Objective 1 Flashcards
Types of group life insurance benefits
- Basic group term life*
- Group supplemental life
- Group accidental death and dismemberment (AD&D)
- Dependent group life
- Survivor income benefits
- Group permanent life
- Group universal life (GUL)
- Group variable universal life
- Group credit life insurance
- Living benefits
Typical basic group term life plan designs
- Flat dollar plans
- Multiple of earnings plans*
- Salary bracket plans
- Position plans
Group term life disability provisions
- Waiver of premium
- Total and permanent disability
- Extended death benefit
Formula for group term life imputed income
Monthly imputed income = [Table I rate * (Coverage amount - $50,000) / $1,000] - EE contributions
Benefit provisions for group disability income
- Definition of disability
- Elimination period
- Benefit period
- Benefit amounts
- Benefit offsets
- Limitations and exclusions
- Optional benefits
Typical definitions of disability for group disability income
LTD: 1st 24 months after EP, own occupation; loss of income % is 20%. After 1st 24 months, any occupation for which EE is reasonably suited; loss of income % is 40%.
STD: unable to perform own occupation duties due to non-occupational accidents or sickness.
Methods for reducing benefits for income earned during a disability
- Proportionate loss formula
- 50% offset
- Work incentive benefit
Optional benefits that may be added to group disability contracts
LTD: 1. COLA 2. Survivor benefit 3. Expense reimbursement for day care expenses 4. Pension benefit 5. Conversion option 6. Spousal benefits 7. Catastrophic benefits STD: 1. 24-hour coverage 2. First day hospital coverage 3. Survivor benefit
Key dimensions of medical benefit plans
- Definition of covered services and conditions under which these services will be covered.
- Degree to which the individual participates in the cost of the service.
- Degree to which the provider participates in the risk related to the cost of the service.
Services covered by medical policies
- Facility services
- Professional services
- Diagnostic services
- X-ray and lab services
- Prescription drugs
- Durable medical equipment
- Ambulance
- Private duty nursing
- Wellness benefits
- Nurse help lines
- Disease management benefits
Purposes for having the insured share in the cost of the medical plan
- Control utilization
- Control costs
- Control risk to the insurer
Types of provider reimbursement
- Discounts from billed charges
- Fee schedules and maximums
- Per diem reimbursements
- Hospital diagnosis related groups (DRGs)
- Ambulatory payment classifications
- Case rate or global payments
- Bonus pools
- Capitation
- Integrated delivery system
Provisions included in medical plans
- Overall exclusions
- Mandated benefits
- Coordination of benefits
- Subrogation
- Preexisting conditions exclusion
- COBRA continuation
- Conversions
Common exclusions for medical plans
- Services deemed not to be medically necessary
- Services deemed to be experimental
- Services related to cosmetic surgery
- Other specified services, such as mental, hearing, and vision services
- Transplants
- Services for which payment is not otherwise required
- Services required due to an act of war
- Services provided as a result of a work-related injury
- Services provided by a provider related to the patient
Criteria for provincial Medicare plans to qualify for federal contributions
- Comprehensiveness - all medically-required hospital and physician services must be covered under the plan
- Universality - all legal residents of a province must be entitled to the plan’s services on uniform terms and conditions
- Accessibility - reasonable access by residents to hospital and physician services must not be impeded by charges made to those residents
- Portability - the plan may not impose a waiting period in excess of 3 months for new residents, and coverage must be maintained when a resident moves or travels within Canada or is temporarily out of the country
- Public administration - the plan must be administered on a non-profit basis by a public authority
(Extra-billing and user charges are not prohibited but will result in reductions in the federal grants to the province.)
