Quiz 1 Flashcards
Any profit generated from the enterprise can be paid to shareholders (owners)
they do pay property & sales taxes
for proffit
Any profit generated from the enterprise is put back into the business NO shareholders (owners) Do NOT pay property & sales taxes
not for proffit
The amount the patient must pay before the insurer will pay anything
deductible
Amount patient pays at time of service ALL YEAR (even after deductible is met
copay
A percentage of the total cost that the patient must pay
Usually ranges from 10-20% for in-network services
co insurance
public insurance is aka
govt insurance
sometimes still called “indemnity”
Provider billed insurer and insurer paid the claim
fee for service
old way of insurance
the dominant pay sx until the 1990s
FFS
A method of reimbursement based on payment for services rendered. Payment made by an insurance company, the patient, or a government program, such as Medicare or Medicaid. With respect to the physicians or other suppliers of service, this refers to payment in specific amounts for specific services rendered. In relation to the patient, it refers to payment in specific amounts for specific services received, in contrast to the advance payment of an insurance premium or membership fee for coverage, through which the services or payment to the supplier are provide
FFS
2 types of managed care
HMO
PPO
type of managed care that were successful in reducing healthcare inflation for the first time in American history
HMO
A form of “managed care”
started in 1980’s
providers sign contracts governing payment
Insurers offer lower premiums by restricting the provider panel (or # of in network docs) but not the most restrictive form of managed care
PPO - preferred provider organization
in network/out of network = PPO
type of managed care New idea = cost responsibility by PCP’s through capitation Gained popularity in 1990’s for: Reduced premium costs Reduced health care cost
HMO
health maintanance org
why were HMOs unpopular in the 90s
loss of pt choice
type of coverage that was usually a combination of a Medical Savings Account (MSA) and a high deductible health plan
New idea = cost responsibility borne by the patient
consumer directed health plan
CDHP
what the provider submits to the insurer
claim
EOB
Explanation of Benefits
defines the allowable = what the insurer will pay
Is the definitive document of what the provider will be paid by insurer & patient
Example of an EOB for a $49,000 outpatient procedure
The amount the insurer will actually pay
Will be defined on the EOB
allowable
what is this:
Your contract calls for you to be paid $80 per outpatient PT visit
$80 is the ______
Even if the visit lasts one hour and you bill $500, you will be paid $80
allowable
FEDERAL insurance benefit plan for ALL elderly (65+ years old)
Uniform benefits across all states
medicare
medicare is regulated by
HHS (health and human services)
medicare was passed and implemented what years
Passed in 1965 and began in 1966
what is MRP
Medicare Replacement Plans
“Medicare Managed Care”
Patients can opt out of traditional Medicare and be covered by a private insurer (e.g., Humana, United Healthcare, etc.)
Medicare pays the patient’s premium
eligibility for medicaid varies by __
state (administered by the state)
medicaid is funded how
fed AND state
Billing system using procedure codes (defacto billing standard in the USA)
CPT4
current procedural terminology
CPT 4 was created by what org
Developed and owned by the American Medical Association (AMA)
What is ICD 9
International Classification of Diagnoses – Version 9
Diagnostic coding system used by most countries to classify patient diagnoses
what does PPS stand for
prospective payment sx
what is PPS
Adopted by Medicare with TEFRA in 1983 with DRG’s then with BBA 1997
Payment system whereby the payor knows what will be paid AHEAD OF TIME (prospectively) for diagnoses or procedures
first medicare form of PPS
DRG
Hospital is paid one lump sum for the entire length of stay is a CASE RATE or
no more charging for every individual service
DRG
dx related group
specifics of an IRF
3+ hours of PT, OT, SLP per day
Minimum of 5 days of therapy per week
how many hrs of therapy per day for SNF
less than 3
HHA
home health agency
2 types of risk
demand
volume (utilization)
what is demand risk
number of pple
The more people that seek (demand) a service the more the insurer (and/or patients) will have to pay
If more people seek the service the risk (cost) increases
If fewer people seek the service the risk (cost) decreases
volume (utilization risk) has to do with what 3 things
Type services are performed
Quantity of services performed
Length of time services are performed
OOP goes towards
the deductible
how did FFS have no incentives for quality
Mistakes were paid for
Do more = get paid more = long LOS
Don’t get paid more for doing higher quality work
“Blank Check Syndrome”- if pt doesn’t have to pay for it, it’s free for all for whatever is performed by HCP
Risk Profile=Insurer bears it all, demand & volume
Provider has none
difference btwn FFS and discounted FFS
Fee for service you could go anywhere
Discounted fee for service = you trade discount for volume (provider decreases charge and gives a % discount, and insurance companies will put them in a preferred group) (but bc you gave discount of overall visit, increase in ind prices of interventions occurred)
who assumes risk for DFFS
Insurer still bears all demand and volume risk
what is the dominant form of payment for OP services in KC
fee schedule
Negotiating a price per code (cpt) – these vary btwn clinics (based on insurance preference list if you agree to do discounted fee for service)
fee schedule
Form of payment whereby the insurer pays on a per CPT code basis, but the amount paid is a pre-negotiated amount that is NOT based on charges
No matter what you charge, you will only be paid what the prenegotiated amt is.
