all referrals
   • CProviders are paid by capitation regardless of the services performed
   • DThe plan contracts with no providers and pays every provider the same amount

   Why: A PPO contracts with a network of providers at discounted fee-for-service rates, but members keep the freedom to go out of network in exchange for higher deductibles and coinsurance. Gatekeeper referral requirements (B) and capitation payment (C) are HMO characteristics, not PPO features.

   Reference Texas outline #124401, general section V (Types of policies)

2. Under TIC 843.208, for which reason may a Texas HMO cancel or refuse to renew an enrollee's coverage?

   • ANonpayment of charges, or another reason the commissioner's rules allowCorrect
   • BThe enrollee turned 60 and moved into a higher rate band
   • CThe enrollee was diagnosed with a chronic illness
   • DThe enrollee filed several unusually large claims during the past plan year

   Why: TIC 843.208 allows an HMO to cancel or refuse to renew an enrollee's coverage only for failure to pay the charges or for another reason prescribed by the commissioner's rules (such as fraud or moving out of the service area under 28 TAC Chapter 11). Claims experience or a new diagnosis is never a permitted reason.

   Reference TIC 843.208; 28 TAC 11.506 — Texas outline IV.C

3. A health plan lets members decide, each time they need care, whether to be treated through their primary care physician within the network (HMO-style, low copayments) or to go outside the network with higher cost-sharing. This plan is a:

   • AExclusive provider organization (EPO)
   • BMedicare SELECT policy
   • CPoint-of-service (POS) planCorrect
   • DBasic hospital expense plan

   Why: A POS plan is a hybrid of HMO and PPO: the member chooses at the point of service whether to use the gatekeeper/network system or self-refer out of network at higher out-of-pocket cost. An EPO (A) is the opposite of flexible — it covers network providers only, with no out-of-network benefits except emergencies.

   Reference Texas outline #124401, general section V (Types of policies)

4. In a Texas HMO, what is the document that sets out an enrollee's benefits, called the equivalent of an insurance policy?

   • AThe certificate of authority
   • BThe evidence of coverageCorrect
   • CThe explanation of benefits
   • DThe outline of coverage

   Why: An HMO issues an evidence of coverage, defined in TIC 843.002, which states the enrollee's rights, covered services, limitations and cost sharing. 28 TAC 11.506 entitles every Texas enrollee to one; it may be delivered electronically, with a paper copy on request.

   Reference TIC 843.002; 28 TAC 11.506 — Texas outline IV.B

5. In an employer group health plan, who receives the master policy and what do covered employees receive as evidence of coverage?

   • AEach employee receives the master policy; the employer keeps the certificates
   • BEach employee receives an individual policy identical to the employer's contract
   • CThe employer receives the master policy; employees receive certificates of insuranceCorrect
   • DThe Department of Financial Services holds the master policy; the employer receives a certificate

   Why: In group insurance there is one contract — the master policy — issued to the policyholder (the employer or other sponsor), while each covered person receives a certificate of insurance summarizing benefits and rights. This is a core difference from individual insurance, where each insured owns a policy. Group underwriting evaluates the group as a whole rather than each member individually.

   Reference Texas outline #124401, general section V (Types of policies)

6. Before a Texas HMO may use a new rider to its evidence of coverage, what must happen under 28 TAC 11.501?

   • AA majority of enrollees must vote to accept it
   • BThe HMO's medical director must sign it, with no state filing
   • CIt must be published in a newspaper for 30 days
   • DThe form must be filed with and approved by the commissionerCorrect

   Why: 28 TAC 11.501 bars issuing or using any evidence of coverage form, or an amendment to one, until it has been filed for review and approved by the commissioner. Riders, endorsements, applications, schedules of benefits and group agreements all count as part of the evidence of coverage, and each needs its own form number.

