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60 Cards in this Set
- Front
- Back
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BC/BS Organizations
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-emerged in the 30's
-separate entities to handle hospital (BC) and medical (BS) bennies -hospital products were prepayment plans -contracted with provider hospitals, reimburse directly for patient length of stay (LOS) -nonprofit; provided insurance to all seekers under their charter -Community rating = uniform premium rate for all subscribers in particular geographical area |
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Insured Indemnity Products
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• Followed BC into hospital market
• Hospital-day benefit stated as fixed $ reimbursement (= indemnification) to insured member (= “subscriber”), based on expected cost of hospitalization • Run for profit • Were not open to all seeking coverage; could refuse coverage in order to reach its profit goals • Didn’t use community rating; experience rating = premium based on actual & expected use (claims) |
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First-dollar coverage
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benefits paid from first covered expense incurred; no deductible, no coinsurance, no copayments, no expenses (beyond cost of plan coverage) were paid by subscriber
Early hospital & medical plans started out w/ first dollar coverage |
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Hospital bennies today
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All services, supplies and procedures provided by and billed through a hospital, including:
• Inpatient room & board: usually semi-private room & necessary services & supplies **If intensive care: usually paid at 2 or 3X semi-private rate, or set charge • Emergency room services • Intensive & specialty care • Maternity & newborn care: set # of days or limited $ amount • X-rays, diagnostic tests, lab expenses while hospitalized or if performed by hospital • Skilled nursing facility (SNF) care: usually limited to certain # days per year or per confinement **Former requirement that stay must follow at least 3 consecutive days hospitalization • Radiation & chemotherapy: materials, preparation, use of hospital facilities • Inpatient mental and nervous care • Inpatient drug and alcohol substance abuse (aka chemical dependency) care • Physical, inhalation, and cardiac therapy • Home health care: set # visits per year by MD, nurse, aide for nursing, therapy, personal care **Usually per treatment plan supervised by a home health agency • Hospice care: if MD certifies terminal illness < 6 months; pain relief & comfort • Respite care: short-term inpatient care in SNF or hospice for terminally ill patient **Expressed in days (e.g., 7 days per 6-months), to relieve primary caregivers at home |
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Medical Plans Background
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BS & commercial insurers eventually addressed physician & other provider expenses
BS bennies limited in terms of services covered |
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Medical Benefits Today
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Medical/service benefits parallel those from earlier plans
**Medical/surgical portion of plan covers most practitioners’ services Providers’ fees are reimbursed on either a Scheduled basis: Maximum allowance per itemized procedure **Flat $ amount or unit value per procedure, multiplied by a conversion factor specific to plan OR Reasonable & customary basis: reimburses lower of provider’s customary charge or R&C **R&C = the full charge of approx. 75 - 90% of the provider’s peer physicians in the area **R&C reimbursements adjust to inflation, don’t require plan amendments like schedules do |
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Medical Services Covered Today
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• Surgeons
• Anesthesiologists • Nurses, surgical assistants • Service fees associated with inpatient medical care • Second surgical opinions • X-rays, diagnostic tests, lab expenses: in MD’s office or independent lab • Skilled nursing care • Obstetricians & pediatricians re prenatal, delivery, postnatal care • Inpatient intensive care and concurrent care in hospital • Allergy tests • Transplant services • Administration of radiation and chemotherapy • Inpatient physical therapy • Immunizations for children |
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Supplemental Major Medical: background
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-supplemental 1st dollar pre-paid services
-high coverage limits w/ reasonable deductibles and coisurance -"all except" coverage = policy lists what won't be covered; basic medical listed "named perils" -earliest cost sharing methods to keep costs down 1.) deductible 2.) coinsurance |
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Cost containment value of deductible & coinsurance - Advantages
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+ May lead to reduced use of health services, hence reduced costs
+ May reduce premiums to reflect insurance company’s savings: but are the savings passed on, or does the employer cost-shift ? + Creates equity, because the participants pay an amount related to usage of health services |
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Cost containment value of deductible & coinsurance - Disadvantages
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- May not reduce utilization, because MDs (not patients) make most utilization decisions
- May discourage preventive care or early care (leading to higher costs for delayed response) - Presents a financial barrier to necessary care |
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Major medical plans today cover:
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• Excess hospitalization (beyond dollar or service limit)
• Excess medical / surgical expenses from a non-participating provider (BC/BS plans) • Diagnostic home & office visits • Ambulance • Durable medical (DME) & surgical equipment • Blood transfusions • Oxygen and its administration • Prescription drugs (except in hospital or outpatient facility) • Prosthetics and orthotics • Excess skilled nursing facility care • Outpatient mental and nervous (M&N) care • Outpatient substance abuse (SA) care |
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Comprehensive Plans - background
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-adaptation of major medical approach
