Health Maintenance Organizations
Health benefit plans are sold by either insurance companies or health maintenance organizations (HMOs). HMOs provide health care to their members through networks of doctors and hospitals.
How HMOs Work
HMOs contract with doctors, hospitals, and clinics to provide health care within specific geographic areas. To be a member of an HMO, you must live or work in its service area.
Except for emergencies, you must use doctors in your HMO's network and within your service area. When care isn’t available from a network doctor, the HMO may approve a referral to a doctor outside of its network.
To learn whether an HMO is available in your area, call the Texas Department of Insurance Consumer Help Line at 1-800-252-3439 or visit www.tdi.texas.gov.
Your Primary Care Physician
When you join an HMO, you’ll have to choose a doctor to oversee your care. This doctor is called your primary care physician, or PCP. Your HMO will give you a list of doctors to choose from.
If you need to see a specialist or another doctor, you’ll usually have to get a referral from your PCP. You don’t need a referral for emergency care or obstetrician/gynecologist visits, however.
Approved Prescription Drugs
Each HMO has a list of prescription drugs that its doctors may prescribe. This list is called a formulary.
If a drug isn’t on your HMO’s formulary, your doctor may prescribe a similar drug that is. Most HMOs must cover any prescription drug that your doctor prescribes for a chronic, disabling, or life-threatening illness, even if it's not on the formulary.
If an HMO drops a drug you’re taking from its formulary, it must continue to cover the drug until your plan’s next renewal date.
HMO group plans must tell you whether they use a formulary, how it works, and which drugs are on it. You may also call the plan to find out whether a specific drug is on its formulary. The HMO must respond within three business days.
What You Pay
- Premiums. Premiums are monthly fees you pay to participate in the HMO. If you belong to an HMO through your job, your employer may deduct your premiums from your paycheck each month. Some employers might pay all or part of your premium.
- Copayments. Copayments are fixed amounts you pay for a covered health service, usually when you get the service. For instance, you will typically pay a copayment each time you fill a prescription. Copayments may vary by the type of service and are usually more expensive for emergency or specialized care.
- Deductibles. A deductible is the amount you must pay out of pocket before your health plan will pay anything for your medical expenses. HMOs usually don’t have deductibles, but some HMOs may require you to meet a deductible for care provided outside the network or service area.
Federal law sets maximum dollar limits on the amount you have to pay out of pocket in a policy period (usually one year). In 2016, the maximum out-of-pocket limit is $6,850 for an individual plan and $13,700 for a family plan. Once you reach the limit, you won't have to pay copayments for the rest of that policy period. You’ll still have to pay premiums, and the premium payments you make don’t count toward the out-of-pocket limit.
What the HMO Will Pay
HMOs pay the difference between your copayment and the cost of your health care. For example, if your HMO requires a $20 copayment for a doctor visit and the doctor’s rate is $80, you would pay the $20 copayment, and the HMO would pay the remaining $60.
Doctors and hospitals in the plan’s network may bill you only for copayments and deductibles. They may not bill you for covered services that the HMO didn’t pay or only partially paid. For instance, assume that the doctor’s normal rate for an office visit is $100, but he or she has agreed to a contracted rate of $80 with the HMO. You would pay your $20 copayment, and the HMO would pay the remaining $60 of the contracted rate. The doctor may not bill you for the difference between the normal rate and the contracted rate with the HMO.
However, be aware that a hospital in your network might use radiologists, anesthesiologists, pathologists, assistant surgeons, emergency room doctors, or neonatologists that aren’t in your network. These out-of-network providers may bill you for their services, even if the hospital where they treated you is in your HMO’s network. If you have to go to the hospital, find out whether the providers that will treat you are all in your network. If some are not, ask whether an in-network provider can be assigned. If not, make sure you know in advance how much they will bill you.
If you get care from a doctor or hospital outside the HMO’s network, you’ll have to pay the full cost of the care yourself, except in the following situations:
- You went to an emergency room for a medical emergency. Make sure you understand how your HMO defines a medical emergency and whether there are any procedures you must follow. For instance, you may be required to notify your HMO within a certain amount of time after you get emergency care.
- You need a covered service that is medically necessary and is not available from network doctors.
- You have a point-of-service option. This is a special provision that allows you to go to out-of-network doctors if you’re willing to pay a greater share of the cost.
HMO members usually don't have to file claims or wait for reimbursements. But there might be times when you have to pay for services when you receive them. For example, an out-of-network emergency room might require you to pay for your care up front. You would then have to submit a claim to your HMO for reimbursement.
Choosing an HMO
When deciding whether to join and HMO, there are several things you should consider.
First, you’ll need to make sure that there’s an HMO in your area. You’ll usually have to live or work in an HMO service area to join. To search for HMOs by county, visit https://apps.tdi.state.tx.us/sfsdatalookup/StartAction.do. You can also call TDI’s Consumer Help Line.
