Chapter 48: Medical Insurance

What is a participating provider (PAR)? A nonparticipating provider (nonPAR)?

A participating provider has a contract with an insurance company or managed care organization and must usually accept the amount allowed by insurance. A nonparticipating provider (nonPAR) does not have a contractual agreement with a third party pay and can bill the patient for the difference between the amount charged and the amount allowed by insurance.

What is the purpose of an insurance claims register?

An insurance claims register allows the medical office to keep track of claims submitted to insurance and payments that have been received or claims that have been denied. A pattern of rejected claims can be identified so that the process for claims submission can be improved.

What group of people is covered by CHAMPVA?

CHAMPVA covers spouses and dependents of veterans who have suffered service-connected disabilities and veterans who have died as a result of service-connected disabilities.

What are Medicare Part B payments based on, and how is the allowable charge calculated?

Charges are determined by a resource-based relative value system (RBRVS), which calculates payments based on the amount of work involved, overhead expense, and cost of malpractice insurance per relative value unit.

Identify three ways for individuals and families to obtain health insurance coverage.

Coverage may be obtained through employment (group insurance), as an individual (individual insurance), or through participation in a government plan, if eligible.

How is the term "formulary" used by managed care organizations?

Each managed care organization identifies an official list of medications included in a patient's benefits that is called a formulary. Member physicians must prescribe medications from the formulary in order for patients to receive insurance benefits. If a physician wants to prescribe a medication that is not included in the formulary, approval must be requested from the insurance plan.

Describe who purchases workers' compensation insurance and when claims must be filed to this program.

Employers purchase workers' compensation insurance and claims must be filed for this program whenever medical costs are the result of injury or illness that is the result of employment.

What are two ways that fee-for-service insurance plans determine the amount they will pay for services?

Fee-for-service insurance plans determine the amount they will pay for services through a fee schedule (fixed amount per procedure) or through service benefits that define the covered services but not the exact payment. In the second method, the insurance company pays based on usual, customary, and reasonable charges.

Identify three advantages of submitting insurance claims electronically.

Government plans, such as Medicare and Medicaid, require electronic submission. Submission is faster, errors are reduced because there is no need to scan paper claims, and payment is also usually faster.

Briefly describe the history of health insurance in the United States.

Health insurance began as insurance to prevent loss of income due to illness or inability to work, but as the health care itself became more expensive, insurance began to cover its costs. In the early part of the 1900s, it usually covered only hospital care and catastrophic illness, but by the end of the century it also covered the expenses of doctor visits, including routine and preventive care. Initially insurance was obtained privately, but employers began to offer health insurance as a benefit. Government insurance programs were established to cover individuals who could not obtain insurance from an employer.

What part of the bill for services is the patient covered by Medicare Part B responsible for if the physician participates in the Medicare program? If the physician does not participate?

If the physician participates, the patient is responsible for the annual deductible plus 20% of the charge allowed by Medicare. If the physician does not participate, the patient is responsible for the annual deductible and the portion of the bill not paid by Medicare (up to a federally set limit for the service).

Identify the three boxes on the CMS-1500 form that require signatures, who must sign, and what each signature authorizes. What can replace the signature for each for most insurance carriers?

In Box 12, the patient authorizes release of information to process the claim. The initials SOF (signature on file) may be used if the office has the patient's signature on such a release in its files. In Box 13, the patient authorizes the insurance company to pay the physician or supplier directly. The initials SOF may be used if the office has the patient's signature on such a release in its files. In Box 31, the physician or supplier certifies that information is true and services were necessary (as described in detail on the back of the form). A stamped signature is acceptable.

What additional services are covered by Medicaid that other health insurance is usually not responsible for?

Medicaid also covers long-term nursing home care.

What is the major difference between Medicare fraud and abuse?

Medicare fraud is a deliberate attempt to obtain more reimbursement than service justifies and is intentional. Medicare abuse refers to actions that increase paperwork, but these actions are often not intentional.

What is a referral and how are referrals used in managed care?

In managed care, the term referral is used to mean authorization for a patient to see a specialist or to receive a specific treatment. Referrals must usually be approved by the managed care organization.

Identify three differences between Medicare Part A and Medicare Part B.

Individuals who are eligible for Medicare are automatically enrolled in Part A but must sign up for Part B. Part A covers hospital costs; Part B covers physician services, medical equipment, and some other services obtained outside the hospital. Medicare Part B can be purchased by federal employees who are not eligible for Part A.

What is meant by managed care?

Managed care is a term used to describe the movement that tries to limit health care costs by emphasizing preventive care, and it is also a general term used to describe insurance plans that use the primary care provider to manage patient care.

What are the recommendations for completing insurance forms to facilitate optical scanning?

Prepare using a word processor or computer, use all capital letters, do not use punctuation, proofread for typographical errors. Make sure all information is inside the box. Be sure that the insurance company accepts paper claims.

Why do some physicians refuse to accept Medicaid patients?

