Chapter 3 Medical Coding

Question 1

Over the past 20 years, managed care has become the predominant form of healthcare delivery in most parts of the United States.

Answer 1

Managed care, by definition, is healthcare delivery system that was created to control the rising cost of healthcare.

Question 2

accreditation

Answer 2

voluntary process that a health care facility or organization (e.g., hospital or managed care plan) undergoes to demonstrate that it has met standards beyond those required by law

Question 3

adverse selection

Answer 3

covering members who are sicker than the general population

Question 4

Amendment of the HMO Act of 1973

Answer 4

legislation that allowed federally qualified HMOs to permit members to occasionally use non-HMO physicians and be partially reimbursed

Question 5

cafeteria plan

Answer 5

also called triple option plan; provides different health benefit plans and extra coverage options through an insurer or third-party administrator

Question 6

capitation

Answer 6

provider accepts preestablished payments for providing health care services to enrollees over a period of time (usually one year)

Question 7

case manager

Answer 7

submits written confirmation, authorizing treatment, to the provider

Question 8

closed-panel HMO

Answer 8

health care is provided in an HMO-owned center or satellite clinic or by providers who belong to a specially formed medical group that services the HMO

Question 9

competitive medical plan (CMP)

Answer 9

an HMO that meets federal eligibility requirements for a Medicare risk contract, but is not licensed as a federally qualified plan

Question 10

consumer-directed health plan (CDHP)

Answer 10

see consumer-driven health plan

Question 11

customized sub-capitation plan (CSCP)

Answer 11

managed care plan in which health care expenses are funded by insurance coverage; the individual selects one of each type of provider to create a customized network and pays the resulting customized insurance premium; each provider is paid a fixed amount per month to provide only the care that an individual needs from that provider (called a sub-capitation payment)

Question 12

direct contract model HMO

Answer 12

contracted health care services delivered to subscribers by individual providers in the community

Question 13

enrollees

Answer 13

also called covered lives; employees and dependents who join a managed care plan’ known as beneficiaries in private insurance plan

Question 14

exclusive provider organization (EPO)

Answer 14

managed care plan that provides benefits to subscribers if they receive services from network providers

Question 15

external quality review organization (EQRO)

Answer 15

responsible for reviewing health care provided by managed care organizations

Question 16

federally qualified HMO

Answer 16

certified to provide health care services to Medicare and Medicaid enrollees

Question 17

fee-for-service

Answer 17

reimbursement methodology that increases payment if the health care service fees increase, if multiple units of service are provided, or if more expensive services are provided instead of less expensive services (e.g., brand name vs. generic prescription medication)

Question 18

flexible benefit plan

Answer 18

see cafeteria plan and triple option plan

Question 19

flexible spending account (FSA)

Answer 19

tax-exempt account offered by employers with any number of employees, which individuals use to pay health care bills; participants enroll in a relatively inexpensive, high-deductible insurance plan, and a tax-deductible savings account is opened to cover current and future medical expenses; money deposited (and earnings) is tax-deferred, and money is withdrawn to cover qualified medical expenses tax-free; money can be withdrawn for purposes other than health care expenses after payment of income tax plus a 15 % penalty; unused balances “roll over” from year to year, and if an employee changes jobs, the FSA can continue to be used to pay for qualified health care expenses; also called health savings account (HSA) or health savings security account (HSSA)

Question 20

gag clause

Answer 20

prevents providers from discussing all treatment options with patients, whether or not the plan would provide reimbursement for services

Question 21

gatekeeper

Answer 21

primary care provider for essential health care services at the lowest possible cost, avoiding nonessential care, and referring patients to specialists

Question 22

group model HMO

Answer 22

contracted health care services delivered to subscribers by participating providers who are members of an independent multispecialty group practice

Question 23

Group practice without walls (GPWW)

Answer 23

contract that allows providers to maintain their own offices and share services (e.g., appointment scheduling and billing)

Question 24

health care reimbursement account (HCRA)

Answer 24

tax-exempt account used to pay for health care expenses; individual decides, in advances, how much money to deposit in an HCRA (and unused funds are lost)

Question 25

health maintenance organization (HMO)

Answer 25

responsible for providing health care services to subscribers in a given geographical area for a fixed fee

Question 26

Health Maintenance Organization (HMO) Assistance Act of 1973

Answer 26

authorized grants and loans to develop HMOs under private sponsorship; defined a federally qualified HMO as one that has applied for, and met, federal standards established in the HMO Act of 1973; required most employers with more than 25 employees to offer HMO coverage if local plans were available

Question 27

health reimbursement arrangement (HRA)

Answer 27

tax-exempt accounts offered by employers with 50 or more employees; individuals use HRAs to pay health care bills; HRAs must be used for qualified health care expenses, required enrollment in a high-deductible insurance policy, and can accumulate unspent money for future years; if an employee changes jobs the HRA can continue to be used to pay for qualified health care expenses.

Question 28

health savings account (HSA)

Answer 28

see flexible spending account

Question 29

health savings security account (HSSA)

Answer 29

see flexible spending account

Question 30

Healthcare Effectiveness Data and Information Set (HEDIS)

Answer 30

created standards to assess managed-care systems using data elements that are collected, evaluated, and published to compare the performance of managed health care plans

Question 31

independent practice associate (IPA) HMO

Answer 31

see individual practice association (IPA) HMO

Question 32

individual practice association (IPA) HMO

Answer 32

also called independent practice association (IPA); type of HMO where contracted health services are delivered to subscribers by providers who remain in their independent office settings

Question 33

integrated delivery system (IDS)

Answer 33

organization of affiliated provider sites (e.g., hospitals, ambulatory surgical centers, or physician groups) that offer joint health care services to subscribers

Question 34

integrated provider organization (IPO)

Answer 34

manages the delivery of health care services offered by hospitals, physicians employed by the IPO, and other health care organizations (e.g., an ambulatory surgery clinic and a nursing facility)

Question 35

legislation

Answer 35

laws

Question 36

managed care organization (MCO)

Answer 36

responsible for the health of a group of enrollees; can be a health plan, hospital, physician group, or health system

Question 37

managed health care (managed care)

Answer 37

combines health care delivery with the financing of services provided

Question 38

management service organization (MSO)

Answer 38

usually owned by physicians or a hospital and provides practice management (administrative and support) services to individual physician practices

Question 39

mandates

Answer 39

laws

Question 40

medical foundation

Answer 40

nonprofit organization that contracts with and acquires the clinical and business assets of physician practices; the foundation is assigned a provider number and manages the practice’s business

Question 41

Medicare risk program

Answer 41

federally qualified HMOs and competitive medical plans (CMPs) that meet specified Medicare requirements provide Medicare-covered services under a risk contract

Question 42

National Committee for Quality Assurance (NCQA)

