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. HMOs are popular alternatives to health care plans sold by insurance companies because they usually cost less.
How HMOs Work
HMOs contract with doctors, hospitals, and clinics to provide health care within specific geographic areas. These service areas include specific counties. 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 medically necessary care isn’t available from a network doctor, the HMO may approve a referral to a doctor outside of its network. Covered dependents who live outside the service area to attend school will have to travel back to the service area for routine care. The service area requirement doesn't apply to children who receive court-ordered medical child support.
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 our website at www.tdi.texas.gov.
HMOs must make sure that all the health care services they cover are accessible and available within their service areas.
Your Primary Care Physician
One of the first things you'll do when you join an HMO is choose a primary care physician (PCP) from a list of doctors in the HMO's network. Your HMO will give you a list of doctors to choose from.
With a few exceptions, your PCP will oversee all of your medical care. If you need to see a specialist or another doctor, you usually get a referral from your PCP. You don’t need a referral for emergency care or obstetrician/gynecologist visits. If you need to see a doctor but your PCP isn't available, your doctor's office might ask if you'd like to see the doctor's assistant or advance-practice nurse instead. You have a right to say no. If you see an assistant or nurse, you will still pay the regular copayment.
It's a good idea to talk to the doctor you’re considering as your PCP before making a decision. Also talk to family members and friends who've used the doctor. Here are some questions you might want to ask:
- Are you satisfied with your doctor?
- How is the doctor's style of care?
- What are the doctor's office hours?
- How long does it take to get an appointment?
HMOs use drug formularies as a way to control costs. A formulary is a list of prescription drugs that an HMO has approved for its doctors to prescribe.
Formularies aren't regulated by TDI. Each HMO may decide which drugs to include on its formulary. If an HMO doesn't cover a specific drug, network doctors may prescribe a similar drug that is on the formulary.
Most HMOs must cover any prescription drug - even if it's not on the formulary - that your doctor prescribes for a chronic, disabling, or life-threatening illness, as long as
- the illness is covered by the plan
- your HMO offers prescription drug coverage
- the drug is approved by the U.S. Food and Drug Administration and recognized in a prescription drug reference book
- the drug has been approved in peer-reviewed literature for treatment of your illness.
The only exception to this requirement is for HMO plans sponsored by small employers. (Texas law defines small employers as having two to 50 employees.)
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. However, your PCP may prescribe a different drug that is on the plan's formulary.
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.
Costs Associated with HMOs
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 will probably deduct your premiums from your paycheck each month. Some employers pay all or some of your premium.
- Copayments. Copayments are a fixed amount 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 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 toward your medical expenses. HMO plans usually don't have deductibles (except for consumer choice benefit plan HMOs). However, a state-mandated HMO plan may require you to meet a deductible for health care provided outside its network or service area.
Federal law sets maximum dollar limits on the amount you have to pay each year out of your own pocket. In 2015, the maximum out-of-pocket limit is $6,600 for an individual plan and $13,200 for a family plan. If your out-of-pocket expenses exceed these limits, you won't have to pay copayments or coinsurance for the rest of that period. 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 contracted 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 deductibles or copayments. They may not bill you for covered services that the HMO didn't pay or only partially paid. Be aware that a hospital in your network might have radiologists, anesthesiologists, pathologists, emergency room doctors, and neonatologists that aren’t in your network and may charge you for services.
If you get care from a doctor or hospital outside the HMO's network, you will likely have to pay the full cost of the care, 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 if you went to an emergency room outside your network or service area.
- 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 in your policy that allows you to go to non-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 need to submit a claim to your HMO for reimbursement.
Deciding on an HMO
When choosing a health plan, be sure you understand the coverage it provides. Health care benefits vary by plan. This means that some plans might cover a particular treatment or service, while another plan might not.
If you have a choice between an HMO and another type of health plan, consider the trade-offs. In an HMO, you will probably have lower overall costs, but your choices of doctors and hospitals will be limited. Your costs will probably be higher in other types of health plans, but you generally have more choice in doctors and hospitals.
In addition to cost, consider the HMO's customer service record. Consumer complaints against the HMO are a good indicator of the service you can expect. 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.
Carefully review the HMO's benefits booklet. Ask the HMO's representative or your employer's benefits coordinator the following questions:
- Is my current doctor in the HMO's network?
- Which specialists will the plan allow me to see?
- Which hospitals are in the HMO's network?
- Where are the plan'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?
- How many members left the health plan last year
To search for HMOs by county, visit https://apps.tdi.state.tx.us/sfsdatalookup/StartAction.do.
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 a plan or an HMO, call NCQA at 1-888-275-7585 or visit its website at www.ncqa.org.
The Texas Office of Public Insurance Counsel (OPIC) issues two annual reports that compare and evaluate HMOs in Texas:
- Comparing Texas HMOs includes results of a survey asking members to rate their plans, 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 detailed information about the quality of care delivered by Texas HMOs.
For more information, call OPIC at 512-322-4143 or visit its website at www.opic.state.tx.us.
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 only pay for services, treatments, and prescription drugs that they consider to be medically necessary. The process HMOs use to decide if something is medically necessary is called utilization review.
Although HMOs usually do utilization reviews before you receive a treatment or service, they may review treatments after you've received them instead. This is called retrospective review. HMOs usually do retrospective reviews on claims for services that it did not previously know you had received.
HMOs must have an internal appeals process for members to challenge an HMO's decision to deny coverage for a treatment or service. Members may also challenge an HMO's decision to deny a prescription drug because it's not on the formulary.
After you use your appeal rights within the HMO, you can contact TDI to ask an independent review organization (IRO) to review the denial. The IRO's decision is binding on the HMO. A member with a life-threatening condition isn’t required to complete the HMOs appeal process and may request an immediate IRO.
An IRO review is only available if the HMO decides that the covered service or treatment is not medically necessary or is experimental or investigational. An IRO review isn’t available if the HMO denied the treatment because your contract excludes it.
Not all health plans are required to participate in the IRO review process. Contact your plan to find out if an IRO review is available. You also have the right to sue an HMO for harm caused by any treatment decisions.
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 members' complaints. HMOs 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 tell doctors not to talk 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 rest. There is an exception for radiologists, anesthesiologists, pathologists, emergency room doctors, and neonatologists that aren’t in your network.
Texas law provides additional protections by requiring that HMOs
- have adequate personnel and facilities
- make covered health care services available within a certain distance of your home or workplace
- 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
- allow members with chronic, disabling, or life-threatening illnesses to use specialists as their PCPs under certain circumstances
- allow members with terminal illness, disability, life-threatening condition, or pregnancy to temporarily continue seeing doctors no longer with the network if the doctor agrees to continue treatment at the HMO's contracted rate
- 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 serious 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 internal complaint process. If the problem continues, TDI might be able to help.
TDI handles HMO complaints about 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 at 1-800-252-3439.
If your complaint involves medical treatment provided by your doctor, call the Texas Medical Board at 1-800-248-4062 or visit its website at www.tmb.state.tx.us/.
For More Information or Assistance
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 1-800-252-3439between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website at www.tdi.texas.gov.
For printed copies of consumer publications, call the Consumer Help Line.
To report suspected arson or suspicious activity involving fires, call the State Fire Marshal's 24-hour Arson Hotline at 1-877-4FIRE45 (434-7345).
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: 01/28/2015