-expands cost-sharing, keeping subscriber mindful of expenses, decreasing the cost of the insurance **combines hospital + basic med + major med |
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Cost Control techniques in Comprehensive Plans
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• 2nd surgical opinion: another MD considers appropriateness of elective (non-emergency) surgery
**Plan pays for 2nd opinion, whether it is required (mandatory) it or merely available (voluntary) **If plan requires 2nd opinion (mandatory): reduced or no benefit if opinion not obtained • Diagnostic tests covered in full with no deductible or coinsurance (to prevent higher costs later on for corrective action) • Pre-admission certification: hospitalization must be OK’d in advance by insurer’s specialist **Benefits are reduced for any procedure or service for which pre-cert. was not obtained • Utilization review (UR): examine medical treatment patterns to spot irregularities by MD or patient **Performed by third party administrator (TPA) or insurer **Prospective (beforehand), concurrent, or retrospective (after-the-fact) basis • Financial incentives (e.g., enhanced reimbursements, waived deductible or co-payments) if procedures performed on an outpatient basis (rather than in hospital) |
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Comprehensive Plans Today
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• Inpatient days room & board (pre-admission certification required)
• Maternity & newborn care • Administration of radiation & chemotherapy • Inpatient surgical services • Physician office visits • Chiropractic care • Anesthesia • Outpatient hospitalization services • Emergency accident and medical emergency • Prescription drugs • Private duty nursing • Preadmission hospital testing • Skilled nursing facility care • Hospice care • Respite care • Physical & respiratory therapy |
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Managed Care Models
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1. HMO
2. PPO 3. POS |
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HMO's
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Stress wellness and preventive care
Cost Control: 1. health maintenance 2. Cost-effective managed care 3. PCP |
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Forms of HMO's
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Individual Practice Association (IPA) - contracts w/ individual MDs or associations of MDs
Group Model - HMO buys services from an independent multi-specialty physician group Network - like group, include >1 multi specialty group practice Staff - HMO employs MDs directly, paying salaries |
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Managed Care Benefits
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• Routine physical exams
• Preventive screenings and diagnostic tests • Prenatal and well-baby care • Immunizations • Vision and dental check-ups • Allowances for health club memberships |
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PPO's
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Group of health care providers (MDs, hospitals, etc.) contract w/ employers, ins. co., other sponsors
**Providers usually offer discounted prices in exchange for expected volume **Providers reimbursed on fee-for-service basis; discounted fees lower than in traditional plan _May function as the in-network provider under a POS program |
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POS
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Elements of an HMO and comprehensive major medical plan
• Sponsor contracts with providers (or MC company) to provide care via a PPO • Participant chooses which provider to use: pays higher deductible & coins. if goes out of network • Participants get choice of doctors while retaining in-network wellness and preventive care benefits • Providers agree to discounted fees, but do not take on the financial risks in HMO capitation Deductibles & coins. can be set at varying levels: allows easy plan transition from trad’l to HMO |
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Integrated Health systems
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Outgrowth of HMO's and PPOs. Included Managed care companies, MD practices, multi-specialty practices, hospitals, ancillary service providers
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CDHPs
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High deductible major med plan linked to savings account
May have a deductible gap before plan covers expenses. Savings account funds can pay either discretionary med costs not covered by plan or covered expenses excluded because initial deductible not met. Participant in newly introduced plan gets ER contribution to savings account - once funds exhausted, participant pays certain expenses out-of-pocket before high deductible supplemental plan kicks in. early CDHPs deposited $ in HRA (ER funding). Funds can be rolled over. |
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HSAs
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permit unused account balance to be carried over.
Allow EE and ER contributions Individuals can establish HSA outside of employment relationship if in a high deductible plan Individual owns HSA |
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CDHP Funding
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2nd generation CDHPs may entail rewards, discounts or other incentives based on behavior.
ERs could use incentives to modify behavior and consumption. Variables of price and incentive could be affected by incentives. Later developments would provide greater personalization, possibly optimizing relationship between health care costs and EE performance. |
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Mental Health/Substance Abuse bennies
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Had been common to have special limitations applied to coverage of MH/SA problems
*Had been usual to have much higher coinsurance (e.g. 50%) apply to MHSA than other treatments **Also had been common to have a very low maximum annual benefit (e.g., $1,500) for MHSA **Separate lifetime maximums were also commonly set for MHSA benefits (e.g., $10,000). *Had also been common to limit the number of outpatient MHSA visits and the benefit for each (e.g., limited to 20 visits per year, at a maximum covered charge of $50 each);and to limit the inpatient days per year and a lifetime cap. |
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Mental Health Parity Act 1996
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Requires that annual & lifetime benefit $ limits for mental health cannot be lower than those for medical and surgical benefits that the plan offers.