Answer 42

a private, not-for-profit organization that assesses the quality of managed care plans in the United States and releases the data to the public for its consideration when selecting a managed care plan

Question 43

network model HMO

Answer 43

contracted health care services provided to subscribers by two or more physician multispecialty group practices

Question 44

network provider

Answer 44

physician, other health care practitioner, or health care facility under contract to the managed care plan

Question 45

Office of Managed Care

Answer 45

CMS agency that facilitates innovation and competition among Medicare HMOs

Question 46

open-panel HMO

Answer 46

health care provided by individuals who are not employees of the HMOS or who do not belong to a specially formed medical group that serves the HMO

Question 47

physician incentive plan

Answer 47

requires managed care plans that contract with Medicare or Medicaid to disclose information about physician incentive plans to CMS or state Medicaid agencies before a new or renewed contract receives final approval

Question 48

physician incentives

Answer 48

include payments made directly or indirectly to health care providers to serve as encouragement to reduce or limit services (e.g., discharge an inpatient from the hospital more quickly) to save money for the managed care plan

Question 49

physician-hospital organization (PHO)

Answer 49

owned by hospital(s) and physician groups that obtain managed care plan contracts; physicians maintain their own practices and provide health care services to plan members

Question 50

point-of-service plan (POS)

Answer 50

delivers health care services using both managed care network and traditional indemnity coverage so patients can seek care outside the managed care network

Question 51

Preferred Provide Health Care of Act of 1985

Answer 51

eased restrictions on preferred provider organizations (PPOs) and allowed subscribers to seek health care from providers outside of the PPO

Question 52

preferred provider organization (PPO)

Answer 52

network of physicians, other health care practitioners, and hospitals that have joined together to contract with insurance companies, employers, or other organizations to provide health care to subscribers for a discounted fee

Question 53

primary care provider (PCP)

Answer 53

responsible for supervising and coordinating health care services for enrollees and preauthorizing referrals to specialists and inpatient hospitals admissions (except in emergencies)

Question 54

quality assessment and performance improvement (QAPI)

Answer 54

program implemented so that quality assurance activities are performed to improve the functioning of Medicare Advantage organizations

Question 55

quality assurance program

Answer 55

activities that assess the quality of care provided in a health care setting

Question 56

Quality Improvement System for Managed Care (QISMC)

Answer 56

established by Medicare to ensure the accountability of managed care plans in terms of objective, measurable standards

Question 57

report card

Answer 57

contains data regarding a managed care plan’s quality, utilization, customer satisfaction, administrative effectiveness, financial stability, and cost controls

Question 58

risk adjustment

Answer 58

method of adjusting capitation payment to health plans, accounting for difference sin expected health costs of enrollees

Question 59

risk adjustment model

Answer 59

provides payments to health plans that disproportionately attract higher-risk enrollees and uses an actuarial tool to predict health care costs based on the relative actuarial risk of enrollees in risk adjustment covered health plans

Question 60

risk adjustment program

Answer 60

lessens or eliminates the influence of risk selection on premiums charged by health plans and includes the risk adjustment model and risk transfer formula

Question 61

risk contract

Answer 61

an arrangement among providers to provide capitated (fixed, prepaid basis) health care services to Medicare beneficiaries

Question 62

risk pool

Answer 62

created when a number of people are grouped for insurance purposes (e.g., employees of an organization); the cost of health care coverage is determined by employees’ health status, age, sex, and occupation

Question 63

risk transfer formula

Answer 63

transfers funds from health plans with relatively lower risk enrollees to health risk individuals, protecting such health plans against adverse selection

Question 64

second surgical option (SSO)

Answer 64

second physician is asked to evaluate the necessity of surgery and recommend the most economical, appropriate facility in which to perform the surgery (e.g., outpatient clinic or doctor’s office versus inpatient hospitalization)

Question 65

self-referral

Answer 65

enrollee who sees non-HMO panel specialist without a referral from the primary care physician

Question 66

staff model HMO

Answer 66

health care services are provided to subscribers by physicians and other health care practitioners employed by the HMO

Question 67

standards

Answer 67

requirements

Question 68

sub-capitation payment

Answer 68

each provider is paid a fixed amount per month to provide only the care that individual needs from that provider

Question 69

subscribers (policyholders)

Answer 69

person in whose name is insurance policy is issued

Question 70

survey

Answer 70

conducted by accreditation organizations (e.g., The Joint Commission) and/or regulatory agencies (e.g., CMS) to evaluate a facility’s compliance with standards and/or regulations

Question 71

triple option plan

Answer 71

usually offered by either a single insurance plan or as a joint venture among two or more third-party payers, and provides subscribers or employees with a choice of HMO, PPO, or traditional health insurance plans; also called cafeteria plan or flexible benefit plan

Question 72

utilization review organization (URO)

Answer 72

entity that establishes a utilization management program and performs external utilization review service s

Question 73

managed health care (managed care) is a health care delivery system organized to mange cost, utilization, and quality. The delivery of health benefits and additional services is provided through contracted arrangements between individuals or health care programs (e.g., Medicaid)

Answer 73

and managed care organizations (MCOs), which accept a predetermined per member per month (capitation) payment for services. Currently, more than 70 million Americans are enrolled in some type of managed care program in response to regulatory initiatives affecting health care cost and quality

Question 74

History of Managed Care

Answer 74

Managed care (table 3-1 and Figure 3-1) was developed as a way to provide affordable, comprehensive, prepaid health care services to enrollees, also called subscribers (policyholders), who are employees and dependents who join a managed care plan and are also known as beneficiaries in private insurance plans

Question 75

1973

Answer 75

Legislated Title: HMO Assistance Act
-The Health Maintenance Organization (HMO) Assistance Act of 1973:
- Authorized grants and loans to develop HMOs under private sponsorship
- defined a federally qualified HMO (certified to provide health care services to Medicare and Medicaid enrollees) and one that has applied for and met federal standards established in the HMO Act of 1973
- Required most employers with more than 25 employees to offer HMO coverage if local plans were available

Question 76

1974

Answer 76

Legislated Title: ERISA
- The Employee Retirement Income Security Act of 1974 (ERISA) mandated reporting and disclosure requirement for group life and health plans (including managed care plans)

Question 77

1981

Answer 77

Legislated Title: OBRA
- The Omnibus Budget Reconciliation Act of 1981 (OBRA) provided states with flexibility to establish HOMs for Medicare and Medicaid programs, resulting in increased managed care enrollment