   Reference 28 TAC 11.501 — Texas outline IV.B

7. An HMO pays a primary care physician a fixed amount each month for every member assigned to that physician, whether or not the member seeks care. This reimbursement method is called:

   • ACapitationCorrect
   • BDiscounted fee-for-service
   • CUsual, customary, and reasonable (UCR) reimbursement
   • DRetrospective indemnity reimbursement

   Why: Capitation is a prepaid, per-member-per-month payment that shifts utilization risk to the provider and is a defining feature of the HMO model, which is why HMOs emphasize preventive care. Choice B describes how a PPO typically pays: the network provider still bills for each service but at a negotiated discount, so the plan, not the provider, carries the utilization risk.

   Reference Texas outline #124401, general section V (Types of policies)

8. A Texas HMO pays a primary care physician a fixed amount per enrollee each month, regardless of how many services each enrollee uses. TIC 843.002 calls this:

   • AFee-for-service
   • BCoinsurance
   • CCapitationCorrect
   • DUsual, customary and reasonable reimbursement

   Why: TIC 843.002 defines capitation as paying a physician or provider for arranging or providing a defined set of covered services for certain enrollees over a period, based on a predetermined payment per enrollee, without regard to the quantity of services actually provided.

   Reference TIC 843.002(4) — Texas outline IV.A

9. An HMO's utilization review agent decides that a requested surgery is not medically necessary. Under TIC 843.002 this decision is a(n):

   • AAdverse determinationCorrect
   • BComplaint
   • CCoordination of benefits
   • DCapitation adjustment

   Why: TIC 843.002 defines an adverse determination as a determination by an HMO or utilization review agent that services provided or proposed are not medically necessary or not appropriate. A complaint, by contrast, is any dissatisfaction an enrollee or someone acting for them expresses about the HMO's operations.

   Reference TIC 843.002(1), (6) — Texas outline IV.A

10. A new Texas HMO enrollee does not choose a primary care physician at enrollment. Under TIC 843.315, the HMO:

    • AMay assign any physician licensed in Texas, wherever the physician's office is located
    • BMay assign one located in the zip code nearest the enrollee's home or workplaceCorrect
    • CMust let the enrollee see specialists with no referral instead
    • DMust cancel the enrollment until a physician is chosen

    Why: TIC 843.315 lets an HMO assign a primary care physician or provider when the enrollee does not select one at application or enrollment, and the assigned provider must be located within the zip code nearest the enrollee's residence or place of employment. Capitation for that enrollee must begin within 60 days of selection or assignment.

    Reference TIC 843.315 — Texas outline IV.D

11. A Texas HMO enrollee needs a covered, medically necessary service that no network provider can deliver within the network adequacy standards. Under 28 TAC 11.1611, the HMO must:

    • ATell the enrollee to wait until a network provider is hired
    • BDeny the claim, because an HMO never pays for out-of-network care
    • CPay the out-of-network claim and help the enrollee get the careCorrect
    • DPay only 50 percent and bill the enrollee for the rest

    Why: 28 TAC 11.1611 requires an HMO to pay an out-of-network claim when the services are medically necessary, covered, and not available through a network provider within the network adequacy standards, to facilitate the enrollee's access to that care, and to tell the enrollee about these rights. Emergency and other balance-billing-protected claims are paid under TIC Chapter 1271.

    Reference 28 TAC 11.1611; TIC 1271.055 — Texas outline IV.E

12. What must appear on the face page of every Texas HMO group, individual and conversion contract under 28 TAC 11.506?

    • AA list of every physician in the HMO's network with home addresses
    • BThe names of the HMO's five largest shareholders and each one's ownership percentage
    • CThe commissioner's signature and the date of the HMO's last examination
    • DThe HMO's contact details and the toll-free number for information and complaintsCorrect

    Why: 28 TAC 11.506 requires the face page to show, where applicable, the HMO's name, address, website address and phone number, and the toll-free number for information and complaints required by Insurance Code 521.102.

    Reference 28 TAC 11.506 — Texas outline IV.B

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