Benefits covered by most Canadian provincial Medicare plans
- Hospital services
- Physician services
- Other professionals, such as optometrists, chiropractors, osteopaths, and podiatrists
- Prescription drugs for social assistance recipients and residents over age 65 (most provinces)
- Prostheses and therapeutic equipment
- Other diagnostic services (lab and x-ray)
- Dental care
- Out-of-province coverage
Concerns about the Canadian Medicare system, from recent reports
- Waiting months to see a specialist
- Waiting for diagnostic procedures due to shortages of equipment and specialists/techs
- Waiting for elective and non-emergency surgery
- Overcrowded ERs
- Waiting in hospitals for LTC facility due to shortage of LTC beds
- Technology-intensive services are not available everywhere
- Rationing because demand for services exceeds supply
- Some essential services are not covered (Rx for chronic illness)
Categories of expenses commonly covered by private (supplemental) medical plans in Canada
- Hospital charges
- Prescription drugs
- Health practitioners
- Miscellaneous expenses
- Out-of-Canada coverage
Group dental insurance is provided through:
- Traditional employers
- Multiple employer trusts
- Unions
- Associations
- Chambers of commerce
Organizations that sell dental insurance
- Insurance companies
- Dental service corporations (e.g., Delta Dental)
- Blue Cross and Blue Shield plans
- Dental HMOs
- Dental referral (discount card) plans
- Third party administrators
Basic components of dental plan designs
- Plans are designed to emphasize preventive care
- Cost containment provisions exist to limit the antiselection that results from the elective nature of benefits
- Plans only reimburse for the least expensive form of adequate treatment
- Substantial out-of-pocket costs ensure that participants use care appropriately
- Benefits are divided into different classes, with reimbursement varying by class
Classes of dental benefits
- Type I (preventive and diagnostic) - oral exams, x-rays, cleanings, fluoride, sealants
- Type II (basic) - fillings, anesthesia, endodontics, periodontics and extractions (last 3 may be in Type III)
- Type III (major) - inlays, onlays, crowns, bridges and dentures
- Type IV (orthodontics) is sometimes added to dental plans
Dental plan cost containment provisions
- Reimbursement limitations (vary by Type)
- Calendar year deductible (may be waived for Type I)
- Calendar year annual maximum (usu. $1,000 but up to $2500)
- Exclusions of cosmetic services, experimental treatments, on-the-job injuries
- Pre-existing conditions limitations
- Benefits after insurance ends
Underwriting and rating parameters for dental
- Group size
- Eligible individuals
- Participation
- Employer contributions
- Other coverages
- Demographics
- Waiting and deferral periods
- Incentive coinsurance
- Transferred business
Dental reimbursement models and delivery systems
- Indemnity: traditional FFS reimbursement
a. Scheduled indemnity plans
b. UCR plans - PPO: discounted FFS
a. Managed indmenity plans (passive PPOs)
b. Discounted FFS PPO plans
c. Fee schedule PPO plans
d. Exclusive provider organization (EPO) plans
e. POS plans - Dental HMO: usu. pre-paid or capitated
a. Independent Provider Association (IPA) plans
b. Staff model DHMO plans - Discount card plans: members receive discounts from preferred providers
Comparison of dental reimbursement models
Plan type Indemnity PPO DHMO
Premium High Medium Low
Patient Access Highest Fair Limited
Benefit richness Least Fair Highest
Reimbursement UCR/schedule Schedule Capitation
Cost mgmt Least Fair Most
Utilization High High Low
Quality assurance Least Fair Highest
Fraud potential High Moderate Low
Provider contracting No Yes Yes
Claim administration procedures used by dental plans
- Predetermination
- Least expensive alternative treatment
- Coordination of benefits
- Dental review
- Maximum allowable charge - based on:
a. Dentist’s usual fee for the procedure
b. Fee level set by plan administrator based on submitted charges in the geographical area
c. Reasonable fee charged for a service when complications exist
Reasons for increases in prescription drug costs
- Prescription drug pipeline
- Biologics
- Patents
- Direct to consumer advertising
- Faster approval process
- Brand name advertising
- Aging population
- Increase in awareness of and testing for disease
- Personalized medicine
Types of prescription drug benefit coverage
- Prescription drug cards
2. Drug coverage through a major medical plan
Types of formulary designs
Formularies are lists of preferred drugs
- Closed - only formulary drugs are covered.
