Define Prepaid Health Plans and Commercial Insurance Flashcards
What are prepaid health plans (also called prepaid medical plans)?
Contracts that cover specific medical expenses for individuals or groups.
What is medical insurance?
The coverage of specific medical expenses.
In the healthcare industry, the term health insurance now covers all aspects of medical insurance as well.
What does health insurance include?
Medical insurance
Income losses for illness or injury (accidental insurance)
Disability income
Accidental death or dismemberment (loss of limbs)
Sickness insurance
Medical expense insurance
What’s involved in a retrospective payment system?
Payments were received for actual charges after services were provided. Patients were billed through fee-for-service or usual, customary and reasonable basis.
Through this payment system, hospitals could overcharge and providers could order whatever regardless of medical necessity.
What’s involved in the prospective payment system?
DRG’s (diagnosis-related groups), created to decrease costs that are not needed.
Payment system reimburses healthcare provider yet to be provided based on pre-determined amount. Based on formula for illness, injury, resources needed, etc.
Encourages hospital to use only what is needed so that the hospital can save money rather than lose it by ordering things that will not be paid for through insurance.
What are private (or individual) insurance companies?
Insurance providing healthcare coverage for policyholder and policyholder’s family.
Involve premiums. (regular, pre-established amounts).
What are employer-based (or group) insurance companies?
Insurance provides coverage to a group of people (such as employees).
Tend to cost less and provide a wider range of benefits across more people and therefore can be offered a lower rate.
What were the first prepaid health plans offered by?
Blue Cross/Blue Shield
What did Blue Cross/ Blue Shield Cover before covering a full range of healthcare services today?
Blue Cross: hospital services
Blue Shield Physician services.
What is underwriting?
Process where an insurer reviews applications submitted for insurance coverage and decides whether to accept or reject all or part of the coverage requested.
What company holds the Federal Employee Program (FEP)?
Blue Cross and Blue Shield
What are the insurer’s responsibilities?
Review applications submitted for insurance coverage
Decide whether or not to accept or reject all or part of the coverage requested.
Fix terms of coverage.
What two plans does FEP offer?
Preferred provider Organization (PPO)
Point-of-service (POS) Plan.
What does PPOs provide?
Discounted healthcare services to members in the plan.
What does POS provide?
The same discount PPOs provide but only through select providers within their network.