Question 78

1982

Answer 78

Legislated Title: TEFRA
-The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA):
- Modified the HMO Act of 1973
- Created Medicare risk programs, which allowed federally qualified HMOs and competitive medical plans that met specified Medicare requirements to provide Medicare-covered services under a risk contract
- Defined risk contract is an arranged among providers to provide capitated (fixed, prepaid basis) health care services to Medciare beneficiaries
- Defined competitive medical plan (CMP) as an HMO that meets federal eligibility requirements for a Medciare risk contract but is not licensed as a federally qualified plan

Question 79

1985

Answer 79

Legislated Title: Preferred Provider Health Care Act of 1985
- Eased restrictions on preferred provider organizations (PPOs)
- Allowed subscribers to seek health care from providers outside of the PPO

Legislated Title: COBRA
- the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) established an employee’s right to continue health care coverage beyond the scheduled benefit termination date (including HMO coverage)

Question 80

1988

Answer 80

Legislated Title: HEDIS
- The Healthcare Effectiveness Data and Information Set (HEDIS)
- Is developed by the National Committee for Quality Assurance (NCQA)
- Created standards to assess managed care systems in terms of membership, utilization of services, quality, access, health plan management and activities, and financial indicators

Question 81

1994

Answer 81

Legislated Title: Office of Managed Care
- Established as an office of HCFA (now called CMS) to facilitate innovation and competition among Medicare HMOs

Question 82

1996

Answer 82

Legislated Title: HIPAA
- The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created federal standards for insurers, HMOs, and employer plans, including those who self-insure

Question 83

1997

Answer 83

Legislated Title: Medical Savings Accounts
- a medical savings account (MSA), now called health savings account (HSA), allows individuals to withdraw tax-free funds for health care expenses that are not covered by a qualifying high-deductible health plan. Health care expenses that may be reimbursed from the MSA include the following:
- Dental expenses, including uncovered orthodontia
- Eye exams, contact lenses, and eyeglasses
- Hearing care expenses
- Health plan deductibles and copayments
- Prescription drugs
Note: The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 replaced MSAs with health savings accounts (HSAs). Existing MSAs were allowed to continue, or they could be moved to an HSA

Legislated Title: BBA
The Balanced Budget Act of 1997 (BBA):
- Encouraged formation of provider service networks (PSNs) and provider service organizations (PSOs)
- Mandated risk-based managed care organizations to submit encounter data related to inpatient hospital stays of members
- Established Medicare+Choice program, which expanded Medicare coverage options by creating managed care plans to include HMOs, PPOs, and MSAs (now called Medicare Advantage or Medicare C)
- Required organizations to implement a quality assessment and performance improvement (QAPI) program so that the quality assurance activities are performed to improve the functioning of M+C organizations
Legislated Title: State Managed care legislation
- In 1997, Texas was the first state to enact legislation allowing consumers to sue an HMO for medical malpractice. (Other states have since passed similar legislation)
- Other state-enacted legislation since 1997 includes that relating to mandated benefits, high-risk pools, method and philosophy of treatment for Alzheimer’s disease, Medicaid eligibility, banning financial incentives, independent appeals measures, insuring liability, and prompt payment

Question 84

2003

Answer 84

Legislated Title: MMA
- The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) (or Medicare Modernization Act):
- Amended the Internal Revenue Code of 1986 to allow a deduction to individuals for amounts contributed to health savings security accounts and health savings accounts, and to provide for the disposition of unused health benefits in cafeteria plans and flexible spending arrangements
- Renamed the Medicare+Choice Program, Medicare Advantage (also referred to as a Medicare Part C)
- Established the Medicare prescription drug benefit (Medicare Part D)
- Established health savings accounts (HSAs) to replace medical savings accounts (MSAs)

Question 85

2016

Answer 85

Legislated Title: Cures Act
- The 21st Century Cures Act requires the submission of a report on the risk adjustment model and the End-Stage Renal Disease (ESRD) risk adjustment model under the Medicare Advantage program every 3 years. (The first report was submitted by December 31, 2018.) Risk adjustment is a method of adjusting capiation payment to health plans, accounting for differences in expected health costs of enrollees. Commercial insurers determine revenue needs based on trends in medical expenditures, benefits offered, and anticipated enrollment, and then determine how to set premiums, deductibles, and copayment and coinsurance amounts. The Medicare Advantage risk adjustment models are more comprehensive in that diagnoses and demographic information are used to adjust each enrollee’s monthly capitation rate to account for expected costs associated with age, gender, and conditions. At the individual (enrollee) level, predicted medical costs can be lower or higher than actual medical costs. At the individual (enrollee) level, predicted medical costs can be lower or higher than actual medical costs. At the group (of enrollees) level, below-average predicted costs balance out above-average predicted costs. Thus, risk adjustment is intended to be accurate at the group level.

Question 86

2020

Answer 86

Legislated Title: PPACA
- The Patient Protection and Affordable Care Act (PPACA) implemented the risk adjustment program to lessen or eliminate the influence of risk selection on premiums charged by health plans and included the:
1. Risk adjustment model, which provides payments to health plans that disproportionately attract higher-risk enrollees (e.g., individuals with chronic conditions). It uses an actuarial tool to predict health care costs based on the relative actuarial risk of enrollees in risk adjustment covered health plans. For example, the HHS - Hierarchical Condition Categories (HHS-HHC) risk adjustment model uses a hierarchical condition category (HHC) system to summarize diagnosis codes into levels of severity for calculating risk scores
2. Risk transfer formula, which transfers funds from health plans with relatively lower risk enrollees to health plans that enroll relatively higher risk individuals, protecting such health plans against adverse selection. Enroll risk scores are based on demographic and health status information, and it is calculated as the sum of demographic and health factors, weighted by estimated marginal contributions to total risk, and calculated relative to average expenditures. Thomson Reuters MarketScan data is the primary source for risk adjustment model calibration, and its database includes data from all 50 states.
Example: An average risk score is 1.0, and the formula for calculating the total risk score is demographic risk factor + health status risk factor. If a 57-year-old patient has a 0.5 demographic risk factor and a 0.7 health status risk factor, the total risk score is 1.2, resulting in the health plan receiving higher payments for care because the risk score is greater than the average. This provides an incentive to the health plan to enroll individuals with higher demographic and health status risk factors. To monetize this example, if the value of 1.0 is $1,000, this individual’s risk score monetary average is calculated as (0.5 x $1,000) + (0.7 x $1,000) = $500 + $700 = $1,200

Question 87

Managed Care

Answer 87

Managed health care (managed care) combines health care delivery with the financing of services provided. The intent was to replace conventional fee-for-service plans with more affordable quality care to health care consumers and providers who agree to certain restrictions (e.g., patients would receive care only from providers who are members of a managed care organization). This administration of managed care includes:
- Managed care organizations
-Managed care models
-Consumer-directed health plans
-Accreditation of managed care organizations
Currently, more than 70 million Americans are enrolled in some type of managed care program in response to regulatory initiatives affecting health care cost and quality.

