Insurance Types Flashcards
Cost Sharing
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How health plan costs are shared
Deductible
Coinsurance
Copayment
(not premiums, balance billing amounts for out of network, or non covered services)
Copayment
medical cost sharing in a health insurance plan that requires an insured person to pay a FIXED dollar amount when a medical service is received.
The insurer is responsible for the rest of the reimbursement.
Deductible
A fixed dollar amount during the benefit period - usually a year - that an insured person pays before the insurer starts to make payments for covered medical services.
Plans may have both per individual and family deductibles.
Gatekeeper
Under some health insurance arrangements, a gatekeeper is responsible for the administration of the patient’s treatment; the gatekeeper coordinates and authorizes all medical services, laboratory studies, specialty referrals and hospitalizations
Coinsurance
A form of medical cost sharing in a health insurance plan that requires an insured person to pay a stated percentage of medical expenses after the deductible amount, if any, was paid.
Managed care Provisions-
Features within health plans that provide insurers with a way to manage the cost, use, and quality of health care services received by group members. Examples include:
- Preadmission certification : Failure to obtain a preadmission certification in non-emergency situations reduces or eliminates the health care provider’s obligation to pay for services rendered.
- Utilization review - The process of reviewing the appropriateness and quality of care provided to patients. Utilization review may take place before, during, or after the services are rendered.
- Preadmission testing - A requirement designed to encourage patients to obtain necessary diagnostic services on an outpatient basis prior to non-emergency hospital admission. The testing is designed to reduce the length of a hospital stay.
Premium
Agreed upon fees paid for coverage of medical benefits for a defined benefit period.
Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.
Primary care physician (PCP)
A physician who serves as a group member’s primary contact within the health plan.
In a managed care plan, the primary care physician provides basic medical services, coordinates and, if required by the plan, authorizes referrals to specialists and hospitals.
Third party administrator (TPA)
An individual or firm hired by an employer to handle claims processing, pay providers, and manage other functions related to the operation of health insurance.
The TPA is not the policyholder or the insurer.
Usual, customary, and reasonable (UCR) charges
charge is the provider’s usual fee for a service that does not exceed the customary fee in that geographic area, and is reasonable based on the circumstances.
Does PPO use UCR?
Instead of UCR charges, PPO (Preferred Provider Organizations) plans often operate based on a negotiated (fixed) schedule of fees that recognize charges for covered services up to a negotiated fixed dollar amount
Indemnity plan -
A type of medical plan that reimburses the patient and/or provider as expenses are incurred.
What is a managed care plan
Managed care refers to health care insurance plans designed to provide care at the lowest possible cost. In order to make coverage affordable, managed care plans require that patients follow certain rules
There are three major types of managed care plans:
Health Maintenance Organizations (HMOs)
Preferred Provider Organizations (PPOs)
Point-of-Service (POS) plans.
HMO
What is it
Health maintenance organization
need a PCP: coordinate care, and to refer to specialists or hospitals in network
Group Model HMO
HMO pays one medical group a per capita rate
group distributes money among its medical staff
(Kaieser)
Staff Model HMO
Pt can use limited number of providers who are employees of the HMO and work in HMO facility
Network Model HMO
MOST COMPREHENSIVE
HMO has contracts with multiple physician groups (many multispecialty geoups)
ie Emblem health
Individual Practice Association (IPA)
independent physicians with own offices that form a group and contract with the HMO
Capitation:
what is it
is a flat periodic payment per enrollee to a healthcare provider ny the third party payer
(used in HMO)
Fixed payments regardless of volume of services, risk sharing all three parties
1) Managed care company- UP FRONT AMOUNT
2) Patient- PREMIUM
3) Provider- receive for each patient regardless of volume: short-term risk that the costs of providing service, (including profits), might exceed the capitation payment.
Focus on PREVENTION and health and WELLNESS
Does HMO provide comprehensive care?
YES
Once recommended by a Primary Care Physician insured patients can be referred to a large network of specialists for more specific needs
How are providers paid by HMO?
fixed, pre-paid fee per person (capitation)
Health Maintenance Organization Characteristics
3
- Centered on Primary Care Physician
- Gatekeeper
- Care manager
- Specialist referrals - HMOs often provide integrated care and focus on prevention and wellness.