Effective for plan years beginning after 1/1/98 Sunset provision: Act applied only through 9/30/2001, but Congress has extended it. OK to have lower dollar limits on substance abuse benefits, but not mental health. Still permisable to have mental health visits and days subject to maximums, not dollars. |
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Carve Outs
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Prescription drug coverage is often managed on a separate basis from group health plan (“carve out”)
*Rx is one of the fastest growing components of medical plans *Drug management (aka pharmacy benefit management - PBM) firms are specialized vendors **Offer network of retail pharmacies, mail order programs, drug formulary (list of Rx drugs covered by the plan in order to eliminate more costly brands with those offering a better discount or with generics), Rx utilization review, and disease management. Mental health and SA benefits are often carved out, too, and managed by specialized organizations. |
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Community Rating
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All insureds in a geographic area pay a uniform rate (premium).
Used by early BCBS prepayment plans. HMOs were required to community rate if "federally qualified" per HMO Act of 73 - requirement relaxed in 88, so fewer HMOs use it now. Still used for individual subscribers, small groups |
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Adjusted Community Rating
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Based on community claims and utilization, but adjusted for employer's favorable experience.
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Experience Rating
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Future rates based on recent claims & utilization data for a particular group.
Preferred by larger groups (vs community rating), as their experience should be better than average. |
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Cost-Plus and Self-Insured Funding
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Organization (ER) pays claims for its group + administrative charge
Insurance company or TPA process claims per administrative services organization (ASO) contract |
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Stop Loss insurance
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Insurance company pays claims (rather than plan sponsor) if they exceed limit stated in policy
Limits exposure for a company using cost-plus/self-insured by insuring claims beyond a set limit Aggregate stop-loss pays all claims (in policy period) once the group’s total claims reach a predetermined amount. EXAMPLE: if aggregate stop loss is purchased for claims above $500,000, once the plan has received claims totaling $500,000 during a year, insurance pays for all further benefits that year Specific stop-loss pays any and all individual case’s claim that exceeds a predetermined amount EXAMPLE: if specific stop loss is purchased for claims above $500,000, insurance will pay for all further benefits for any participants who have already had $500,000 in claims. Policy (contract with insurer) provisions need to be carefully reviewed o Period of claims coverage (when incurred vs. when. paid) o Covered expenses under stop loss should be same as in plan (e.g., define “experimental”) |
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Provider Reimbursement - Fee For Service
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Separate charge billed each time services are rendered.
Fees set by Provider, but may be negotiated per schedule maximums. Most common approach in traditional prepayment, indemnity and comprehensive plan designs. |
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Provider Reimbursement - Capitation
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Providers are paid set amount per plan participant, regardless of services rendered.
Common for HMOs Shifts some risk to provider, who re;ies on enrollment volume to offset lost service fees. ** some plans reimburse PCPs & certain specialists per capitation, but use fee schedule for others. |
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Provider Reimbursement - Health Care Purchasing Coops/Coalitions
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ERs band together for greater purchasing power in the healthcare marketplace.
Large volume of business can persuade providers to negotiate fees. ERs assume the role that a managed care organization might otherwise perform for them. |
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Cost Containment - Deductibles
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cost of health expenses that a covered person must pay before plan will pay benefits
Usually expressed as a fixed dollar amount (e.g., $100) but could be a % of income, or both Eliminates costs associated with processing many small claims; discourages frivolous treatments Concern that deductibles may cause postponing care until very ill, usually more expensive to treat **Plans can counter that by waiving deductible on wellness programs, etc. Plan may require deductibles for specific services, in addition to overall plan deductible |
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Cost Containment - Coinsurance
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provision requiring participant to pay portion of expense, plan pays remainder
Applies after deductible has been met Usually limited each year to a set dollar amount (= out-of-pocket maximum), then plan pays 100% As with deductibles, there is concern that person might not seek care if coinsurance is burdensome Plan may pay 100% of UCR for certain cost-effective services, such as outpatient surgery |
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+ & - of Deductibles & Coinsurance
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+ Might reduce costs if utilization is reduced
- But physicians may control utilization more than patients do + Might reduce premiums if insurer passes savings along + Creates equity, because utilizers pay more than others - Might discourage preventive care - Might even discourage necessary care, if a financial burden |
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Cost Sharing
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-Deductibles
-Coinsurance -Copayment -EE contribution to premiums Most experts feel only the first 3 are effective in reducing overall costs because they are do at the point of service. |
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Coordination of Benefits
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plan provision which prevents duplicate payment for services
If person is covered by more than 1 plan, aggregate benefits received should be ≤ the actual loss. The National Association of Insurance Commissioners (NAIC) provides COB guidelines Generally: 1) if one plan has no COB provision, that plan is primary payer 2) if both plans have COB provisions, that plan covering patient as employee pays first 3) Birthday rule: if patient is child of married parents, each with employer coverage, plan of parent with earlier birthday in the calendar year is primary payer 4) if patient is child of divorced parents, each with employer coverage, plan of custodial parent pays first, custodial step-parent pays next, plan of non-custodial parent pays 3rd 5) If plan covers patient as an active employee (or dependent of active employee), it pays before plan that covers patient through retiree or laid-off status coverage 6) if one plan is COBRA, other plan pays first 7) if no above rules apply, the plan that has covered the patient the longest pays first |
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Subrogation
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Gives rights to ER or insurer for any legal claim a patient has vs. negligent 3rd party.