Question 88

Managed Care Organizations (MCOs)

Answer 88

a managed care organization (MCO) is responsible for the health of a group of enrollees and can be a health plan, hospital, physician group, or health system. Unlike traditional fee-for-service plans, which reimburse providers for individual health care services rendered, managed care is financed according to a method called capitation, where providers accept pre-establihsed payments for providing health care services to enrollees over a period of time (usually one year). If the physician provides services that cost less than the capitation amount, there is a profit (which the physician keeps). If services provided to subscribers cost more than the capitation amount, the physician loses money

Question 89

capitation

Answer 89

provider accepts pre-established payments for providing health care services to enrollees over a period of time (usually one year)

Question 90

Example

Answer 90

In June, Hillcrest Medical Group received a capitated payment of $15,000 for the 150 members (enrollees) of the ABC Managed Care Health Plan. The Group spent $12,500 of the capitated payment on preventive, chronic, and acute health care services provided to member patients. The services were provided at the member patients. The services were provided at the Group’s office and local hospital, which included inpatient, outpatient, and emergency department care. (The Group is responsible for paying the enrollees’ hospital bills). In this scenario, health care services provided to enrollees cost less than the capitated payment received. The Hillcrest Medical Group, therefore, made a profit of $2,500. If health care services had cost more than the capitated amount of $15,000, the Group would have experienced a loss.

Question 91

Primary Care Providers

Answer 91

Managed care plan enrollees receive care from a primary care provider selected from a list of participating providers. The PCP is responsible for supervising and coordinating health care services for enrollees and approves referrals to specialists and inpatient hospital admissions (except in emergencies). The PCP serves as a gatekeeper by providing essential health care services at the lowest possible cost, avoiding nonessential care, and referring patients to specialists.

Question 92

Quality Assurance

Answer 92

Managed care plans that are “federally qualified” and those that must comply with state qualified review mandates (laws) are required to establish quality assurance programs. A quality assurance program includes activities that assess the quality of care provided in a health care setting. Many states have enacted legislation (laws) requiring an external quality review organization (EQRO) (e.g., QIO) to review health care provided by managed care organizations. The types of quality reviews performed included government oversight, patient satisfaction surveys, data collected from grievance procedures , and reviews conducted by independent organizations. Independent organizations that perform reviews include accreditation agencies such as the National Committee for Quality Assurance and the Joint Commission

Question 93

Medicare established the Quality Improvement System for Managed Care (QISMC) to ensure the accountability of managed care plans in terms of objective, measurable standards (requirements). Plans are required to meet minimum performance levels and to show demonstrable and measurable improvement in specified broad clinical areas

Answer 93

(e.g., preventive services, acute ambulatory care, chronic care, and hospital care) based on performance improvement projects that each plan identifies. Beginning in 2006, the Physician Quality Reporting System (formerly called Physician Quality Reporting Initiative or PQRI system) established a financial incentive for eligible professionals who participate in a voluntary quality reporting program

Question 94

Utilization Management

Answer 94

Managed care plans implement utilization management (or utilization review) as a method of controlling health care costs of quality of care. The appropriateness, efficiency, and medical necessity of health care provided to patients is reviewed on a prospective and retrospective basis. Utilization management activities included pre-admission certification (PAC) or pre-admission review, preauthorization, concurrent review, and discharge planning

Question 95

Some managed care plans contract out utilization management services to a utilization review organization (URO), an entity that establishes a utilization management program and performs external utilization review services.

Answer 95

Other plans contract with a third-party administrator (TPA), an organization that provides health benefits claims administration and other outsourced services (e.g., employee benefits management) for self-insured companies

Question 96

Case Management

Answer 96

Managed care plans also require the development of patient care plans for the coordination and provision of care for complicated cases in a cost-effective manner, which is called case management. For example, instead of admitting a patient to the hospital, a managed care plan might authorized 24-hour home health care services when appropriate. The case manager (e.g., physician, physician’s assistant, nurse practitioner, nurse practitioner, nurse, or social worker) submits written confirmation, authorizing treatment, to the provider.

Question 97

Second Surgical Opinions

Answer 97

Prior to scheduling elective surgery, managed care plans often require a second surgical opinion (SSO); that is, a second physician is asked to evaluate the necessity of surgery and recommend the most economical, appropriate facility in which to perform the surgery (e.g., outpatient clinic or doctor’s office versus inpatient hospitalization)

Question 98

Gag Clauses

Answer 98

Medicare and many states prohibit managed care contracts from containing gag clauses, which prevent providers from discussing all treatment options with patients, whether or not the plan would provide reimbursement for services. Medicare beneficiaries are entitled to advice from their physicians on medically necessary treatment options that may be appropriate for their condition of disease. Because a gag clause would have the practical effect of prohibiting a physician from giving a patient the full range of advice and counsel that is clinically appropriate, it would result in the managed care plan not providing all covered Medicare services to its enrollees, in violation of the managed care plan’s responsibilities

Question 99

Physician Incentives

Answer 99

include payments made directly or indirectly to health care providers to encourage them to reduce or limit services (e.g., discharge an inpatient from the hospital more quickly) so as to save money for the managed care plan. The federally physician incentive plan requires managed care plans the contract with Medicare or Medicaid to disclose information about physician incentive plans to CMS or state Medicaid agencies before a new or renewed contract receives final approval

Question 100

Managed Care Models

Answer 100

Managed care originally focused on cost reductions by restricting health care access through utilization management and availability of limited benefits. Managed care organizations (MCOs) were created to manage benefits and to develop participating provider networks.
Note: Government and private payers have implemented managed care programs to control health care costs. Chapter 12-17 of this textbook include details about such managed care programs (e.g., Medicare managed care plans are discussed in Chapter 14.)

Question 101

Managed care can now be categorized according to six models:

Answer 101

1. Exclusive provider organization (EPO)
2. Integrated delivery system (IDS)
3. Health maintenance Organization (HMO)
   a. direct contract model
   b. group model
   c. individual (or Independent) practice associate (IPA)
   d. Network model
   e. staff model
4. Point-of-service plan (POS)
5. Preferred provider organization (PPO)
6. Triple option plan

Question 102

Exclusive Provider Organization (EPO)

Answer 102

an exclusive provider organization (EPO) is a managed care plan that provides benefits to subscribers who are required to receive services from network providers. A network provider is a physician or health care facility under contract to the managed care plan. Usually, network providers sign exclusive contracts with the EPO, which means they cannot contract with other managed care plans. (Network providers are usually reimbursed on a fee-for-service basis). Subscribers are generally required to coordinate health care services through their primary care physician (PCP). EPOs are regulated by state insurance departments (unlike HMOs, which are regulated by either the state commerce or department of corporations, depending on state requirements)
Note: Exclusive provider organization (EPO) patients must receive care from participating providers, which can include emergency departments at practicing hospitals, or they pay for all costs incurred

Question 103

Integrated Delivery System (IDS)

Answer 103

an integrated delivery system is an organization of affiliated providers’ sites (e.g., hospitals, ambulatory surgical centers, or physician groups) that offer joint health care services to subscribers. Models include physician-hospital organizations, management service organizations, group practices without walls, integrated provider organizations, and medical foundations.