- Open - all eligible drugs are covered
- Tiered (incentive) - separate formulary tiers are established with varied cost sharing
Process for adding drugs to the formulary
- The Pharmacy and Therapeutics Committee monitors for new products and gathers info on them
- Determine whether drug is clinically effective, safe, and cost-effective.
- If criteria are met and there are no therapeutically interchangeable products, the drug is added to the formulary
- If criteria are met and there are interchangeable drugs, the health plan does a cost analysis to determine which drug to add
- After decisions are made, the health plan must implement changes and educate its associates, providers, pharmacists, and customers
Factors that determine leverage when negotiating rebates from drug manufacturers
Rebates are payments from manufacturers in exchange for preferred status of their drugs on a formulary
- Number of lives represented
- Control of market share
- Consistency of behavior
Sales and marketing process for group long-term care insurance (LTCI)
- First sale (to the plan sponser) - must educate about the value of group LTCI:
a. Keeping a current and competitive benefit portfolio (at no cost if offered as voluntary coverage)
b. Helping attract and retain quality employees
c. Reducing productivity losses through missed or distracted work time
d. Responding to needs and expectations of employees - Second sale (enrollment of employees) - enrollment campaign discussing benefits of LTCI:
a. Protecting retirement saving from LTC expenses
b. Preserving freedom of choice and independence if LTC services are needed
c. Avoiding becoming a burden to one’s family
Marketing tools and media used in the group LTCI enrollment campaign
- Informational articles in company publications
- Mailings to employees’ homes
- Lead generator brochures
- Toll-free number to request additional info
- Website to educate about the plan and, if desired, allow rate quotes and enrollment
- Printed or CD enrollment kit that includes plan details and an application
- Group enrollment meetings
- E-mail reminders
- Videos
Types of LTCI plans
- Service reimbursement model - pays the cost of LTC services, subject to fixed limits that vary by type of service
- Service indemnity model - fixed benefit is paid for any day or week that formal LTC services are received
- Disability or cash model - fixed benefit is paid for each day an insured is eligible for benefits
Plan provisions on LTCI policies
- Benefit triggers
- Elimination or waiting period
- Covered services
- Alternate plan of care
- Benefit limits
- Inflation protection
- Nonforfeiture benefits
- Spousal riders and discounts
- Restoration of benefits
- International coverage
- Shared lifetime maximum benefit pools
- Policy exclusions
Benefit triggers for LTCI policies
For tax-qualified policies, the benefit trigger must be:
- The inability to perform (without substantial assistance) at least two activities of daily living (ADLs), or
- Cognitive impairment that requires substantial supervision to protect the health and safety of the insured, including:
a. Wandering and getting lost
b. Combativeness
c. Inability to dress appropriately for the weather
d. Poor judgment in emergency situations
Definitions of the ADLs allowed by HIPPA
- Bathing
- Continence
- Dressing
- Eating
- Toileting
- Transferring
Types of nonforfeiture benefits on LTCI policies
- Shortened benefit period (minimum standard for tax-qualified plans)
- Reduced paid-up
- Extended term
- Contingent nonforfeiture benefit
Types of health insurers and MCOs
- Indemnity
- Service plans
- Managed indemnity
- PPOs
- Exclusive provider organizations
- POS plans
- HMOs
- CDHPs
- Third-party administrators
- Consumer operated and oriented plans (CO-OPs)
Common types of managed care overlays
- General utilization management (UM)
- Large case management
- Specialty UM
- Disease management (DM)
- Rental networks
- Workers’ compensation UM
Features that differentiate HMOs from health insurers
- Licensed under different laws than health insurers
- Must provide adequate access to providers within their service areas
- Must require stronger “no balance billing” clauses
- Must allow direct access to PCPs and OB/GYNs
- Must have written policies & procedures for physician credentialing, UM, and quality mgmt
- Must maintain defined minimum levels of capital reserves
- Usually share financial risk with physicians
- Most require members to see PCP for routine services and access to specialty care
- Most are accredited by an accrediting organization
Types of HMOs
- Open-panel - HMO contracts with private physicians
a. Independent practice associate (IPA) model - physicians are not employees of the IPA or the HMO and continue to see non-HMO patients
b. Direct contract model - HMO contracts directly with independent physicians or medical groups - Closed-panel - closed to private physicians:
a. Group model - HMO contracts with a multi-specialty medical group practice to provide all physician services to members. Physicians are employed by the group practice.
b. Staff model - physicians are employed by the HMO and are paid salary plus bonus/incentives. - True network model - HMO contracts with more than one large medical group.
