Managed Care

Question 1

Traditional fee for service health insurance is also referred to as what?

Answer 1

indemnity insurance

Question 2

What does indemnity/conventional plans allow for?

Answer 2

The insured to obtain health care services anywhere and from any physician or hospital

Question 3

Are indemnity (FFS) plans expensive for employers?

Answer 3

Yes, the most expensive

Question 4

What does the patient typically pay for in a traditional indemnity plan?

Answer 4

10-20% of what the provider billed plus their deductible

Question 5

What are the 3 main types of managed care arrangements?

Answer 5

• HMO
• PPO
• POS

Question 6

What does PPO stand for?

Answer 6

Preferred Provider Organization

Question 7

Describe how a PPO works

Answer 7

The PPO establishes contracts with a select group of physicians and hospitals that are “preferred”. The PPOs make discounted fee arrangements with providers and cost sharing tends to be higher for out-of-network providers

Question 8

PPOs make what kind of fee arrangements with providers?

Answer 8

discounted fee for service (DFFS)

Question 9

PPOs introduced the utilization review. What is this?

Answer 9

The process of evaluating the appropriateness of services provided through retrospective review of documentation

Question 10

PPOs have _____ premiums than traditional indemnity plans, however they are ____ expensive than HMOs

Answer 10

lower

more

Question 11

PPOs provide a 20-50% discount from providers, what is then done with this money ideally?

Answer 11

It is passed along to the employers via lower premiums

Question 12

Why didn’t PPOs result in lower premiums?

Answer 12

• Providers increased their prices
• Providers saw more patients (increased demand)
• Providers did more procedures (increased volume)

Question 13

Describe how the old PPOs worked

Answer 13

The PPO paid 80-90% of the discounted rate after the deductible was met. And the patient paid 10-20% of what provider billed.

Question 14

Describe how PPOs work now

Answer 14

The patient pays their copay and the co-insurance on the allowable amount. The PPO then pays what is left to meet the allowable after the deductible is met.

Question 15

What does HMO stand for?

Answer 15

Health Maintenance Organization

Question 16

Describe how a HMO works

Answer 16

The enrollee is required to choose a PCP that delivers services in accordance with the gatekeeping model

Question 17

Are PPO or HMO provider networks smaller and more restricted?

Answer 17

HMO

Question 18

How are providers paid under a HMO?

Answer 18

capitation

Question 19

True or False

Part of the capitation the provider receives can be withheld. Explain why or why not.

Answer 19

True

Part of the PMPM (per member per month) payment can be withheld depending on the achievement of goals

Question 20

What happens to the withholdings if goals are not met?

Answer 20

The HMO keeps the money

Question 21

What does the patient pay in a HMO?

Answer 21

copays before services are provided

Question 22

What is the significance of paying the copay up front?

Answer 22

It is their way of trying to deter patients from receiving care since the payment occurs on the front end

Question 23

Are HMOs popular with employers or insurers? Explain why…

Answer 23

BOTH

Popular with employers because of reduced premium growth
Popular with insures due to reduced growth in healthcare expenditures

Question 24

Explain why HMOs are both loved and hated by consumers

Answer 24

• Loved because of low premium and OOP expenses

- Hated because they restricted/denied access to specialists

Question 25

What are the 4 common HMO models?

Answer 25

• staff
• group
• network
• independent practice association (IPA)

Question 26

Describe a staff model HMO

Answer 26

It employs its own salaried physicians. They must employ physicians in all the common specialties to provide for the health care needs of their members. They can also subcontract for infrequently needed services.

Question 27

What are 2 advantages to the staff model HMO?

Answer 27

They can exercise a greater degree of control over the practice patterns of their physicians.
They also offer the lowest premiums of the HMO models.

Question 28

What are the disadvantages to staff model HMO?

Answer 28

The fixed-salary expense can be high, requiring HMOs to have a large number of enrollees to support operating expenses.

Question 29

Describe a group model HMO

Answer 29

This type of HMO contracts with a single multispecialty group practice and contracts separately with one or more hospitals to provide comprehensive services to its members.

Question 30

Who employs the physicians of a group model HMO?

Answer 30

the group practice - not the HMO.

The HMO pays an all-inclusive capitation fee to the group practice to provide physician services to its members

Question 31

What are 2 disadvantages to a group model HMO?

Answer 31

• because they are often contracted with large groups if the contract is lost they will have a hard time meeting their service obligations to the enrollees
• premiums are also higher than in a staff model HMO

Question 32

Describe a network HMO

Answer 32

The HMO contracts with more than one medical group practice.

Question 33

How is each group in a network HMO paid?

Answer 33

Each group is paid a capitation fee based on the number of enrollees

Question 34

1 advantage the network HMO has over the group HMO and 1 disadvantage.

Answer 34

Advantage: wider choice of physicians
Disadvantage: higher premiums

Question 35

Describe an IPA (independent practice association) HMO

Answer 35

The IPA is its own legal entity separate from the HMO. The IPA contracts out various physicians and the HMO contracts with IPA to provide services to its members

Question 36

Who is paid what in an IPA model?

Answer 36

The HMO pays a capitation amount to the IPA. They then decide how they want to reimburse their physicians.

Question 37

1 advantage the IPA model has over the network HMO and 1 disadvantage.

Answer 37

Advantage: wider choice of physicians
Disadvantage: higher premiums

Question 38

What does POS stand for?

Answer 38

point of service

Question 39

POS HMOs are hybrid plans that allow for what?

Answer 39

Patients to seek care outside of the HMO physician/hospital network while still retaining the benefits of tight utilization reviews found in HMOs

Question 40

What is the recent trend in managed care?

Answer 40

Consumer Directed Health Plans (CDHP)

Question 41

What is a CDHP?

Answer 41

A combination of a health savings account (HSA) and a high-deductible health plan

Question 42

Where is the risk placed in a CDHP?

Answer 42

the patient

Question 43

When does insurance kick in with a CDHP?

Answer 43

After the HSA has been used up and the deductible has been met

Question 44

What is the advantage of using a CDHP?

Answer 44

lower premiums

Question 45

In summary the risk in a fee for service plan is on who?
Managed care?
CDHP?

Answer 45

Insurer

Provider

Patient