The dollar amount is the final result of your negotiations with the insurer
fee schedule
MPFS
medicare physician fee schedule (type of fee schedule)
why do fee schedules have no incentive for quality
providers would do certain interventions tied to certain codes and avoid those that didn’t pay well
with fee schedule, pricing is ____
irrelevant
Ex of downfall of ______: 8$ for US and 60$ for Manual, most private PTs won’t do the cheaper interventions
The pricing is irrelevant plays into PT clinics that have multiple locations vs the 1 stand alone PT clinic.
fee schedule
who assumes risk in fee schedule
Insurer still bears all demand and volume risk
Provider begins to bear some volume risk if the fee schedule amounts are low such that they do not cover the per visit costs of providing care
per diem applies to per __ or per __
day
visit
ONE $$$ Payment for Entire LOS
No matter how many procedures/surgeries/interventions
No matter how long the LOS was
No matter how ill the patient is
case rate
whats the incentive with case rate
Very efficient care reduce LOS
If LOS is too long then will lose money
If do unnecessary procedures then will lose money
per diem vs case rate
case rate= the Sooner you get them out of hosp, the more money is made by hosp
In perdiem, the longer you keep them the more money you make
explain risk involved in case rate
Insurer bears ONLY demand risk
Insurer pays providers only when people seek out the service, but that payment will be the same no matter what
*Provider now bears ALL volume risk Is on the hook for: Type of services provided Quantity of services provided Duration (LOS) that services are provided
A form of case rate, different payment levels depending on the dx
you must do coding accurately
DRG
How medicare pays acute hospitals for all stays
drg
ONE $$$ Payment for Entire LOS
Still not sensitive to any volume considerations
BUT
Is sensitive to diagnostic group that patient falls into
DRG
what is the 200 with DRG
~200 “transfer” MS-DRGs mitigate Medicare’s risk- ex: allotment for THA is 5 days, but if you get them out of the acute hosp before the allotted DRG, they only pay for the days they were there (not the total allotted DRG). The 200 are the most common procedures in the US
with capitation, payment has zero to do with ___
LOS
with this plan you get paid a flat rate per member per month (PMPM) This plan, you get paid regarless if 8000 or 0 pts show up in your clinic for that month
capitation
ex of capitation, how much is paid
Ex: 8,000 covered lives in their plan at 5$
8,000 X $5 PMPM
$40,000 payment per month made to PCP, regardless if you see pts or not
with capitation you get paid more to do
less
explain who has risk with capitation
Insurer bears essentially none for PCP services
Provider has essentially become the insurer
*Bears demand and volume risk for those services
differentiate btwn capitation and global capitation
with capitation, docs were paid more to not see pts
Capitation - PMPM (month)
With reg capitation, docs would refer to specialists to keep them out of their office.
With global, Doc is only capitated under one practice within the group, insurance companies pay 1 flat rate for the group of pts for the entire YEAR, if you refer them out to someone else you get sent the bill (can’t use referral to offload cost).
incentives with global capitation
Prevention = manage health of members on own
YOU Monitor chronic issues
Diabetes, COPD, CHF, etc.
Cost effectively manage acute problems
who assumes risk with global capitation
The Practice is essentially the insurer
Insurer is simply is a premium pass-through
Provider/practice Bears ALL demand and volume risk (for ALL services
PCMH
pt centered medical home
one conglomerate of HCP under the same practice
could use global capitation
manage the overall health of the population
This is where the big incentive for preventive care comes in…with this plan, it is crucial to keep pts healthy
overall explaination of risk for FFS
FFS highest insurer risk, and high pt risk no provider risk
overall explanation of risk for DFFS
DFFS high insurer risk, some pt risk, no provider risk
Overall explanation of risk for perdiem
Perdiem some insurer risk, some provider risk no pt risk
overall explation of risk for case rates
Case rates low insurer risk high provider risk low pt risk
overall explantaion of risk for capitation
Capitation low insurer risk very high provider risk very low pt risk
Method of payment whereby a provider (usually a primary care physician) receives a fixed amount per member per month (PMPM) for a given covered population.
