Health Plan Designs And Cost Control Flashcards
Define first-dollar coverage and explain why it was a variable health insurance design earlier but not commonly used today and traditional benefit designs.
First-dollar plans pay benefits from the “first dollar” of expense incurred. The subscriber pays no expense. This model was used in early hospital and medical plans when costs and utilization patterns were lower. First-dollar coverage is not used much today, having been replaced first with plans that utilized deductibles, coinsurance provisions and other cost-containment techniques designed to encourage the subscriber to share in the cost of insurance and thus have A financial stake in the plan. Following the initial wave of cost-sharing features, other approaches such as managed care programs and consumer-driven health plans have subsequently replaced these early plan designs.
What are the types of hospitalization benefits covered in health plans?
The hospitalization portion of health plans generally covers all services, supplies and procedures provided and build through a hospital. These include the following:
(A) Inpatient room and board (B) Emergency care (C) Intensive and specialty care (D) Maternity and newborn care (E) X-ray, diagnostic testing and laboratory expenses in a hospital (F) Skilled nursing facility care (G) Radiation and chemotherapy (H) Inpatient mental and nervous care (I) Inpatient drug and alcohol substance abuse care (J) Physical, inhalation and cardiac therapy (K) Home health care (L) Hospice care (M) Respite care
Explain the early cost-sharing techniques used in major medical coverage.
Deductibles and coinsurance for two of the earliest cost-sharing methods used in major medical coverage and in comprehensive plans. A deductible is the amount of covered medical expense that a subscriber must pay before the plan pays benefits. The coinsurance amount usually is some percentage of total charges for which the plan participant is responsible once the deductible is exceeded. Deductibles and coinsurance work together asked cost-sharing mechanisms.
For example, it’s a plan may require that the participant pay $500 of expense as the deductible before it begins paying. After that amount has been reached, the plan may pay 80% of allowable charges. The participant would be responsible for the other 20% of charges.
Explain how major medical insurance works in the benefits to which it applies.
A major medical plan was often combined The first-dollar prepaid service plan in early medical plan designs. When the benefit allowances for hospital or medical services were exceeded by a participant (for example, if the services received were from a “nonparticipating” BS provider who charged more than BS would pay) or a service was not covered, the plan would start paying a second level of reimbursement through the major medical component (sometimes called supplemental major medical). This second-level used coinsurance and deductibles has described earlier. The major medical insurance policy was written as “all-except” coverage rather than as “named peril” coverage, with us if Ikelea identified the services that were covered. Major medical coverage included a widely defined array of medical expenses, and named those services or medical items that were either limited in or precluded from coverage. A major medical policy could also be issued as a standalone policy, which was prevalent when this type of coverage was first introduced.
What are comprehensive plans, and how do they differ from basic major medical plans?
Comprehensive plans are and adaptation of the major medical approach. Up-front deductibles and coinsurance are applied to all hospital and medical services and procedures, not just to the supplemental charges as in a major medical plan. The ass, the subscriber shares and the cost of all benefits and charges. These plans are easy to communicate to plan participants.
Need to Know - Review Answer
Cost-sharing is a key issue and medical plan design. If usually takes four different forms. These include the use of deductibles and coinsurance. The third approach is the use of copayment provisions that consist of a specific dollar amount per day of inpatient care or per unit of service. The fourth approach is the use of premium contributions by employees or contributory provisions. However, many experts believe that cost sharing should take place only at the point of service by using deductibles, coinsurance and copayment provisions. They oppose the use of the contributory approach because while this lowers the employers cost, it does not affect the overall cost of medical care.
Need to Know - Review Answer
Coordination of benefits (COB) is a common provision of health insurance plans used as a cost-containment technique to prevent duplication of payment under two insurance policies and limiting the aggregate benefits and insured receives to an amount not exceeding the actual amount of the loss. Under COB guidelines of the National Association of Insurance Commissioners, when a patient is a dependent child covered under separate plans of the father and mother who are not divorced, the primary plan is the plan covering the parent whose birthday falls earlier in the year. This guideline is known as the birthday rule.
Explain the differences between prepaid service and indemnity plans and how the evolved.
Prepaid service plans provided a set allowance (or level of benefits) for hospital/medical services and paid them directly to the provider. Blue Cross/Blue Shield (BC/BS) plans were set up as prepaid plans from their inception in the 1930s. The hospital insurance entity (BC) was set up separately from the medical insurance (BS) organization. The BC/BS plans were nonprofit organizations, provided insurance to all seekers under their own charter and were underwritten by community rating, and insurance approach whereby a uniform rate is used for all subscribers or insureds within a given geographical area. Insurance companies entered the market shortly after the BC/BS plans, providing indemnity plans that reimbursed (indemnified) a set dollar amount to the subscriber. Unlike the BC/BS plans, the insurance companies were for-profit, not open to all and not community rated.
What do you hospital bill audits generally include and in which areas are errors the most prevalent?
Insurers use both independent and internal auditors to conduct a continuing series of audits of the hospital claims that are most likely to contain errors, that is, bills exceeding a certain amount;room and board charges less than 44% of the total bill; certain lab test such as blood counts, urinalysis, SMA 12/60s and sodium potassium levels listed more than once every 24 hours; therapy sessions prescribed more than normal; bills that show evidence of treatment for non-related conditions; drug charges that are large and frequent;patients who are hospitalized longer than necessary; and a high number of charges for whole blood derivatives without any credits for donated replacements.