- It generally won’t cover out-of-network care except in an emergency.
Advantages of an Health Management Organization
3
Decreased third party payer costs when compared to a “traditional” fee-for-service plan.
HMOs have fewer out-of-pocket costs for the enrollee, including smaller co-payments and deductibles.
HMOs cover preventive care, essential health benefits and prescription drugs. When receiving health care services from network providers, claims are filed directly to the HMO.
Disadvantages of an Health Management Organization
3
An HMO may not provide coverage if you receive health care services from a doctor, hospital or other health care provider outside its network or service area
A HMO member may need a referral to see a specialist
HMOs may not be the best choice if travel is regular or have a specific physician that is not part of the HMO’s provider network.
Also, you have no guarantee that doctors and hospitals in your HMO’s provider network will stay in the network.
What is a PPO?
Preferred Provider Organizations (PPO’s)
allowed to go in network without referral from PCP (no gatekeeper)
flexibility to go out of network : but pay the cost of your treatment in full, and then submit the bill for reimbursement to the insurance company. (higher copay)
PPO Subscription based:
Is a subscription-based medical care arrangement where membership allows a substantial discount below the regularly charged rates of the designated professionals partnered with the organization
PPO Access Fee
Preferred provider organizations themselves earn money by charging an access fee to the insurance company for the use of their network (unlike the usual insurance with premiums and corresponding payments paid either in full or partially by the insurance provider to the medical doctor).
–higher copay, deductible, premium
What is POS
hybrid of HMO and PPO plans.
Like HMO: pt designates in network PCP
Like PPO: can go out of network
If leave network: pay most of bill unless primary care provider has made a referral to the out-of-network provider. Then the medical plan will pay the fees.
POS
pros/cons
pros
1-can leave network
2-comprehensive choice of providers (ie if live in rural area)
cons
- high deductible out of network (low copay in network)
- might waste premium money if they sign up for POS coverage and never use out-of-network specialists.
- out of network paperwork
- may need referrals to go out of network
point-of-service products
At the same time, HMOs have developed products, called point-of-service products, which permit covered people to elect to receive care outside of the HMO network, typically with higher cost sharing.
Risk Pooling
private health coverage pools the risk of high health care costs across a large number of people -they pay premium based on average cost of medical care for the group of people
–>To make healthcare affordable for most people
should result in expected costs for the pool that are reasonably predictable for the insurer and relatively stable over time
(average level of health risk in the pool should not vary dramatically from time to time, although costs will rise with overall changes in price and utilization).
Adverse Selection
health coverage providers take steps to avoid attracting a disproportionate share of people in poor health into their risk pool
(b/c then cost will rise and healthy people will not want to be in the pool)
Death Spiral
risk pool has adverse selection—lose healthier risks and cause avg cost to rise
The most efficient and effective underwriting mechanism for avoiding adverse selection is to provide coverage to already formed large groups of people, such as the employees of a large employer.
Most effective way to avoid adverse selection:
The most efficient and effective underwriting mechanism for avoiding adverse selection is to:
provide coverage to already formed large groups of people, such as the employees of a large employer.
Underwriting
–use medical or health info in the evaluation of an applicant for coverage, typically for life or health insurance.
health information may be used in making two decisions:
1.) Whether to OFFER or DENY coverage
2.) What PREMIUM RATE to set for the policy
Effect of ACA on underwriting:
insurers cannot discriminate against anyone for their health. This means they aren’t allowed to ask for medical history when someone applies for coverage.