Keep in mind that while your overall costs will be lower in an HMO, your choices of doctors and hospitals will be limited. In most cases, you’ll have to use doctors and hospitals in your HMO’s network.
Also consider the HMO’s customer service record. You can learn an HMO’s complaint history by calling TDI’s Consumer Help Line or by using the Company Lookup feature on our website.
You should also talk to an HMO representative or your employer’s benefits coordinator to get important information. Ask the following questions:
- Is my current doctor in the HMO’s network?
- Which hospitals and specialists are in the network?
- Where are the network’s doctors and hospitals located?
- What will my expenses (premiums and copayments) be?
- What is the maximum amount I'll have to pay out of pocket?
- Do I have to pay a deductible for emergency care outside the HMO’s network?
HMO Report Cards
The National Committee for Quality Assurance (NCQA) is an independent health care monitoring organization that accredits HMOs. Each year, NCQA issues a report card evaluating HMO performance. To learn more about an HMO, call NCQA at 1-888-275-7585 or visit its website at www.ncqa.org.
The Texas Office of Public Insurance Counsel issues two annual reports that compare and evaluate HMOs in Texas:
- Comparing Texas HMOs includes results of a survey asking members to rate their HMOs, the quality of care they receive, and their doctors. This report also provides the number of customer and doctor complaints against HMOs.
- Guide to Texas HMO Quality compares the quality of care delivered by HMOs in the state.
For more information about OPIC, call 512-322-4143 or visit www.opic.texas.gov.
You can view financial reports and complaint data for HMOs online at www.tdi.texas.gov/reports/report2.html.
Denial of Services, Treatments, or Medications
HMOs will pay only for services, treatments, and prescription drugs that are medically necessary. The process they use to decide whether something is medically necessary is called utilization review.
HMOs usually do utilization reviews before you receive a service. However, an HMO may review a service after you received it if it didn’t know about it beforehand.
HMOs must have an appeals process for you to challenge an HMO’s decision to deny coverage for a treatment or service. You may also appeal an HMO’s decision to deny a prescription drug because it’s not on the approved list.
If you lose your appeal, you can ask an independent review organization (IRO) to review the denial. The HMO must comply with the IRO’s decision. If you have a life-threatening condition, you aren’t required to go through the HMO appeal process. You may request an immediate review by an IRO.
You can ask for an IRO review if the HMO decides that the covered service or treatment isn’t medically necessary or is experimental or investigational. You can’t ask for an IRO review if your HMO denied the treatment because the HMO doesn’t cover it.
Not all health plans are required to participate in the IRO review process. For questions or more information about IROs, call TDI's Managed Care Quality Assurance Office at 1-866-554-4926 or visit www.tdi.texas.gov/wc/wcnet/index.html.
Your Rights in an HMO
HMOs must have a process to resolve complaints. They may not cancel or retaliate against an employer, a doctor, or a patient who files a complaint or appeals an HMO decision.
HMOs may not prevent doctors from talking to you about your medical condition, available treatment options, and terms of your health care plan, including how to appeal an HMO’s decision. An HMO also may not reward doctors for withholding necessary care.
If an HMO doesn’t pay or only partially pays for a covered service, network doctors and hospitals may not bill you for the amount that the HMO didn’t pay. If you think a doctor or other health care provider has billed you inappropriately, talk to your HMO. You may also call TDI’s Consumer Help Line to learn your options.
Texas law requires HMOs to have adequate personnel and facilities to meet the needs of their members. HMOs also must make health care services available within a certain distance of your home and workplace. The law also requires HMOs to
- allow referrals to out-of-network doctors and hospitals when medically necessary services aren't available within the network,
- allow members to change a PCP up to four times a year, and
- pay for emergency care if not getting immediate medical care could place your health - or the health of your unborn child if you're pregnant - in jeopardy. If you get emergency treatment at a hospital outside the HMO’s network, you may be transferred to a network doctor or hospital after your condition is stabilized.
Filing a Complaint
If you have a problem with an HMO, first file a complaint through the HMO’s complaint process. If you can’t resolve your problem with the HMO, TDI might be able to help.
TDI investigates complaints about HMO claims, billing, enrollment, and appeals. A complaint form is available on our website at www.tdi.texas.gov or by calling the Consumer Help Line.
For More Information or Help
For answers to general HMO or insurance questions, for information about filing an insurance-related complaint, or to report suspected insurance fraud, call the Consumer Help Line at 1-800-252-3439 between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website at www.tdi.texas.gov.
You can also visit www.HelpInsure.com to help you shop for automobile, homeowners, condo, and renters insurance, and www.TexasHealthOptions.com to learn more about health care coverage and your options.
The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company.
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Last updated: 02/25/2016