Some of the prevalent errors uncovered in hospital audits are in the areas of pharmacy cost, laboratory charges, radiology cost, inhalation therapy fees and occupational therapy cost. Auditors, for example, check the physicians orders, the nurses notes, pharmacy records, the total charges for therapy divided by the number of hours spent with a therapist, radiology and laboratory records, as well as the room and board charges and length of stay for a given diagnosis.
What was commonly done in the past to ensure that preadmission certification was effective and that patients used it?
This was accomplished by using a benefit design that reduced benefits for nine participation. Thus, for example, when preadmission certification for a procedure or other covered service was not received, a penalty was imposed. Fewer plans today require the participant to get involved in the preadmission certification process that is done routinely by hospitals.
Identify different types of managed-care arrangements and state the benefits they cover that traditional plans generally do not.
Three types of managed care arrangements are health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans. Benefits included in managed care arrangements typically not included in traditional plans are routine physical exams, preventive screenings and diagnostic test, prenatal and well-baby care, immunizations, vision and dental checkups, and allowances for health club memberships.
What do you integrated health systems often include? Explain.
Integrated health systems are in outgrowth of HMOs and PPOs that expand to include a managed-care company, physician practices, multispecialty practices, hospitals and ancillary service providers.
Describe the forms of health maintenance organizations.
Health maintenance organizations can take a variety of forms including:
(A) Individual Practice Model - an HMO contracts with individual physicians or associations of individual physicians to provide services.
(B) Group Model - An HMO purchases services from an independent multispecialty group of physicians.
(C) Network Model - it is similar to a group model, but includes more than one multispecialty practice.
(D) Staff Model - positions are employed and paid a salary by an HMO.
Discuss the common attributes that characterize consumer-driven health plans (CDHPs) and their original designs.
CDHPs link a high deductible supplemental major medical plan with a savings account that can be accessed to pay health expenses. A CDHP may have a deductible gap before the high-deductible supplemental major medical plan covers expenses. The funds in the savings account portion of the plan can pay either discretionary medical costs not covered by the plan or health charges excluded from reimbursement because the initial deductible has not been met.
Under a typical CD HP design, asked first introduced, a plan participant would receive an employer contribution into the savings account, say $1000 to $2000. When the funds in the savings account were exhausted, the participant would pay certain medical cost out-of-pocket before receiving insured health coverage under the high deductible supplemental major medical plan. The first CDHPs deposited funds into a health reimbursement arrangement (HRA),a savings account created by regulatory guidance from the Internal Revenue Service (IRS). NHRA required funding solely by employer contribution, but more importantly allowed any unused amount remaining at the end of the coverage. To be rolled over and utilized for reimbursement in subsequent coverage periods. Following the creation of the very first CDHPs, a new savings vehicle, the health savings account (HSA), was introduced. HSA’s, first utilized in 2004, allowed unused account balances to be carried forward to future years. however, unlike HRA’s, and HSA allowed for employer contribution, employee contribution or both. And HSA could be created apart from the employer as long as the individual was a participant in a high deductible health plan. An HSA is owned by an individual, is nonforfeitable and maybe rolled over from one employer to another and from one account to another.
How are practitioners expecting consumer driven health plans (CDHPs) to evolve overtime?
Some practitioners expect the consumer-driven health plan to evolve and change over time. Where as the initial design nearly went a high-deductible supplemental major medical plan with a savings account, future evolution will build greater sophistication into the criteria for funding the savings component of the plan. Under this evolutionary schema, second-generation CDHPs would entail rewards, discounts or other incentives when employees make behavioral changes or demonstrate thoughtful healthcare consumption. By tailoring these incentives carefully, employers could reward those who otherwise would be most likely to incur plan cost. Both variables of price and utilization could be affected with the proper incentives. Looking even further into the future, CDHP theorists see greater personalization and the possibility of optimizing the relationship between health care cost an employee performance.
How have health insurance rating techniques evolved and in what circumstances are they used?
In community rated products,such as Blue Cross Blue Shield plans, all insurance in a given geographic area paid a uniform rate. After inception, HMOs were required to use community rating and adhere to certain rules regarding it in order to be qualified under the HMO act of 1973. The 1988 amendments to the act relaxed these requirements, and only some HMOs now use community rating in certain circumstances. Although community rating is still used for individual subscribers and for smaller group contracts, it is much less popular in the group insurance market as a whole we are larger organizations preferred to be experienced rated rather than be rated with other organizations with possibly less favorable ratings.
In adjusted community rating, the baseline claims data used to establish the rates are the claims and utilization patterns in the community at large, but based on certain favorable characteristics of the plan sponsor’s own past claims data, the insurer is willing to offer a more favorable rates.
And experience rating, rates are based on the past claims and utilization experience of a particular organization, not the larger community. And experience rated plan uses recent claims and utilization data of a particular organization to establish the appropriate insurance rates for a future time period. If an organization has had a history of favorable claims experience, the experience rated insurance product may offer a substantial cost advantage over a rating approach that uses aggregate community claims experience to establish insurance rates.
