Health Insurance Providers Flashcards
Service providers
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.
Blue Cross and Blue Shield
re 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.
A health maintenance organization (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 the health services as well. Subscribers pay a fixed periodic fee to the HMO (as opposed to paying for services only when needed) and are provided with a broad range of health services, from routine doctor visits to emergency and hospital care. This care is rendered by physicians and hospitals who participate in the HMO. The payment given to a physician for each member of an HMO assigned to them is called capitation. 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. Employers with 25 or more employees can offer enrollment in an HMO if they provide health care benefits for their workers.
A preferred provider organization (PPO)
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 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. 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.
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 protection to any individual who suffers from chronic kidney disease or to those who are receiving Social Security disability benefits.
In addition to Medicare, the federal government also provides disability related benefits through the Social Security OASDI program. 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.
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.
Multiple Employer Trusts
is a method of marketing group benefits to employers who have a small number of employees. 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.
multiple employer welfare arrangement (MEWA)
is a type of MET. It 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.
TRI-CARE
a federal government accident and health plan which provides accident and health coverage to military services members and their families.
Federal Employees Health Benefits Program
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).
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
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.
Multiple Employer Trusts
- 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.
- 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.
- Self-funded plans commonly use the services of an insurance company to act as a third-party administrator of the plan. Insurers may provide such services without responsibility for claims payment under an Administrative Services Only (ASO) contract.
Multiple Employer Welfare Arrangements
- A multiple employer welfare arrangement (MEWA) is a type of MET
- It 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