Reimbursements under Medicaid are usually lower than those under any other type of insurance, and some physicians feel that they actually lose money providing service to Medicaid patients.

What is the cost to patients if they seek services outside a managed care plan?

Some managed care plans have tiers of service (usually called in network and out of network), and patients must usually pay more of the cost for out-of-network services. Other managed care plans require patients to pay the entire cost for services obtained outside of the managed care plan.

Describe who receives benefits under the government TRICARE plan, and describe the three levels of service briefly.

TRICARE covers dependent spouses and children of active-duty military personnel and personnel who died while on active duty, and military retirees and their dependents who are not old enough to be eligible for Medicare. TRICARE Standard replaces CHAMPUS and is a fee-for-service plan. TRICARE Prime is an HMO-type plan that includes preventive and primary care services. TRICARE Extra allows an individual to receive a discount on medical services (compared with costs under TRICARE Standard) and pay a lower copayment.

What is the CMS-1500 claim form?

The CMS-1500 claim form is a universal claim form for government programs used by the medical office. It is also accepted by most private insurance companies. It was revised in 2007 to accept the 10-digit national provider identification (NPI) number to identify providers.

What organization oversees the Children's Health Insurance Program?

The Children's Health Insurance Program is overseen by the CMS (Center for Medicare and Medicaid Services) but is managed by the individual states.

How should the medical assistant (MA) handle an insurance claim that was denied?

The MA should review the claim and resubmit it promptly with revised information or additional information to get the claim paid. If the MA has questions, the MA should contact the insurance company to obtain an explanation of the denial.

If both parents have health insurance through their employers, what determines which parent's insurance is primary for their children? Is it the same if the parents are divorced?

The birthday rule specifies that the insurance belonging to the working parent whose birthday comes first in the year is the primary insurance of the children. If a child's parents are divorced, the custodial parent is responsible for providing health insurance (if he or she is remarried) or the birthday rule remains in effect (if the custodial parent has not remarried) unless there is a court ruling specifying that a specific parent will be responsible for providing health insurance.

What information is contained on a remittance advice (RA) or an explanation of benefits (EOB) form?

The form identifies the amount paid by an insurance company in relation to the amount charged. It is used to enter insurance payments and insurance adjustments.

What types of payments must the insured person make for health care?

The insured person must sometimes pay a deductible, an amount of money required annually before insurance payments begin. For each visit, the insured must usually pay a copayment, a fixed dollar amount, or coinsurance, a percentage of the allowed charge.

Why is a separate medical record established for a patient who is being treated for a work-related injury or illness?

The medical record for the work-related injury or illness may be necessary for hearings or legal matters related to employment or work status, and only information pertaining to the case at hand should be in that record.

If a patient is covered by Medicaid insurance, what portion of the bill is the patient responsible for?

The patient is not responsible for any portion of the bill.

What is the tax advantage to obtaining health insurance through the employer?

The premium for the insurance is usually paid with pretax dollars, either by the employer or by the employee.

What is the function of the primary care provider in a managed care plan?

The primary care provider coordinates all care for the subscriber of an HMO. He or she sees the patient for all health problems and refers the patient for specialized care when and if it is necessary.

What is the process of preauthorization/precertification?

The term preauthorization or precertification is used by health insurance companies to describe a process of review to determine that a proposed service, test, or treatment is medically necessary and medically appropriate. The medical plan is reviewed by employees of the insurance company and accepted or denied.

What is the difference between verifying eligibility status and verifying insurance benefits?

To verify eligibility status is to find out if an individual has insurance coverage for a proposed time period. To verify insurance benefits is to find out if the insurance will cover a proposed service.

What type of communication skills should the medical assistant use when communicating with third party representatives and/or patients related to managed care and/or insurance?

When communicating with managed care and/or insurance provides the medical assistant should demonstrate assertive communication techniques while remaining tactful. When communicating with patients, medical assistants should show empathy and express understanding for the patient's feelings.

Describe each of the following managed care plans:

a. Staff model HMO: Provides all care through a medical practice run by the insurance company. Physicians are employees of the HMO. b. Network model HMO: An expanded group practice model in which the HMO contracts with more than one group practice to provide care. c. Preferred provider organization (PPO): Providers are paid on a fee-for-service basis but agree to accept what the PPO pays as payment in full if they are part of the network. Patients must pay the difference between the fee charged and amount allowed for providers outside the network. d. Exclusive provider organization (EPO): Members are restricted to the plan's network as with an HMO, but the plan is regulated as an insurance plan, not as an HMO. Services outside the plan's network are not covered. e. Independent practice association (IPA): Physicians in the community organize a physician association and provide services to subscribers. Funds collected by subscribers pay for services and administrative costs. If the plan operates at a profit, member physicians receive an additional payment. f. Point-of-service (POS) plan: Patients pay higher copayments and deductibles for services delivered by providers in a secondary network outside of the main HMO network. The out-of-network services are regulated as an insurance plan.