Chapter 2: Health insurance providers

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured? *PPO -HMO -EPO -PLHSO

PPO

TRI-CARE

a federal government accident and health plan which provides accident and health coverage to military families.

medicaid was designed to assist individuals who are: - disabled * below a specific income level - federal employees - in poor health

below a specific income level

What is medicare? - part D provides payment for surgeon expenses - offers assistance in making health insurance premiums - is a disability program * is a hospital and medical expense insurance program

is a hospital and medical expense insurance program

preventive care

managed care program also helps lower costs by encouraging preventive care. includes annual physical lyceums and other procedures that help detect illnesses and medical problems early

Which of the following BEST describes how a Preferred Provider Organization (PPO) is less restrictive than a Health Maintenance Organization (HMO)? - more benefits available - typically not subject to deductibles - not regulated by the federal government - more physicians to choose from*

more physicians to choose from * PPO's normally provide a wider choice of physicians and hospitals.

managed care systems

when an HMO and a PPO are mixed together

Medicare part A

• (Hospital Insurance) covers inpatient care in hospitals and skilled nursing facilities, and it covers care provided in a hospice and some care provided at home • Part A covers drugs administered as part of inpatient treatment • Social Security Administration enrollment for the Medicare program and provides information about Medicare to the public • All parts of the Medicare program (except for public information and enrollment) are administered by The Centers for Medicare and Medicaid Services • The day the insured enters a hospital is the first day of a Medicare Part A benefit period • Skilled nursing facility expenses are sometimes covered by Medicare Part A, but ONLY if the insured was hospitalized shortly before entering the facility • Medicare Part A will cover a maximum of 100 days per benefit period in a skilled nursing facility (days 1- 20 will pay 100%, days 21-100 will pay a flat dollar amount per day) • The lifetime maximum for inpatient psychiatric care under Part A Medicare is 190 days • The primary source of financing for Part A is Federal payroll and self-employment taxes • Physicians who agree to accept assignment on ALL Medicare claims are called participating providers • Dental care is not covered under Medicare

HMO group model

-physicians and medical professionals are not hired directly. Rather, they belong to multi-specialty physician group practices -HMO pays the group in bulk, and the physicians decide within the group how the money is distributed -physicians only see patients that signed up for the HMO that contracted them

Which of the following types of organizations are prepaid group health plans, where members pay in advance for the services of participating physicians and hospitals that have agreements? HMO POS PPO MEWA

HMO * HMO is a prepaid group health plan, where members pay in advance for the services of participating physicians and hospitals that have agreements

Which of these statements is INCORRECT regarding a Preferred Provider Organization (PPO)? * PPO's are NOT a type of managed care systems - PPO's normally have more providers to chose from as compared to an HMO - in-network PPO providers offer members better coverage of incurred expenses - prices are negotiated in advance for PPO providers

PPO's are NOT a type of managed care systems * PPO'S ARE considered to be a managed health care system

medicare part D

optional coverage that provides access to private Prescription drug coverage plans that contract with medicare.

The health insurance program which is administered by each state and funded by both the federal and state governments is called: - medicare supplemental program * medicaid - medicare - long-term care

Medicaid.

what does medicare parts A and B cover

Part A covers hospitalization; Part B covers doctor's services

The individual who provides general medical care for a patient as well as the referral for specialized care is known as a

Primary Care Physician

Preferred Provider Organization (PPO)

- a group of physicians and hospitals that contract with the employers, insurers, or third-party organizatoins to provide medical care services at a reduced fee - Another type of health insurance provider is the preferred provider organization, or PPO. A preferred provider organization is a collection of health care providers such as physicians, hospitals, and clinics who offer their services to certain groups at prearranged discount prices. In return, the group refers its members to the preferred providers for health care services. • Unlike HMOs, preferred provider organizations usually operate on a fee for-service-rendered basis, not on a prepaid basis • Members of the PPO select from among the preferred providers for needed services. In contrast to HMOs, PPO's provide a wider choice of physicians. PPO health care providers are normally in private practice. They have agreed to offer their services to the group and its members at fees that are typically less than what they normally charge. In return, the group refers its members to the PPO and the providers broaden their patient/service base. If service is obtained outside the PPO, benefits are reduced and costs increase. • Groups that contract with PPOs are often employers, insurance companies, or other health insurance benefit providers • While these groups do not mandate that individual members must use the PPO, a reduced benefit is typical if they do not • If a patient with a preferred provider organization (PPO) chooses to use a non-PPO, the patient usually can expect to have higher out-of-pocket expenses