(risk is spread through new federal taxes that compensate insurers for the amount of sick patients they take on)
ACA change in underwriting pros and cons:
con: sticker shock: increased premiums
pro:
insurance cannot
-Ask for health information on an application
-Increase premiums based on the applicants risk level
-Exclude benefits that the applicant will need to care for a condition
-Refuse to cover services with an elimination rider
Employee Retirement Income Security Act of 1974 (ERISA):
standards for employee benefit plans –protect from losing benefits
(bc of the studbaker motor company)
Amendments to ERISA
5
- COBRA
- HIPAA
- Newborns and Mothers Health Protection Act
- Mental Health Parity Act
- Women’s Health and Cancer Rights Act
Consolidated Omnibus Budget Reconciliation Act (COBRA),
amendment to ERISA
workers and their families with the right to continue their health coverage for a limited time after certain events, such as the loss of a job
Health Insurance Portability and Accountability Act (HIPAA)
Amendment to ERISA
protections for working Americans and their families who have PREEXISTING MEDICAL CONDITIONS or might otherwise suffer discrimination in health coverage based on factors that relate to an individual’s health.
Minimum capital requirements:
state law of minimum amount of net worth that an insuring organization must have in order to operate: unencumbered – i.e., it must be available to pay for claims
Guaranty fund:
state law: to pay for claims of a patient if insurance defaults
Mandated Coverage
State law to cover certain coverage = MANDATED BENEFITS (vary by state, federal law also has a few)
ie: mental health services, substance abuse treatment, and breast reconstruction following mastectomy.
Rate Bands
laws that restrict the diff between the lowest and highest premium allowed to charge for same coverage
–ie limit underwritting
Community rating
all policyholders are charged the same premium for the same coverage
MODIFIED COMMUNITY RATING: health insuring permitted to vary premiums for coverage based on specified demographic characteristics (e.g., age, gender, location) but CANNOT vary premiums based on the health status or claims history of policyholders.
Loss ratio
Ratio:
Benefits paid/Premiums
(Loss claims/Earned premiums)
Guaranteed renewability:
guarantees policyholder right to renew their policy when the term of coverage expires.
The health insuring organization generally is permitted to change the premium rates at renewal.
2 models pushed by CMS to move away from Fee for Service model and reduce costs:
- ACO: Accountable Care Organizations
2. PCMHs: Patient Centered Medical Homes
Accountable Care Organization (ACO)
healthcare organization:
payment and care delivery model that seeks to tie provider REIMBURSEMENT to QUALITY metrics and REDUCED COST of care for an assigned population of patients.
Providers (ie primary care Dr, specialists, and hospitals) work together and accept collective accountability for the cost and quality of care delivered to a population of patients.
ACOs create incentives for healthcare providers to treat an individual patient across care settings, such as physician practices, hospitals, and long-term care facilities.
Shared Savings Program
Medicare: when healthcare organization becomes an ACO,
share of the savings that would result from improving care quality and reducing the cost for their eligible Medicare populations
Patient Centered Medical Home (PCMH)
provide comprehensive and continuous medical care to patients with the goal of obtaining maximized health outcomes.
Principals of Medical Home: Personal physician Physician directed medical practice Whole person orientation Care is coordinated and/or integrated Quality and safety are hallmarks Enhanced access to care Payment appropriately recognizes the added value
How Care Coordination part of patient centered medical home
essential component of the PCMH. Care coordination requires additional resources such as health information technology, and appropriately trained staff to provide coordinated care through team-based models.
Additionally, payment models that compensate PCMHs for their effort devoted to care coordination activities and patient-centered care management that fall outside the face-to-face patient encounter may help encourage coordination
Medical Home vs Traditional Managed Care
medical home emphasize medical management rewards quality
Patient can see any dr they want, No referral or permission needed, doctor facilitates info to subspecialists
vs gatekeeper placed more financial risk on the Physicians resulting in rewards for less care
Similar btwn
ACO PCMH
3
More than just fee-for-service. (reduce financial incentives for providers to earn more by treating more) both fee-for-service but also includes another revenue stream.
Better care through coordination. (integration and coordination for better health outcomes)
Information technology (IT). to improve the quality of care and produce better patient outcomes
ACOS AND PCMHS: Differences
Numbers.
–A Patient-Centered Medical Home (PCMH) refers to a single primary care practice.
–Accountable care organizations (ACOs) = umbrella organizations incorporate multiple primary care practices, specialists, and at least one hospital.