Question 104

A physician-hospital organization (PHO) is

Answer 104

owned by hospital(s) and physician groups that obtain managed care plan contracts; physicians maintain their own practices and provide health care services to plan members.

Question 105

Management service organization (MSO)

Answer 105

is usually owned by physicians or a hospital and provides practice management (administrative and support) services to individual physician practices.

Question 106

A group practice without walls (GPWW) establishes

Answer 106

a contract that allows physicians to maintain their own offices and share services (e.g., appointment scheduling and billing)

Question 107

Integrated provider organization (IPO) manages

Answer 107

the delivery of health care services offered by hospitals, physicians (who are employees of the IPO), and other health care organizations (e.g., an ambulatory surgery clinic and a nursing facility).

Question 108

a medical foundation is a

Answer 108

nonprofit organization that contracts with and acquires the clinical and business assets of physician practices; the foundation is assigned a provider number and manages the practice’s business.

An integrated delivery system may also be referred to by any of the following names: integrated service network (ISN), delivery system, vertically integrated plan (VIP), vertically integrated system, horizontally integrated system, health delivery network, or accountable health plan

Note: an integrated delivery system (IDS) is the result of a joint venture between hospitals and members of the medical staff

Question 109

Health maintenance organization (HMO)

Answer 109

is an alternative to traditional group health insurance coverage and provides comprehensive health care services to voluntarily enrolled members on a prepaid basis. In contrast, traditional health insurance coverage is usually provided on a fee-for-service basis in which reimbursement increases if the health care services fees increase, if multiple units of service are provided, or if more expensive services are provided instead of less expensive ones (e.g., brand-name versus generic prescription medication)
Note: health maintenance organizations (HMOs) manage patient health care services by expending a monthly capitation amount paid by a third-party payer HMO

Question 110

HMOs provide preventive care services to promote “wellness” or good health, thus reducing the overall cost of medical care. Annual physical examinations are encouraged for the early detection of health problems.

Answer 110

Health risk assessment instruments (surveys) are resources are also available to subscribers. A PCP assigned to each subscriber is responsible for coordinating health care services and referring subscribers to other health care providers

Question 110

HMOs often require copayment (or copay), which is a fee paid by the patient to the provider at the time health care services.

Answer 110

Copayments range from $1 to $35 per visit, and some services are exempt because coinsurance payments are required instead
Note: coinsurance may also be required of managed care plans when out-of-network (nonparticipating) providers render health care services to plan subscribers
HMOs must meet the requirements of the HMO Act of 1973 as well as the rules and regulations of individual states. There are five HMO models (table 3-2): direct contract model, group model, individual practice association, network model, and staff model

Question 111

Closed-panel HMO

Answer 111

Health care is provided in an HMO-owned center or satellite clinic or by physicians who belong to a specially formed medical group that serves the HMO.

Question 112

Closed-Panel Models

Answer 112

-Group Model HMO
-Staff Model HMO
-Open Panel HMO

Question 113

Staff Model HMO

Answer 113

Health care services are provided to subscribers by physicians employed by the HMO. Premiums and other revenue are paid to the HMO. Usually, all ambulatory services are provided within HMO corporate buildings

Question 113

Group Model HMO

Answer 113

Contracted health care services are delivered to subscribers by participating physicians who are members of an independent multi-specialty group practice. The HMOS reimburses the physician group, which is then responsible for reimbursing physician group, which is then responsible for reimbursing physician members and contracted health care facilities (e.g., hospitals). The physician groups can be owned or managed by the HMO, or it can simply contract with the HMO

Question 114

Open-Panel HMO

Answer 114

Health care is provided by individuals who are not employees of the HMO or who do not belong to a specially formed medical group that serves the HMO

Question 115

Open-Panel Models

Answer 115

-Direct Contract Model HMO
-Individual Practice Association (IPA) HMO
-Network Model HMO

Question 116

Direct Contract Model HMO

Answer 116

Contracted health care services are delivered to subscribers by individual physicians in the community

Question 117

Individual Practice Association (IPA) HMO

Answer 117

Also called independent practice association (IPA) HMO, contracted health services are delivered to subscribers by physicians who remain in their independent office settings. The IPA is an intermediary (e.g., physician association) that negotiates the HMO contract and receives and manages the capitation payment from the HMO, so that physicians are paid on either a fee-for-service or capitation basis

Question 118

Network Model HMO

Answer 118

Contracted health care services are provided to subscribers by two or more physician multi-speciality group practices

Question 119

Example: Dr. Sanders provided Nancy Jones with evaluation and management (E/M) services at the Center City HMO during an office visit. The contracted E/M service rate is $64, and Nancy is required to pay a $10 copayment. Nancy has a $100 annual deductible, which was met earlier this year. Nancy is not required to pay a coinsurance amount

Answer 119

Provide fee (contracted E/M service rate) - $64.00

Patient Copayment - -$10.00
Insurance payment - $54.00

Question 120

Point-of-service plan (POS)

Answer 120

to create flexibility in managed care plans, some HMOs are preferred provider organizations have implemented a point-of-service plan (POS), under which patients have freedom to use the managed care panel of providers or to self-refer to out-of-network providers. If enrollees choose to receive all medical care from the managed network of health care providers, or obtain an authorization from the POS primary care provider for speciality care with an out-of-network provider, they pay only the regular copayment or a small charge for the visit and they pay no deductible or coinsurance costs.

Question 121

If the enrollee see a non-managed care panel specialist without a referral from the primary care physician, this is known as a self-referral.

Answer 121

The enrollee will have greater out-of-pocket expenses, as both a large deductible (usually $200 and $250) and 20 to 25 percent coinsurance changes must be paid, similar to those paid by persons with fee-for-service plans.
Note: A POS plan is not an HMO, but it is a managed care plan that combines the characteristics of an HMO and a referred provider organization (PPO). POS enrollees pay less if they use the plan’s in-network providers. POS enrollees who receive care from out-of-network providers pay higher deductible and coinsurance amounts

Question 122

Preferred Provider Organization (PPO)

Answer 122

(sometimes called a participating provider organization) is a managed care network of physicians and hospitals that have joined together to contract with insurance companies, employers, or other organizations to provide health care to subscribers for a discounted fee. PPOs do not routinely establish contracts for laboratory or pharmacy services, but they do offer reduced-rate contracts with specific hospitals. Most PPOs are open-ended plans allowing patients to use non-PPO providers in exchange for larger out-of-pocket expenses. Premiums, deductibles, and copayments are usually higher than those paid for HMOs, but lower than those paid for regular fee-for-service plans
A PPO is not an HMO, but it is similar to an HMO because it is a managed care plan that provides enrollees with discounted health care through a network of providers. PPO enrollees can also receive health care outside of the network if they are willing to pay higher costs

Question 123

Triple Option Plan

Answer 123

which is usually offered either by a single insurance plan or as a joint venture among two or more insurance payers, provides subscribers or employees with a choice of HMO, PPO, or traditional health insurance plans.