Medicaid

- federal and state funded program for those whose income and resources are infufficent to meet the cost of necessary medical care. - the federal gov. provides about 56 cents for every mediciad dollar spent and the state gov. provides the balance. - Medicaid is Title XIX of the Social Security Act, added to the Social Security program in 1965. Its purpose is to provide matching federal funds to states for their medical public assistance plans to help needy persons, regardless of age. • Medicaid benefits are generally payable to low income individuals who are blind, disabled, or under 21 years of age • The benefits may be applied to Medicare deductibles and co-payment requirements • Medicaid is financed by both federal and state governments -• Under Medicaid, financial need is an eligibility requirement for the payment of nursing home expenses

Blue Cross and Blue Shield

- have a contractual agreement with physicans and hospitals. - blue papns are volunary not-for-profit heatlh care organizations - they are not an insurance company. - They are considered a prepaid plan bc each subscriber pays a set fee in order to receive services. They are also considered a service plan bc benefits are paid to the physican and hospital instead of the insured - uses experience rating for large groups and community rating for small groups and individuals -the dominant health insurers of the United States. The nation's Blue Cross and Blue Shield plans are loosely affiliated through the national Blue Cross and Blue Shield Association but are independently managed. The Blues provide the majority of their benefits on a service basis rather than on a reimbursement basis. This means that the insurer pays the provider directly for the medical treatment given to the subscriber, instead of reimbursing the insured. • As participating providers, the doctors and hospitals contractually agree to specific costs for the medical services provided to subscribers • Members of Blue Cross and Blue Shield are known as subscribers • Blue Cross and Blue Shield plans are called prepaid plans because the subscribers pay a set fee (usually each month) for medical services covered under the plan • Most Blue Cross and Blue Shield organizations operate as nonprofits

Medicare part C

- known as medicare choice or Medicare Advantage - to be eligible for medicare advantage enrollees must also be enrolled in medicare part A and B. - medicare advantage is medicare provided by an approved heath maintenance organization or preferred provider organization

laws and regulations - the requirements to starting an HMO include the following:

- obtain a certificate of authority - obtain a valid healthcare provider certificate - meet capital and surplus minimum requirements - make a deposit of $10,000 to the rehabilitation and administrative expense fund - become a member fo the states health maintenance organization consumer assistance plan

SERVICE PROVIDERS

- receive premium payments from a subsriber in return for providing benefits, including services provided by hospitals and physicians. - people who use a service provider are usually not billed for their care bc they have arleady paid for their care with their premium payments. - offer benefits to subscribers in return for the payment of a premium. Benefits are in the form of services provided by hospitals and physicians in the plan.

PPO's differ from the HMO's in two ways:

- they do not provide care on a pre-paid basis (physicians are paid a fee for service) - subscribers are not required to use physicians or facilities that have contracts with the PPO

What is the maximum Social Security Disability benefit amount an insured can receive? -50% of the insured's Primary Insurance Amount (PIA) -75% of the insured's Primary Insurance Amount (PIA) -100% of the insured's Primary Insurance Amount (PIA)* -100% of the insured's Primary Insurance Amount (PIA) minus any moves received from a retirement plan

100% of the insured's Primary Insurance Amount (PIA) * the MAXIMUM SS disability benefit an insured may receive is equal to 100% of the insured's primary insurance amount (PIA)

Health Maintenance Organization (HMO)

A health maintenance organization, or HMO, is another type of organization offering comprehensive prepaid health care services to its subscribing members. HMOs are distinguished by the fact that they not only finance health care services for their subscribers on a prepayment basis, but they also organize and deliver these health services at its own local health care facilities. - most HMO's operate exclusively through a group enrollment system. Each memeber of the group pays a premium, whether or not the person uses the services of the HMO. By having services prepaid, the individuals are encouraged to see a doctor early so that the preventatative meansurees may be taken.

