Merritt Personal Lines Manual: Guidelines Plans Must Follow

HMOs, like traditional indemnity insurance companies, cannot engage in certain types of business practices, policies, etc. Specifically, the HMO is prohibited from excluding the insured's preexisting conditions from coverage, from unfairly discriminating against the insured based on age, sex, health status, race, color, creed, national origin or marital status.

The HMO is also prohibited from terminating the insured's coverage for reasons other than:

• nonpayment any of premiums or co-payments;
• fraud or deception;
• a violation of contract terms;
• failure to meet or continue to meet eligibility requirements; or
• a termination of the group contract under which the insured is covered.

Because an HMO provides service benefits rather than reimbursement benefits, they are required to follow guidelines prescribed by the Insurance Department to assure quality service to members.

These guidelines specify the requirements for reasonable hours of operation and after-hours emergency health care and standards to insure that sufficient personnel will be available to attend to the insured's needs. The guidelines also require adequate arrangements to provide inpatient hospital services for basic health care and a requirement that the services of specialists be provided as a basic health care service.