AD Banker Comprehensive Practice Exam

Under Alabama law, which of the following is a requirement for a health maintenance organization (HMO)?

1. Must have a license from the federal government

2. Must provide state-subsidized healthcare

3. Must contract with healthcare providers to offer services

4. Must limit enrollment to state residents only

The correct answer is: Must contract with healthcare providers to offer services

A health maintenance organization (HMO) is required to contract with healthcare providers to offer a range of medical services to its members. This contracting enables the HMO to manage healthcare costs effectively while providing access to a defined network of doctors, hospitals, and other medical services. By establishing such contracts, the HMO can ensure that its members receive coordinated care from providers who agree to deliver services under specific conditions and rates, which is central to the HMO model of managed care. The necessity for contracts with healthcare providers is foundational to how HMOs operate, allowing them to maintain a structure that prioritizes preventive care and cost control. Therefore, this requirement is essential for ensuring that members have access to healthcare services as part of their membership, meeting both regulatory expectations and the organizational goals of improving health outcomes while managing expenses. Regarding the other options, they do not accurately represent what is required by law for an HMO in Alabama. Federal licensing is not necessary for HMOs, as they primarily operate under state regulations. There is no stipulation for state-subsidized healthcare, allowing HMOs to operate independently of state financial support. Additionally, limiting enrollment only to state residents is not a strict requirement, as HMOs can serve a broader population based on their