Which of the following organizations would make reimbursement payments directly to the insured individual for covered medical expenditures? - administrative-services-only plan - preferred provider organization - commercial insurer - health maintenance organization

Commercial insurer - commercial health insurance companies use the REIMBURSEMENT approach, which allows policy owners to seek medical treatment then submit charges to the insurer for reimbursement

Which of the following reimburses its insureds for covered medical expenses? - Health maintenance organizations - Preferred provider organizations - Commercial insurers - Service providers

Commercial insurers * commercial insurance companies function on the reimbursement approach. policy owners obtain medical treatment from whatever source they feel is most appropriate and submit their charges to their insurer for reimbursement .

Medical Cost Management

Defined as the process of controlling how policy owners utilize their policies. There are four general approaches insurers use for cost management: mandatory second opinions, precertification review, ambulatory surgery, and case management.

Which of the following does Social Security NOT provide benefits for? Survivorship Dismemberment Disability Retirement

Dismemberment * SS provides for all of these types of benefits EXCEPT dismemberment

Which of these is considered a true statement regarding Medicaid? - provides disability income benefits - automatically covers those receiving SS disability benefits - Funded by both state and federal governments - intended to be used by individuals age 65 and older

Funded by both state and federal governments

HMO network model

HMO contracts with multiple group practices HMO pays capitated fee Generally offers wider selection of physicians Fewer utilization controls

J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a predetermined price. What type of plan does J belong to? - multiple employer trust - multiple employer welfare arrangements - co-op arrangement - health maintenance organization

Health Maintenance Organization * HMO contracts with doctors and hospitals to provide medical benefits to subscribers at a predetermined price.

commercial insurance providers

Health insurance may be written by a number of commercial insurers. The list includes: life insurance companies, casualty insurance companies, and monoline companies which specialize in one or more types of medical expense and disability income insurance. • Commercial insurance companies function on the reimbursement approach • The right of assignment built into most commercial health policies lets policyowners assign benefit payments from the insurer directly to the health care provider, thus relieving the policyowner of first having to pay the medical care provider

which type of provider is known for stressing preventative medical care?

Health maintenance organization (HMO)

A 66 year-old is covered under a group health plan while employed with a business that has 40 employees. If she injures herself while walking in the park, what coverage would be considered primary? long-term care medicaid her group health plan medicare

Her group health plan * if the employer has more than 20 employees, the group health plan generally pays first.

Social Security Disability Income

Social Security provides services other than survivorship and retirement benefits. In addition to Medicare, the federal government also provides disability related benefits through the Social Security OASDI program.• To be eligible for Social Security Disability benefits, you need to be fully insured, in which you need at least one quarter of coverage for each calendar year after turning 21 years old. The minimum number of credits needed is 6. • To be fully insured on a permanent basis, 40 quarter credits are required - at this point you are fully insured for Social Security Disability benefits whether you continue to work or not. • The maximum Social Security Disability benefit an insured may receive is equal to 100% of the insured's Primary Insurance Amount (PIA) • Disability income benefits are available to covered workers who qualify under Social Security requirements • One of the requirements is that the individual must be so mentally or physically disabled that he cannot perform any substantial gainful work • The impairment must be expected to last at least 12 months or result in an earlier death • A five-month waiting period is required before an individual will qualify for benefits, during which time he/she must remain disabled • The worker's spouse and dependent children are entitled to an income benefit which is a percentage of the worker's primary insurance amount

Federal Employees Health Benefits Program (FEHB)

The Federal Employees Health Benefits (FEHB) Program is a system of "managed competition" through which employee health benefits are provided to civilian government employees and annuitants of the United States government. There are two types of plans that participate in the FEHB program: fee-for-service plans and health maintenance organizations (prepaid).

ambulatory surgery

The advances in medicine now permit many surgical procedures to be performed on an outpatient basis where once an overnight hospital stay was required these outpatient procedures are commonly referred to as ambulatory surgery.