Question 124

Cafeteria plan (or flexible benefit plan)

Answer 124

because of the different benefit plans and extra coverage options provided through the insurer or third-party administrator. Triple option plans are intended to prevent the problem of covering members who are sicker than the general population (called adverse selection).

Question 125

A risk pool

Answer 125

is created when a number of people are grouped for insurance purposes (e.g., employees of an organization); the cost of health care coverage is determined by employees’ health status, age, sex, and occupation
Note: A tripe option plan provides patients with more choices than a traditional managed care plan

Question 126

Consumer-Directed Health Plans (CDHPs)

Answer 126

define employer contributions and ask employees to be more responsible for health care decisions and cost-sharing. You might think of CDHP as a sort of “401(k) plan for health care” (recalling the shift from employer defined-benefit pension plans to employer defined contribution 401(k) plans). Consumer-directed health plans (CDHPs) include many choices that provide individuals with an incentive to control the costs of health benefits and health care.

Question 127

Individuals have greater freedom in spending health care dollars, up to a designated amount, and receive full coverage for in-network preventive care.

Answer 127

In return, individuals assume significantly higher cost-sharing expenses after the designated amount has been expended (The catastrophic limit is usually higher than those common in other plans)

Question 128

CDHPs have become a popular alternative to the increased costs of traditional health insurance premiums and the limitations associated with managed care plans. They include the following tiers:

Answer 128

-Tax-exempt account, which is used to pay for health care expenses and provides more flexibility than traditional managed care plans in terms of access to providers and services
-Out-of-pocket payments for health care expenses, which are made after the tax-exempt account is expended and before the deductible for high-deductible insurance has been met; this tier actually represents a gap in coverage
-high-deductible insurance policy, which reimburses allowable health care expenses after the high deductible has been paid

Question 129

CDHPs usually provide Internet-based support so individuals can track health care expenses, improve their health by viewing useful information and learning about preventive services, obtain information about provider quality, and receive notification about provider group-rate pricing.

Answer 129

Various CDHPs are available to individuals, all of which are subject to modification as legislation is passed any payers alter program requirements

Question 130

Types of Consumer-Directed Health Plans (CDHPs)

Answer 130

-Customized Sub-Capitation Plan (CSCP)
-Flexible Spending Account (FSA)
-Health Savings Account (HSA); Health Savings Security Account (HSSA)
-Health Care Reimbursement Account (HCRA)
-Health Reimbursement Arrangement (HRA)

Question 131

Customized Sub-Capitation Plan (CSCP)

Answer 131

-Health care expenses are funded by insurance coverage; the individual selects one of each type of provider to create a customized network and pays the resulting customized insurance premium.
-Each provider is each paid a fixed amount per month to provide only the care that an individual needs from that provider (sub-capitation payment)
Note: In managed care , the primary provider usually receives a capitation payment and is responsible for managing all of an individuals health care, which includes reimbursing other caregivers (e.g., specialists)

Question 132

Flexible Spending Account (FSA)

Answer 132

-Tax-exempt accounts that are offered by employers to any number of employees, which individuals use to pay health care bills
-Employees contribute funds to the FSA through a salary reduction agreement and withdraw funds to pay medical bills
-Funds in an FSA are exempt from both income tax and Social Security tax (employers may also contribute to FSAs).
-Per the PPACA, employers can allow employees to carry over up to $500 of unspent funds remaining in the FSA at the end of the year or a have grace period of up to two and a half months (but neither is required)

Question 133

Health Savings Account (HSA); Health Savings Security Account (HSSA)

Answer 133

-Participants enroll in a relatively inexpensive high-deductible insurance plan, and a tax–deductible savings account is opened to cover current and future medical expenses
-Money deposited (and earnings) is tax-deferred, and money withdrawn to cover qualified medical expenses is tax-free
-Money can be withdrawn for purposes other than health care expenses after payment of income tax plus a 20-percent penalty
-Unused balances “roll over” from year to year; if an employee changes jobs, the HSA can continue to be used to pay for qualified health care expenses

Question 134

Health Care Reimbursement Account (HCRA)

Answer 134

-Tax-exempt account that is used to pay for health care expenses
-Individual decides, in advance, how much money to deposit in the HCRA (unused funds are forfeited)

Question 135

Health reimbursement Arrangement (HRA)

Answer 135

-Tax-exempt accounts that are offered by employers with 50 or more employees, which individuals use to pay health care bills
-U.S. Treasury Department and Internal Revenue Service issued tax guidance information for HRAs in 2002.
-Money must be used for qualified health care expenses and allows individuals to accumulate unspent money for future years
-If an employee changes jobs, the HRA can continue to be used to pay for qualified health care expenses

Question 136

Accreditation of Managed Care Organizations

Answer 136

the National Committee for Quality Assurance (NCQA) evaluates managed care organizations. Accreditation is a voluntary process that a health care facility or organization (e.g., hospital or managed care plan) undergoes to demonstrate that it has met standards beyond those required by law. Accreditation organizations develop standards (requirement) that are reviewed during a survey (evaluation) process that is conducted both office (e.g., managed care plan submits an individual document for review) and onsite (at the managed care plan’s facilities)

Question 137

National Committee for Quality Assurance (NCQA)

Answer 137

of Washington, DC, is a private, not-for-profit organization that assesses the quality of managed care plans in the United States and releases the data to the public for consideration when selecting a managed care plan. The NCQA began accrediting managed care programs in 1991 when a need for consistent, independent information about the quality of care provided to patients was originally identified

Question 138

The Healthcare Effectiveness Data and Information Set (HEDIS)

Answer 138

sponsored by the National Committee for Quality Assurance, consists of performance measures used to evaluate managed care plans (e.g., rate of Pap smears performed among women of certain age). The National Committee for Quality Assurance (NCQA) reviews managed care plans and develops report cards to allow health care consumers to make informed decisions when selecting a plan.

Question 139

The report card

Answer 139

contains data regarding a managed care plan’s quality, utilization, customer satisfaction, administrative effectiveness, financial stability and cost control

Question 140

HEDIS and Quality Compass

Answer 140

(Permission to reuse granted by the National Committee for Quality Assurance. www.ncqa.org.)

