Module 2 Flashcards
1. The importance of the health insurance industry 2. health insurance plans 3. stock and mutual insurance companies 4. other entities providing coverage 5. ACA and health insurance exchanges
Administrative Services Only (ASO)
Insurer provides third-party administrative services only (processes claims & other admin for a fee). For self-insured or self-funded groups, or other entities.
American Health Benefit Exchange (AHBE)
The health insurance exchanges sponsored by the government and created because of the ACA.
- individuals and employers can buy policies
- exchanges will determine eligibility, facilitate comparison shopping, and enroll new members
- operated through web portals and call centers
- run by states, assisted and funded by FED
Blue Cross/Blue Shield Plan
Began in 1930s, non-profit organizations sponsored by local hospital groups (blue cross) and physician groups (blue shield). Offered pre-paid service plans where members receive services only if they pay a monthly fee.
initial advantages: favorable reimbursement agreements, and preferential tax treatment
initial disadvantages: flat rate charges no matter the risk level of the member, and expected to serve community by accepting members commercial plans would turn away
Changes: became less distinct from insurance companies, congress removed tax exemption in 1986, some plans became mutual companies, stock companies and other subsidies like PPOs
Capitation
Providers receive a fixed monthly fee for each enrollee, no matter the services provided during that month
Capitation fee
the monthly rate paid to providers, independent of services provided
Children’s Health Insurance Plan (CHIP)
Children from families not poor enough to receive Medicaid, but too poor to receive private insurance. Estimated 7.4 million in 2008
Community rating
For Blue Cross, Blue Shield plans, community ratings are charging everyone in the community the same rate, even if the characteristics of certain individuals or groups made them a higher risk
Demutualization
When a company converts from a mutual company to a stock company. This brings several advantages:
- stock companies can raise money by selling new shares of stock (i.e. a greater ability to raise capital)
- with more funds, stock companies can buy other companies (i.e. a greater ability to acquire other companies)
- less regulations on how stock companies can use their money (mutual companies are limited in how they can spend the money in their surplus)
- by offering shares of stock or stock options as part of the overall compensation package, stock companies can attract top-level employees and executives
Dividend
periodic payments (usually quarterly) to stockholders when earnings have been received by the stock company
the size of the dividend is dependent on the number of shares an individual owns and the performance of the company
Fee-for-Service
when the insurer pays the provider a fee for each service rendered
Fraternal societies
Fraternal societies are not businesses, but rather social organizations, and they provide insurance only to their own members.
Separate laws govern the insurance activities of fraternal societies, but these laws have the same purpose as those governing insurers: to ensure that the organization has the financial capacity to meet all of its insurance commitments
Health Insurance exchange
a place where individuals and small employers can purchase policies from insurers (see American Health Benefit Exchanges (AHBEs))
Health insurance plan
health coverage provided by private-sector and government insurers. Insurers include: stock and mutual companies, BCBS plans, self-insured groups, government programs, and fraternal societies
Health Maintenance Organization (HMO)
HMO provides care to its members through its own facilities and employees or through a network of contracted providers
Only services delivered by an HMO or Network provider are covered. If a member goes to a non-network provider, she receives no benefits and must pay for the care out-of-pocket
Instead of fee-for-service, providers are often reimbursed through salary or capitation (see capitation and capitation fee)
Plan seeks to promote cost-effective and high-quality care. Introduced medically necessary and ensured treatment was consisted with current medical practices and research.
Focus on prevention and early treatment of illnesses (less costly and more effective)
Indemnity Insurance
an insured person goes to any healthcare provider (physician, clinic, or hospital) and submits a claim to her insurer for reimbursement of expenses (or provider submits on member’s behalf), and the insurer pays for each service rendered (i.e. fee for service compensation).
Individual Mandate
The requirement through the ACA for most individuals to have health coverage or pay a tax penalty
Managed Care
Developed during the 20th century as a new model for covering healthcare costs (see HMOs)
Medicaid
a federal-state program that pays for health care received by poor people who meet certain criteria.
It currently serves almost 60 million people, and under the ACA, eligibility will be substantially expanded with about 16 million more people expected to qualify
Medicare
a federal program that provides health care benefits for people who are 65 or older; have severe, long-term disability; or have permanent kidney failure.
Most elderly are covered by Medicare and in 2008 the program served approx. 43 million people
Minimum premium plan
in relation to self-insured or self-funded groups, a minimum premium plan (MPP) is when the employer takes responsibility for the group’s expected level of claims, but it purchases insurance to cover claims above the expected level.
Mutual Company
A mutual company has no stock holders.
The ownership and control is held by its policyholders.
Each policy holder has a vote in the elections of the company’s board of directors and each has one vote no matter the number of policies owned or the amount of insurance purchased
Mutual insurers do not seek profit, but do seek a surplus. This affects the determination of their premiums.
Surplus serves as a margin of safety, a guarantee of solvency, and continuity of the organization (i.e. a measure of the financial strength of the organization)
if a company’s surplus reaches an optimum size, excess amounts may be returned to policyholders in the form of dividends
state regulations make it difficult for new mutual companies to form (required number of premiums, for example).
Mutualization
Converting from a stock company to a mutual company
- not as common anymore
- main advantage of mutualization is that it gives the company’s management more control over the operations (freed from demands of stockholders)
- usually accomplished by using surplus funds to buy all stock from shareholders
Network
a group of contracted providers who may deliver services that will be covered by the health plan.
Preferred provider organization
Not exactly an HMO, but a network of preferred providers. (more info)
Prepaid service plan
Common for BCBS, prepaid service plans, were not insurance companies. Subscribers did not receive benefits to pay for medical expenses that they incurred; instead they made monthly payments and received medical services in return directly from the physicals or hospitals that were part of their plan
Self-insured (self-funded) group
A large company or union that sets up its own health benefit program and pays claims out of its own funds, instead of buying a group insurance policy.
- not subject to state insurance regulation, and receive some tax advantages
- very common among large businesses
- may create a market for insurers by purchasing TPA or ASO services
(also see minimum premium plans (MPP))
Small Business Health Options Program (SHOP)
exchanges for employers through the ACA.
provides information about available health plans and allows them to enroll
State workers’ compensation program
all states have laws that require employers to purchase or provide worker’s compensation insurance
this coverage pays for employees lost income and medical expenses related to injuries and illnesses due to work
Stock Company
People purchase shares of the company’s stock for ownership and control the company through stockholder voting and receive the profits of the company
In a stock insurance company, money is earned by selling insurance.
When determining premiums, the company must take into account the consideration for profit
Third-party administrator (TPA)
When the insurer only provides administrative services such as claims processing, (See ASO)
TRICARE
A program of the US Department of Defense that pays benefits for healthcare received by members of the military and other uniformed services, retirees, and their dependents.
The veterans’ administration also provide health care