Policy Design

The design or structure of a policy and its provisions can have an impact on an insurer's cost containment efforts. • A higher deductible will help limit claims • Coinsurance is another important means of sharing the cost of medical care between the insured and the insurer • Shortened benefit periods can also prove beneficial from a cost containment standpoint

medicare

The federally administered Medicare program took effect in 1966. Its purpose is to provide hospital and medical expense insurance protection to those aged 65 and older. It also provides insurance protection to any individual who suffers from chronic kidney disease or to those who have been receiving Social Security Disability benefits for at least 24 months. - benefits are also available to any one regardless of age who has been entitled to disability income benefits for 2 years or has chronic kindey disease or end-stage renal disease

Which of the following statements is true about most Blue Cross/Blue Shield organizations? - they are federally sponsored - they are nonprofit organizations * - they are the same as private insurance companies - they are owned by hospitals and physicians

They are nonprofit organizations

The situation in which a group of physicians are salaried employees and conduct business in an HMO facility is called a(n) open panel closed panel* co-op panel capitation panel

closed panel * A closed panel is when an HMO is represented by a group of physicians who are salaried employees and work out of the HMO's facility.

Medicare Part A and Part B do NOT pay for physical therapy skilled nursing care hospitalization dental work

dental work

medicare part B

• (Medical Insurance) provides medical insurance for required doctors' services, outpatient services and medical supplies, and many services not covered by Part A (hospital insurance). most services are needed by people with permanent kidney failure. - part B is OPTIONAL and offered to everyone who enrolls in part A. If part B is initially declined, you must wait until the next general enrollment • Open enrollment period for Medicare Part B is January 1 through March 31 • Medicare Part B is funded by General tax revenue and user premiums * Individuals over 65 who have just enrolled in Medicare Part B for the first time cannot be refused a Medicare Supplement policy and cannot be rated if they apply for coverage within 6 months of Part B enrollment (in other words, Medicare Supplements must be guaranteed issue during open enrollment) * Coverage for Medicare Part B excess charges is a Medicare Supplement additional benefit.

Concurrent (Utilization) Review

• A health insurance company's opportunity to review a request for medical treatment to confirm that the plan provides coverage for your medical services • Health care is reviewed as it is being provided • Involves monitoring the appropriateness of the care, the setting, and the length of time spent in the hospital • This ongoing review is directed at keeping costs as low as possible and maintaining effectiveness of care by determining if the recommended treatment is appropriate

Multiple Employer Trusts (MET)

• A method of marketing group benefits to employers who have a small number of employees is the multiple employer trust (MET). They are usually in the same industry group • METs can provide a single type of insurance (e.g., health insurance) or a wide range of coverages (e.g., life, medical expense, and disability income insurance) • An employer who wants to get coverage for employees from a MET must first become a member of the trust by subscribing to it • A MET may either provide benefits on a self-funded basis or fund benefits with a contract purchased from an insurance company • In the latter case, the trust (rather than the subscribing employers) is the master insurance contract holder • Participants are issued a joinder agreement (document which an individual is admitted as a member and bound to the terms of membership) • The employer's premium payments are directed into a trust from which the plan's benefits and claims are paid. These trusts are also called 501(c)(9) trusts after the relevant section of the Internal Revenue Code. * premiums are based on claim experiences • Self-insured plans are common to multiple employer trusts (METs) or multiple employer welfare arrangements (MEWAs). They are also common in cases where the insured group is small, with relatively healthy members and few claims.

Point-of-service Plans

• A point-of-service plan allows the insured to choose either an in-network or an out-of-network provider at the time care is needed. • With in-network coverage, the insured receives care through a particular network of doctors and hospitals participating in the plan • All care is coordinated by the insured's primary care physician, which includes referrals to specialists • An insured receiving out-of-network care usually pays more of the cost than if it had been in- network (except for emergencies)

Case Management

• Case management is sometimes referred to as Utilization Review. • Case management involves a specialist within the insurance company, such as a registered nurse, who reviews a potentially large claim as it develops to discuss treatment alternatives with the insured. • The purpose of case management is to let the insurer take an active role in the management of what could potentially become a very expensive claim. • Most of these services are performed on a prospective basis, a concurrent basis, a retrospective basis or a combination of all three.