The Healthcare Effectiveness Data and Information Set (HEDIS) is a tool used by more than 90 perfect of America’s health plans to measure performance on important dimensions of care and service. Because so many plans collect HEDIS data, and because the measure are so specifically defined, HEDIS makes it possible to compare the performance of health plans on an “apples-to-apples” basis.H

Question 141

Health plans also used HEDIS results themselves to see where they need to focus their improvement efforts.
HEDIS measures address six domains of care:

Answer 141

-Effectiveness of Care
-Access/Availability of Care
-Experience of Care
-Utilization and Risk Adjusted Utilization
-Health Plan Descriptive Information
-Measures Collected Using Electronic Clinical Data Systems

Question 142

HEDIS measure data is collected using an Interactive Data Submission System (IDSS)

Answer 142

and data elements under the measures are more relational, modular, reusable, and meaningfully named and structured. Many health plans report HEDIS data to employers or use their results to make improvements in their quality of care and service. Employers, consultants, and consumers use HEDIS data, along with accreditation informaiton, to help them select the best health plan for their needs. To ensure the validity of HEDIS results, all data are rigorously audited by certified auditors using a process designed by the National Committee on Quality Assurance (NCQA).

Question 143

Consumers also benefit from HEDIS data through the State of Health Care Quality report

Answer 143

a comprehensive look at the performance of the nation’s health care system. HEDIS data also are the centerpiece of most health plan “report cards” that appear in national magazines and local newspapers

Question 144

To ensure that HEDIS stays current, NCQA has established a process to evolve the measurement set each year.

Answer 144

NCQA’s Committee on Performance Measurement, a broad-based group representing employers, consumers, health plans and others, debates and decides collectively on the content of HEDIS. This group determines what HEDIS measures are included and field tests determine how it gets measured

Question 145

Included in HEDIS is the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey, which measures members’ satisfaction with their care in areas such as claims processing, customer service, and getting needed care quickly

Answer 145

HEDIS is designed to provide purchasers and consumers with the information they need to reliably compare the performance of health care plans. HEDIS results are included in Quality Compass, an interactive, web-based comparison tool that allows users to view plan results and benchmark information. Quality Compass users benefit from the largest database of comparative health plan performance information to conduct competitor analysis, examine quality improvement, and benchmark plan performance

Question 146

Effects of Managed Care on a Physician’s Practice
Managed care organizations (MCOs) impact a practice’s administrative procedures by requiring:

Answer 146

-Separate bookkeeping systems for each capitated plan to ensure financial viability of the contract
-A tracking system for preauthorization of specialty care and documented requests for receipt of the specialist’s treatment plan or consultation report
-Preauthorization and/or pre-certification for all hospitalizations and continued certification if the patient’s condition requires extension of the number of authorized days
-Up-to-date lists for referrals to participating health care providers, hospitals, and diagnostic test facilitates used by the practice
-Up-to-date lists of special administrative procedures required by each managed care plan contract
-Up-to-date lists of patient copayments and fees for each managed care plan contract
- Special patient interviews to ensure preauthorization and to explain out-of-network requirements if the patient is self-referring
-Additional paperwork for specialists to complete and the filing of treatment and discharge plans
-Some case managers employed by the MCO to monitor services provided to enrollees and to be notified if a patient fails to keep a preauthorized appointment
-The attachment of preauthorization documentation to health insurance claims submitted to some MCOs
NOTE: It is important to realize that managed care is an option many payers use to reimburse health care covered in later chapters

Question 147

Federal legislation mandated that

Answer 147

MCOs participate in quality assurance programs and other activities, including utilization management, case management, requirements for second surgical opinions, non-use of gag clauses in MCO contracts, and disclose any physician incentives

Question 148

Why do you think it is important t o remind the staff about the practice’s financial policies, especially in light of high-deductible health plans

Answer 148

Medical practice revenue provides the money to pay salaries, purchase equipment and supplies, and pay the rent, utilities, and many other expenses. With high-deductible health plans, the patients take on much more of the cost for their care. Collecting patient payments at the time of service helps with the cash flow, saves time, and reduces the costs related to billing, follow-up, and collection activities

Question 149

After a patient receives a medical service, the healthcare provider sends a claim to the insurance or government payer responsible for covering the medical costs. Reimbursement is a term used when healthcare providers receive payment for services rendered. Three common types of healthcare reimbursement include:

Answer 149

-Fee-for-service
-bundled payment
-capitation

Question 150

Fee-for-service (FFS)

Answer 150

is healthcare’s most traditional payment type where physicians and other providers are paid by government programs and insurance companies based on the services provided. In other words, every doctor’s visit, hospital stay, laboratory test, and surgical procedure is itemized and billed separately. Under this reimbursement method, the reimbursement is based on a fee schedule.

Question 151

Bundled payment

Answer 151

is a single payment for all services associated with an episode of care, such as an inpatient hospital admission or maternity care. This promotes a coordinated, efficient, cost-conscious effort for treating certain conditions

Question 152

Capitation

Answer 152

reimbursement method, healthcare providers are paid a fixed amount of money for the number of patients enrolled in the insurance plan rather than by the actual services provided. The amount covers a specified period of time (for example, monthly) and is paid in advance to the physician for the delivery of healthcare services to those patients. In other words, the physician is paid a “per patient per month” fee regardless of whether the patient uses any healthcare services or not. If the physician can keep their costs for providing services to the patient less than the capitation amount, the physician keeps the profit.
Capitation is mainly associated with managed care

Question 153

Managed Healthcare

Answer 153

was created to control the rising costs of healthcare and has introduced changes to the U.S. healthcare delivery system that include cost effectiveness, access to care, and quality of care.
Keeping the costs of care as low as possible without sacrificing access to quality is done by creating a network of providers who have entered into a contractual agreement with the managed care plan and agreed to accept negotiated (often discounted) rates. These providers are called network providers or in-network providers. Patients will pay less out of their own pockets when receiving treatment from in-network providers.

