Lecture 1 Flashcards
What is a deductible?
Deductible: amount you need to pay each calendar yr. before insurance kicks for non-preventive expenses. Usually you choose an insurance plan w/ high monthly premium, the deductible amount will be lower
What is a co-pay?
Copay: a fixed amount you pay for a health care service, usually when you receive the service.
The amount can vary by the type of service.
You may also have a Copay when you get a prescription filled
Co-payment may/may not count towards deductible depending on plan
What is coinsurance?
Coinsurance: once you have met your deductible, the plan pays a % and you pay the coinsurance
What is a premium?
Premium: monthly amount you pay to your health insurance company to maintain your health care coverage.
You may pay to the total cost or share the cost with your employer or union
What is a formulary?
Formulary: a drug formulary is a list of prescription drugs , both generic and brand name, that are preferred by your health plan will cover
… you will pay more if your doctor chooses a medication that is not listed on your health plan’s formulary
What is an out of pocket maximum?
Out of pocket maximum: limits the amount you can pay per year for medical expenses.
consists of annual deductible, medical, and prescription Copay and coinsurance, but not premium/payments made for non-covered services
What is a Health Maintenance Organization (HMO)?
Have to choose a PCP (primary care provider) from a network of local health care providers and all care is coordinated with the PCP
You will need a referral for in-network specialist and hospitals, and it will not cover out of network unless it is a true emergency
For HMOs, the premiums & OoP costs are lower
TIP: So if you don’t see a specialist a lot and like all care coordinated via PCP, this is the way to go
What is a Preferred Provider Organization (PPO)?
Offers a network of health care providers, and you can receive care from in and out-of-network doctors (PoP costs are lesser w/ in-network care)
PPOs don’t req. you can choose PCP & do not req. referrals for a specialist
However, the premiums, deductibles, and co-payment are higher
What is the difference between in-network and out-of-network and which one is covered under HMO vs. PPO?
Network: group of physicians, hospitals, and other providers who agree to offer services to a medical plan at a lower price called “negotiated rates”
In-Network services: when care is given by a provider who is “in-network” this service will be provided at a lower negotiated prices
Out-of-Network: when care is given by provider who is outside the plan option network - higher prices
In network is HMO and out of network is PPO
that’s what makes it different is that the HMO requires in-network and PPO allows you to do out-network, but you have higher premiums, deductibles, and co-pays
What is “Risk” in the context of healthcare coverage/insurance? Who is at risk in each payment mode/approach in healthcare?
Risk: refers to the potential to lose money, earn less money, or spend more time w/ no additional payment
Fee-for service: both insurance company and individual pay eac. time for each procedure that is conducted
WHO IS AT RISK? Usually the person paying the bill is the one at risk (this could be the payer, govern. agency, insurance co.). Generally there are more times the person is seen, then more the insurance co. has to pay and the more people have to make copayments.
So, what is the prob?
here MD will ask for more tests and insurance co can deny payment, ultimately you may have to pay more
What is payment by illness? Who is at risk and what is the problem?
Payment by illness: one sum is paid for full services delivered during one illness. This is where insurance co.s use the concept of diagnostic related groups (DRG) for hospitals or global surgical fees for physicians, where all people w/ a certain diagnosis receive a certain amount.
WHO IS AT RISK? Both the providers for length of stay (LOS) & no of postoperative visits and the insurer for the # of admissions.
So, what’s the PROBLEM?
Hospitals or surgeons want to decrease the LOS or post-operative visits, so care may not be provided as completely
What is per diem? Who is at risk?
Per Diem: hospital is paid by a fixed amount. For all services delivered during 1 day. It is called bundling of services
WHO IS AT RISK? Both the provider for # of tests and insurer for LOS (length of stay)
What is Capitation, carve outs and risk adjusted capitation?
Capitation: provider is paid in one payment for every patient cared for during a month or year. (for physicians) so the insurer pays physician for people signing up
WHO IS AT RISK? The provider b/c insurance co only pays one time & if the person keeps getting sick, they don’t pay more.
So, what is the PROBLEM?
There is only an incentive for MDs to sign up healthy people, MDs need more capita (more headcount) so they do not want sick or older patients
However, to mitigate the financial risks associated w/ capitation payments, 2 methods have been developed
Carve outs: fee for some services, such as pap smears, immunizations, ECGs etc. AND
“Risk adjusted capitation”: insurance pays higher monthly payments for chronic patients and eldery, so physicians will take them one and not only healthy patients
What are accountable care organizations? (developed as part of affordable care act – ACA)
Groups of providers (PCP, specialist, hospitals, home health care, hospice) and other providers to coordinate patient care – both financial and clinical
Breaks down the silos between diff. parts and types of care a patient might need
Idea is to coordinate providers and provide high quality care at a lower cost
The goal of ACOs = to reduce duplication and unnecessary interventions, and keep people healthy and reduce emergency room visits, hospitalizations, etc.
Know simple calculations of deductibles, copays, and co-insurance.
Calculation for deductibles example:
Suppose that under your health insurance policy, hospital expenses are subject to a $1,000 deductible and $250 per day co-pay. You get sick and are hospitalized for 4 days, and the bill (after insurance discounts are applied) comes to $6,000. How much of that hospital bill will you have to pay yourself?
250 (x) 4= 1000
1,000 (deductible) + 1,000 = 2,000