characteristics of HMO

• HMOs are known for stressing preventive care • Health maintenance organizations may be self-contained and self-funded based on dues or fees from their subscribers. They may also contract for excess insurance or administrative services provided by insurance companies. In fact, some HMOs are sponsored by insurance companies. • HMO's often require subscribers to select a primary care physician, which is a doctor who provides all care for a particular member and controls all referrals for specialized care, and in some cases, hospital care • If a need for emergency health services arises for an enrollee of a health maintenance organization (HMO) using a gatekeeper system, the enrollee should proceed directly to the nearest emergency room • Employers with 25 or more employees to offer enrollment in an HMO if they provide health care benefits for their workers • Hospital care under a typical HMO plan includes services such as hospitalization, in-hospital lab work and X-rays, inpatient laboratory services, and inpatient mental health care

HMO IPA model

• HMOs function on an individual or independent practice association (IPA) basis, which is characterized by a network of physicians who work out of their own facilities and participate in the HMO on a part-time basis. This is also known as an open panel.

Mandatory Second Opinions

• In an effort to reduce unnecessary surgical operations, many health policies today contain a provision requiring the insured to obtain a second opinion before receiving elective surgery • Under the mandatory second surgical opinion provision, an insured typically will pay more out-of-pocket expenses for surgeries for which only one opinion was obtained • The mandatory second surgical option provision can help contain the cost of a group medical plan

Self-Insurance

• Many self-insured plans are administered by insurance companies or other organizations that are paid a fee for handling the paperwork and processing the claims. When an outside organization provides these functions, it is called an administrative-services-only (ASO) or third-party administrator (TPA) arrangement. • To bolster a self-insured plan, some groups adopt a minimum premium plan (MPP). These plans are designed to insure against a certain level of large, unpredictable losses, above and beyond the self-insured level. As the name implies, MPPs are available for a fraction of the insurer's normal premium.

recertification review

• To control hospital claims and prevent unnecessary medical costs, many policies today require policy owners to obtain approval from the insurer before entering a hospital for elective surgeries • A pre-hospitalization authorization program (pre-certification) determines whether the requested treatment is medically necessary • Pre-admission, pre-hospitalization, and pre-certification are all common names used for this particular type of managed care • Pre-certification occurs before the treatment is provided • Pre-admission testing, also known as pre-admission certification, usually involves evaluating an individual's overall health prior to being hospitalized for surgery • Preadmission testing helps control health care costs primarily by reducing the length of hospitalization • Failure to obtain a preadmission certification in non-emergency situations reduces or eliminates the health care provider's obligation to pay for services rendered

HMO Staff Model

• When the HMO is represented by a group of physicians who are salaried employees and work out of the HMO's facility, this is known as a closed panel (sometimes called a staff model HMO)

State Workers' Compensation Programs

• Workers compensation benefits generally compensate employees for lost wages and medical expenses due to occupational accidents. • All states have workers' compensation laws, which were enacted to provide mandatory benefits to employees for work-related injuries, illness, or death • Employers are responsible for providing workers' compensation benefits to their employees and do so by purchasing coverage through state programs, private insurers, or by self-insuring • There is no time limit on how long Workers' Compensation medical expense benefits continue for disabled workers • The benefits arising from a worker's compensation claim could be inadequate to replace the loss of income • Under medical expense insurance policies, losses that are covered by workers' compensation are generally excluded from coverage

Multiple Employer Welfare Arrangements (MEWA)

• a type of MET which consists of small employers who have joined to provide health benefits for their employees, often on a self-insured basis • They are tax-exempt entities • Employees covered by a MEWA are required by law to have an employment related common bond

Retrospective review

• involves an analysis of care, after the fact, to determine if it was necessary and appropriate. The purpose of this review is not to deny claims but to monitor trends regarding treatment so that future actions may be taken to reduce or eliminate unnecessary health care costs, especially in high cost areas.

prospective review

• involves analyzing a case before admission to determine what type of treatment is necessary.

Concurrent review

• involves the monitoring of a hospital stay by a nurse while a patient is in the hospital to determine when they will be released, if they require home health care or if a transfer to another facility such as a hospice center is warranted.