12.3.1 HMO Operation
HMOs operate almost exclusively through group enrollment plans. An HMO can be owned or sponsored by insurance companies or service corporations but an HMO can only offer HMO contracts, not insurance.
In order for an HMO to conduct business in Florida, it must obtain a valid Health Care Provider Certificate from the Agency for Health Care Administration of Florida (AHCA) and meet the following Florida state requirements.
- Capital and surplus minimums
- Rate filings
- Contract and forms submissions
- Bylaws
- Marketing procedures
- Experience
- Any other criteria established by the legislature
In addition, the entity must:
- pay all required fees;
- deposit $10,000 in the Rehabilitation Administration Expense Fund;
- become a member of the Florida Health Maintenance Organization Consumer Assistance Plan (CAP Fund); and
- obtain a Certificate of Authority (from the Office of Insurance Regulation).
HMO Consumer Assistance Plan (CAP)
CAP was established to protect the subscribers of HMOs against the failure of the HMO to perform its contractual obligations due to its insolvency. The law specifically prohibits the use of the CAP in any way in the sale of an HMO contract, even if it is for the purpose of reassuring the prospect. [Sec. 631.827, F.S.]
HMOs are required to file a report of its activities within three months of the end of each fiscal year. A complete examination of an HMO's affairs is conducted at least once every five years.
Even though an HMO cannot engage in insurance activities per se, an insurance company may own or sponsor an HMO.
If a group HMO plan is terminated, subscribers are entitled to a contract conversion as long as the subscriber was enrolled for at least three months prior to the termination date, unless the policy was terminated for legal reasons such as:
- failure to pay premiums;
- fraud in applying for benefits;
- replacement by similar coverage within 30 days;
- disenrollment for cause (disruptive, unruly, abusive, or uncooperative);
- willful and knowing misuse of the HMO I.D. membership card by a subscriber;
- willful and knowing furnishing to the organization by the subscriber of incorrect or incomplete information for the purpose of fraudulently obtaining coverage or benefits; and/or
- the subscriber has left the geographic area of the HMO with the intent to relocate or establish a new residence outside the HMO's geographic area.
An HMO is required to file a report of its activities within three months of the end of each fiscal year, or more often if deemed appropriate by the Office of Insurance Regulation.
Insured members are referred to as subscribers.
Regulation requires an HMO to provide an extension of benefits "without prejudice to any continuous loss that commenced while the contract was in force" in the event the HMO terminates the contract.
The extension of benefits applies until the earliest of the following:
- 12 months have expired;
- the member is no longer totally disabled;
- another carrier assumes coverage; or
- maximum benefits under the contract have been paid.
How does an HMO differ from a "prepaid health clinic?"
Prepaid health clinics differ from HMOs in that the requirements, both financial and otherwise, are much less stringent and they are limited only to the delivery of basic health services.
Remember, basic health services are defined under the law as being restricted to "emergency care, physician care other than hospital inpatient physician services, ambulatory diagnostic treatment and preventive health care services."
An HMO must pay benefits directly to any contracted hospital, ambulance provider, physician, or dentist to which a subscriber has specifically authorized benefits if any benefits are due to the subscriber under the HMO contract. An HMO cannot prohibit direct payment of benefits to such providers for emergency services.
The HMO has 12 months after payment of a claim to submit a claim for overpayment to the provider. Likewise, a provider has 12 months after payment of a claim by an HMO to submit a claim for underpayment.
HMOs are required to reimburse all claims or any portion of any claim made by a contract provider for services or goods provided under the HMO contract within 20 days after receipt of the claim unless the HMO contests or denies the claim. If the HMO contests the claim or a portion of the claim, the HMO is required to formally notify the contract provider within 20 days after receipt of the claim. Such notification must identify the contested portion of the claim and the specific reason for contesting or denying the claim, and may include a request for addition information.
If the HMO requests additional information, the provider must provide the information within 35 days of receipt of the request. Upon receipt of the additional information, the HMO must pay or deny the contested claim or portion of the contested claim within 90 days after receipt of the claim. In any event, an insurer must pay or deny any claim no later than 120 days after receiving the claim. [Sec. 641.31, F.S.]
