Maryland Life and Health Insurance License Practice Exam

Coordination of Benefits regulation applies to all of the following plans EXCEPT?

1. Preferred Provider Organization plan

2. Health Maintenance Organization plan

3. Indemnity plans

4. Medicare Advantage plan

The correct answer is: Preferred Provider Organization plan

The Coordination of Benefits regulation is designed to prevent overinsurance and ensure that when an individual has more than one insurance policy, the payment of claims is coordinated among all policies. This ensures that the total benefits provided do not exceed 100% of the incurred expenses. In the context of the question, the correct answer highlights that the regulation does not apply to Preferred Provider Organization (PPO) plans. PPO plans typically operate by encouraging enrollees to use a network of preferred providers and allow for some coverage out-of-network, but they generally have a less structured requirement for coordination of benefits compared to managed care plans like Health Maintenance Organizations (HMOs) and certain government programs. Health Maintenance Organizations (HMOs) and Medicare Advantage plans, for example, have specific guidelines and requirements regarding how benefits will be coordinated when a member is covered by multiple plans. Indemnity plans, while they allow for more flexibility in provider choices, also operate under coordination of benefits provisions. The distinction is that PPO plans often have more private sector flexibility and less regulatory oversight in terms of coordination than the other plans listed, which are required to adhere strictly to guidelines set forth in coordination of benefits regulations. This illustrates the specificity of the regulation and highlights scenarios where it is less likely