Question 154

Out-of-network providers

Answer 154

do not have a contractual relationship with the managed care plan and did not agree to the discounted rates. If a patient chooses to receive care out of network, the insurer might not cover the cost, especially if they have an option for the service within their network. If a managed care plan does allow coverage for out-of-network care, the patient’s costs will always be higher

Question 155

History of managed care

Question 156

1910

Answer 156

for 50 cents a month, the Western Clinic in Tacoma, Washington, offered medical services to lumber mill owners and their employees

Question 157

1929

Answer 157

Ross-Loos Medical Group provided prepaid healthcare services to Los Angeles Department of Water and Power employees and their families. This was the first known managed care program

Question 158

1937

Answer 158

The Group Health Association nonprofit cooperative was created in Washington, D.C. for employees of the Federal Home Loan Bank

Question 159

1938

Answer 159

Dr. Sidney Garfield and Henry Kaiser created a group practice prepayment plan for Grand Coulee Dam construction workers and their families in the state of Washington

Question 160

1947

Answer 160

The Health Insurance Plan of Greater New York was created to provide healthcare coverage to City of New York employees

Question 161

1973

Answer 161

The passing of the Health Maintenance Organization Act was designed to provide an alternative to the traditional fee-for-service practice of medicine and allowed for the creation of managed healthcare organizations to better serve patients

Question 162

Utilization review is a method of controlling healthcare costs by focusing on the appropriate use of resources while ensuring the quality of care that is provided. The benefits, efficiency, and medical necessity of the healthcare provided to patients are reviewed on a prospective, concurrent, and retrospective basis.

Answer 162

A prospective review assesses the need for healthcare services before the service is performed. Providers must often submit preauthorizations to health plans under this utilization review process

For concurrent reviews, services are reviewed as they are being provided during the hospitalization. The nurse reviewer focuses on the coordination of care, the appropriateness of the length of stay, and discharge planning

Retrospective review is he process of assessing the appropriateness of healthcare services after care has been provided. Hospitals typically have a certified coder perform retrospective reviews to ensure claim submissions contain complete, correct medical codes for all services provided.

Question 163

The NCQA began in

Answer 163

1979 as a managed care industry alternative to government oversight. Today it accredits health insurance plans, physician groups, and other medical businesses through an evaluation system called the Healthcare Effectiveness Data and Information Set (HEDIS).

Question 164

HEIDS medical record reviews are used to track how well the health plan’s providers comply with the recommended standards of care and cost-effectiveness.

Answer 164

HEDIS data is released to the public and widely used by employers to compare different health plans for their employees

Question 165

The goal of medical management is the coordination and provision of cost-effective healthcare.

Answer 165

A case manager (usually a nurse or social worker) is assigned to the patient and their family and develops a plan of care in collaboration with all healthcare providers.

Question 166

The case manager ensures that the care provided is safe, effective, patient-centered, timely and efficient

Answer 166

The case manager also anticipates the patient’s future healthcare needs and tries to put in place mechanisms to meet those needs as efficiently as possible. This approach achieves optimum outcomes for both patient and payer.

Question 167

A drug formulary is a list of generic and brand name prescription drugs covered by your managed care plan.

Answer 167

The plan will usually only pay for the drugs listed on its formulary. It’s their way of providing effective medications at the lowest possible cost. A committee of physicians and pharmacists approves the drugs on a health plan’s fomulary based on safety, quality, availability, and cost-effectiveness.

Question 168

Tier description

Answer 168

Tier 1: These drugs are usually generics and have the lowest copays
Tier 2: These drugs are brand-named drugs that are usually more affordable and have higher copays than Tier 1
Tier 3: These drugs are often brand-named drugs that have a generic version available and have higher copays than Tiers 1 and 2
Tier 4: These drugs are considered specialty drugs and are typically used to cover rare or serious medical conditions. The copays are highest in Tier 4

Question 169

Some health plans have more than 4 tiers and others have only 2 or 3, but they will cost less, and

Answer 169

those in higher tiers will cost more. In addition, the same drug may be listed on different tiers from one healthcare plan to another

Question 170

What is a Managed Care Organization (MCO)

Answer 170

MCOs were created to manage benefits for enrollees and to develop participating provider networks. MCOs can be a health plan, hospital, physician group, or health system
To achieve their goals of providing cost-effective healthcare, MCOs must typically control access to speciality care, reduce healthcare utilization by eliminating unnecessary services, limit provider fees by contracting with physicians and hospitals, and lower drug costs by the preference for generic over brand name drugs

Question 171

Health Maintenance Organization (HMOs)

Answer 171

-Plan only pays for care within the network
-Patients must designate a PCP to coordinate all of their healthcare services
-referrals are required to see a specialist
-Focus is on wellness and disease prevention
-Premiums are generally lower

Question 172

Preferred Provider Organization (PPO)s

Answer 172

-Patients pay less by choosing a provider in the plan’s network
-Patients do not have to choose a PCP
-Referrals are not required to see a specialist
-This is the most popular type of managed care model offered by employers
-Premiums tend to be higher

Question 173

Point-of-Service (POS)

Answer 173

-Like a PPO. patients may receive services in-network or out-of-network at different levels of cost
-Like an HMO, POS plans require patients to choose a PCP
-Referrals are required to see a specialist
-A POS plan is a combination of an HMO and PPO
-Premiums fall in between an HMO and PPO

Question 175

Exclusive Provider Organization (EPO)

Answer 175

-Patients are required to receive services from network providers. There are no out-of-network benefits
-Patients are generally not required to choose a PCP
-Referrals are not required to see a specialist
-This is the most restrictive type of managed care model
-Premiums tend to be lower

Question 176

What are Consumer-Directed Health Plans (CDHPs)

Answer 176

CDHPs are designed to put more responsibility on the employee for their healthcare spending. With the continuing rise in healthcare costs, employers are looking to alternatives such as CDHPs to budget and manage these costs by asking employees to be more responsible for healthcare decisions and to share the costs. These plans tend to attract younger individuals with healthy lifestyles and a desire to control more of their spending

Question 177

CDHPs cost less than traditional health insurance and have fewer limitations associated with managed care plans.

Answer 177

In addition, CDHPs often include a high deductible health plan (HDHP) that is paired with a health savings account (HSA)

Question 178

High Deductible Health Plan (HDHP)

Answer 178

a high-deductible health plan (HDHP) is a specific type of CDHP. It has a higher deductible than a traditional insurance plan, but the monthly premiums are lower. A HDHP can be combined with a HSA

Question 179

Health Savings Account (HSA)

Answer 179

individuals who enroll in a high deductible health plan can open a tax-deductible health savings account (HSA) to cover current and future medical expenses. Money is put into the HSA through either payroll deduction or direct deposit. Also, some employers contribute to their employees’ HSAs as a benefit of their employment. Their moeny should only be used for medical expenses (deductible, copayments, and other meidcal expenses)l, but the individual is in charge of how and when to spend it. Any money you save in an HSAs as a benefit of their employment.

Question 180

The money should only be used for medical expenses (deductible, copayments, and other medical expenses), but the individual is in charge of how and when to spend it. Any money you save in an HSA earns interest, and any unused balances “roll over” from year to year to continue to be used to pay for qualified healthcare expenses.

Answer 180

Once an individual reaches the deductible, the employer’s health plan coverage begins

Question 181

Referring physician

Answer 181

Directs a patient to another physician (usually a specialist) for diagnosis or treatment