If plan participant recovers loss through legal action, he must reimburse plan. |
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Preadmission Testing (PAT)
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Reduce hospital stay by doing x-rays, lab tests & exams on outpatient basis before admission, but reimbure participant as if they were done while an inpatient.
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Emergency Room Treatments
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often subject to a separate deductible/higher copay to discourage use.
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Incentives for outpatient surgery
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usually deductible is waived and expenses paid at 100%
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Medical Necessity Language
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in plan's terms of coverage
Eliminates inappropriate or unproven treatments from coverage; requires licensed provider ** Inpatient services normally covered if confinement required for safe, effective treatment |
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Skilled nursing care
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Cost savings compared with acute hospital care (for final days of a period of confinement)
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Home health care
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Cost savings compared w/ hospital care (for chronically ill, disabled, or monitering care)
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Preventive Care
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Includes regular physical exam to spot problems early, counseling for diet, smoking, nutrition, etc.
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2nd surgical opinion
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plan encourages patient to consult another doctor re need for surgery
Plan pays all or most of the cost for 2nd opinion for certain expensive treatments Plan may require consultation with 2nd doctor, but it does not require patient to follow that advice |
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Hospice Care
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care for terminally ill patients that emphasizes pain relief rather than recuperation
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Birthing Centers
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cost-effective alternative for hospitals for low risk deliveries
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Claims Review
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Examination of submitted claims by insurance carrier or TPA to identify those not covered by plan:
o because employee is not eligible for coverage o because particular service is not covered o because reimbursement should be made by another plan (per COB provision) o because there is a discrepancy between the services claimed and those actually performed o because claims are above usual, customary and reasonable charges |
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Utilization review
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Guidelines for appropriate hospital admissions, lengths of stay and courses of treatment
**Take patient age, gender and diagnosis into account **Meant to control quality as well as ensure cost-effectiveness Independent review organization or insurer’s staff determine if admission satisfies guidelines UR program consists of: o preadmission certification o concurrent or continued stay review o retrospective review o discharge planning |
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Pre-admission Certification (PAC)
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Benefits reduced if covered persons don't get OK for inpatient stays and other services in advance.
Health care professionals review proposed treatment and setting in light of diagnosis |
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Cocurrent or continued stay review
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Concurrent review: nurse coordinator makes periodic onsite review of treatment while covered person is hospitalized.
Continued stay review: periodic off-site review of treatment while covered person is hospitalized. |
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Retrospective Review
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Review after patient is released from hospital.
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Discharge planning
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To prepare for covered person being released from hospital, arrangements are made for appropriate continuing care.
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Hospital Bill Audits
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Insurance co. (or internal staff of plan sponsor or plan consultants) review claims for incorrect accounting, charges.
Check MD orders, nurse notes, pharmacy records, room & board charges, length of stay, etc. Use independent or internal auditors to continuously review: • Bills exceeding a certain amount • Bills on which room & board account for less than 40% of its total • Certain lab tests if listed more frequently than once in a 24 hour period (blood count, urinalysis, SMA 12/60s & sodium potassium levels) • Unusually frequent therapy sessions • Billing showing treatments for non-related conditions • Large & frequent drug charges • Unnecessarily long hospitalizations • Frequent charges for whole blood derivatives, with no credits for donated replacements |
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Errors in Hospital Billing
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Most commonly found in:
• Pharmacy • Lab • Radiology • Inhalation therapy • Occupational therapy |
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Records consulted in audit
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• Physician orders
• Nurse notes • Pharmacy records • Therapy charges divided by hours spent with therapist • Radiology & lab records • Room & board charges vs normal length of stay for particular diagnosis |