- Mixed model HMOs - closed-panel HMO adds open panel components
- Open-access HMOs - patients can bypass gatekeeper to see other HMO providers, but with less coverage.
Advantages and disadvantages of open-panel HMOs
Advantages:
1. More easily marketed and sold due to large panel of private physicians
2. Easier for members to find a conveniently located participating physician
3. In IPA models, routine medical management functions may be delegated to the IPA
4. Easier and less costly to set up and maintain
Disadvantages:
1. Because the HMO is not providing medical care itself, it has little ability to manage care
2. Premiums are often higher than in closed panel HMOs
Advantages and disadvantages of closed-panel HMOs
Advantages:
1. Ability to more closely manage care
2. Delegation of many routine medical management functions to the group, which reduces admin costs
3. Convenience for members due to many services in one location
Disadvantages:
1. Not as easily marketed to new members who would have to change doctors
2. Locations of medical offices may not be convenient for all members
3. Only feasible in medium to large cities
4. More complex and costly to set up and maintain
Types of integrated health care delivery systems (IDSs)
In IDSs, providers unite to manage health care and contract with health plans.
- IPAs
- Physician practice management companies
- Group practice without walls
- Physician-hospital organizations
- Management services organizations
- Foundation model
- Provider-sponsored organizations
- Hospitals with employed physicians
Structural requirements of accountable care organizations (ACOs)
PPACA created ACOs for use in the Medicare program. They help achieve more integrated and efficient care by fostering local organizational accountability for quality and costs.
- Those eligible to from an ACO include: group practices, networks of individual practices, hospitals, rural health clinics, and federally-qualified health centers
- Must be a legal entity authorized to do business in any state in which it operates
- Must be formed for the purposes of:
a. receiving and distributing shared savings
b. repaying shared losses or other monies owed to CMS
c. establishing, reporting, and ensuring provider compliance with health care quality criteria - At least 75% of the ACO’s board seats must be held by ACO participants
- Management structure must be similar to what is found in a nonprofit health plan
- Participants must have a sufficient investment such that ACO losses would be a significant motivator
Key characteristics of patient-centered medical homes
- Patients have an ongoing relationship with a personal physician
- Patients receive care from a team of individuals led by the personal physician
- Personal physicians take responsibility for providing or arranging all care for the patient
- Patient’s care is coordinated or integrated across all elements of the health care continuum
- Quality and safety are key parts, enhanced by evidence-based medicine
- Patients have enhanced access to care through open scheduling and expanded hours
- Payment should appropriately recognize the value provided to patients
(Added) Cost sharing provisions for medical plans
- Employee contributions (premiums)
- Paying a portion of medical cost: deductible, coinsurance, copays, annual & lifetime maxima, OOP max
- Plans may limit reimbursements to UCR charges
- Varying deductibles and coinsurance to encourage use of certain providers
- Daily limit maximums
(Added) Underwriting for group LTCI
- Guaranteed issue during open enrollment for full time, active EEs; otherwise must submit full evidence of insurability
- May offer re-enrollment campaigns if infrequent, irregular and not announced in advance
- Other group members must complete long-form health questionnaire
- Accept or decline basis rather than preferred/substandard coverage
(Added) Individual vs. group LTCI
Commissions: Ind - higher
Underwriting: Ind - fully-underwritten, group - guaranteed issue for active FT EEs
Risk class: Ind - multiple risk classes, group - single class
Coverage: Ind - modified offers; group - accept/decline basis
Target market: Ind - older target market
Death benefit: Ind - none
Benefits: Ind - more flexible