Shared risk and savings.
–ACOs are designed to better align incentives with behavior by requiring participants to share bonus payments for savings generated beyond established benchmarks—or penalties for cost overruns.
–PCMHs have no such sharing mechanism.
Autonomy.
- -Doctors who join ACOs can expect to enter into contractual agreements with the organization around referral and care-management protocols.
- -PCMH physicians retain a greater level of independence.
Patient Centered Medical Home Program Challenges
- Accreditation standards are being revised
- A wonderful concept that’s hard to actually do
- Can be done by organized primary care, but it must be truly organized and have the
infrastructure to support it - Most achievable with a truly integrated system
Private health insurance
coverage by a health plan provided through an employer or union or purchased by an individual from a private health insurance company.
Employment-based health insurance
Employment gives it, to family also
Own Employment-based health insurance
Employment gives it only to employee
Direct-purchase health insurance
individual purchases plan from a private company
Private Plans
reason to get it (2)
Protect from the potentially extreme $ costs of medical care if they become severely ill
Ensure that they have access to health care when they need it and with whom they would like to see*
*within the provision of the plan
5 private insurance types
HMO
PPO
POS
EPO
Indemnity Plans
How private insurance delivered
- commercial
- BCBS
- HMO
- Self Funded Employee health benefit plan
Private Plans Offered by Blue Cross Blue Shield (3)
- HAS
- FAS Accounts
- HRA
Health Savings Accounts
Funded by the BCBS company member, an employer or anyone else.
reimburses employees for specific health care expenses (pre-taxed)
$ contributed to your HSA belongs to you and can be used to cover eligible current or future medical expenses.
Flexible Spending Accounts
Funded: Deduction from Paychecks
reimburses employees for specified expenses (for example, health care or dependent care) as expenses are incurred. FSAs are usually funded through deductions from employees’ paychecks.
Health Reimbursement Arrangements
Funded by Employer
reimburses employees for specific health care expenses as expenses are incurred. HRAs are funded by employers
Health Maintenance Organizations (HMOs)
A Health Maintenance Organization (HMO)
contracts with its providers allow for premiums to be lower,
–health providers has the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO’s members.
Self-funded Employee Health Benefit Plans
Employer takes a risk: pays claims as they come
third-party administrators.
ponsors of self-funded health plans contract with one or more third parties to administer the plan
Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
Medicare Part D: he prescription drug benefit program
FICA
federal insurance contributions act
tax on employees and employers to fund medicare and medicaid
Medicare Payments
Part A
Part B
Part A:
- FICA
- Deductible
PART B:
-Program pays 80% after $100 deductible
The Federal Medical Assistance Percentage (FMAP)
The amount of Federal payments to a State for medical services depends on the actual amount spent that qualifies as matchable under Medicaid and The Federal Medical Assistance Percentage (FMAP)
The FMAP is computed from a formula that takes into account the average per capita `` for each state relative to the national average. By law, the FMAP cannot be less than 50%.
A state’s Medicaid program must cover at least:
Inpatient and outpatient hospital services
Laboratory and x-ray services
Skilled nursing and home health services
Doctors’ services
Family planning
Periodic health checkups
Diagnosis and treatment for children
States pay on average 21% of total state budgets on Medicaid
States pay on average 21% of total state budgets on Medicaid
SCHIP = designed to help states expand health care coverage to uninsured children to at least include:
Inpatient and outpatient hospital services
Surgical and medical services
Laboratory and x-ray services
Well baby/child care, including immunizations
who is not insured?
Twenty-five percent of all working class families in Los Angeles have no health insurance coverage all year long, more than 500,000 people above the poverty line.
885,000 people under and over poverty line do not have health insurance.
20% of all Louisiana children have no health insurance.
The number uninsured part of the year is 1.4 million (e.g. people between coverages or between jobs). Nationally 13% of all workers do not have health insurance.
How did ACA expand medicaid?
Specifically, the ACA expanded Medicaid eligibility to nearly all non-elderly adults with income at or below 138% of the federal poverty level (FPL) – about $16,245 for an individual in 2015.