capitation
purpose of insurance
Mitigate (reduce) the financial risk of the insured (lost income)
in 3rd party payment sx, why is cost no longer a purchasing factor
customer (payor = insurer or employer) is no longer the consumer (user = patient)
Consumer is insulated from much of the cost, so cost is no longer a purchasing factor
where did the whole idea of employers paying for insurance stem from
In WW2 Wage freezes
Created incentive to increase fringe benefits in order to bargain with unions
Medical insurance quickly became a primary benefit that the employer paid for
what is community rating
This is when all covered companies were considered the same “risk” factors so they were all put in the same big pool
employer may pay more for community rating vs experience
what is experience rating
Insurance co’s began realizing that some co’s had younger healthier employees than others. number of employees per co was also taken into consideration (ex: Garmin is paying less than a local pizza place)
Larger co’s can spread their risk across a large number of employees. Smaller co’s are riskier and spread risk across small amt of pple so their rates are higher
indemnity plan (explain)
was old FFS
insurance paid 100% and you could go anywhere
in old FFS, when did pt pay % of allowable
AFTER the service was performed
1st health care plan where pt choice was restricted
PPO
who had lower premiums, PPOs or FFSs
PPO had lower premium
other than less choice, what was bad about PPO
introduced utilization review
primary payment model for PPO
DFFS (discounted fee for service)
which plan type uses DFFS
PPO
the goal of a DFFS for PPO was to
decrease premiums for employers
why didn’t DFFS for PPOs work
Providers increased their prices to compensate
Providers saw more patients (increased demand)
Providers did more procedures (increased volume
difference in PPOs then vs now
Old: pts used to just pay 10-20% of what the provider billed and the PPO paid the rest.
Now: pts pay copay, deductible, coinsurance and PPO pays what is left
co insurance % applies to the
allowable
ex: if allowable is 1,000 and their co insurance is 20% it’s 20% of 1000
how did insurance co’s try to encourage pts to remain in network for PPOs
To encourage patients to remain in-network, PPOs charged different co-insurance rates
In-network = 10-20% Out-of-network = 40-50%
when is co insurance paid
after the care
if they are out of network they pay more
what is utilization review
done with PPOs evaluating your decisions- are they medically nessesary Decisions made based on restrospective review of DOCUMENTATION To pay or not to pay
who performs utillization reviews
Clerks
Nurses
Social workers
Not many PTs perform UR
who assumes risk with HMOs
PCP
6 main differences btwn HMO and PPO
HMOs have a more restricted provider network than PPOs
Gatekeeper role for primary care physicians = HMO
Capitation for primary care physicians HMO
No deductibles for HMO
Pre-authorization by insurer and/or PCP for non-PCP services for HMO
copays before services explains what plan
HMO
meant to be a Dis-incentive
now PPOs have copays too
in an HMO, the PCP is paid via what model
capitation
PCP is the gatekeeper is what plan
HMO
what are with-holds
used in HMOs
the insurance co with-holds a certain % from the PMPM payments if goals are not met.
why might pts like HMOs
low premiums low OOP
why might pts hate HMOs
not very much choice
why might docs hate HMOs
they look like the bad guy
why do employers like HMOs
low premeiums
Insurance company owns all entities from the insurer to the providers
(what type of plan)
staff model HMO
like Keiser Permentente
type of HMO with the lowest premiums
staff model HMO
Provides the most control over healthcare delivery
staff model HMO
insurance has most control
what type of HMO is this
HMO contracts with one large multi-specialty physician group for all of their patients
Physicians do not work for the HMO
Can see patients from other insurers
group model
only model of HMO where docs are employed by the HMO
staff model
type of HMO model where the HMO contracts with numerous physician providers
network
what is an IPA HMO
independent practitioner association
doc does contract with IPA that does a separate business contract with HMO.
what is POS HMO
point of service HMO
Point of Service (requires insurance to have an out of network option)
Allows patients to seek care outside of the HMO physician/hospital network
what is downfall of POS HMO
higher copays and co insurance for out of network
who assumes most risk in an HMO
provider
deductibles and co insurance are only used with what plans
FFS
PPO
highest restricted provider networks is what group
HMO
what plan does utilization reviews
PPOs
what plan utilizes gate keepers and pre-authorization
HMO
what is HDHP
high deductible health plan (usually at least 5000)
goal of a HDHP
create financial incentive for patient to forego or put off purchasing healthcare
what is CDHP
Consumer Directed Health Plans
Combination of a Health Savings Account (HSA) or Medical Savings Account (MSA) and a high-deductible health plan
typically the employer starts the MSA
after you use your MSA or HSA pt pays deductible OOP
explain the correlation with taxes and a CDHP
MSA or HAS is a federally recognized healthcare savings account
Money left in the account is not taxed
who assumes risk with CDHP
pt *****
who assumes risk with HDHP
pt
theory behind CDHP and HDHP transferring risk to the pt
pt will be more sensitive and aware of pricing so decisions will be made on that concept
examples of for profit orgs
Examples:
Insurance companies (e.g., United Healthcare, Humana, Aetna, etc.)
HCA (own 220+ hospitals across USA)
Most physician offices, private practice PT clinics
examples of not for profit orgs
Examples:
Most hospitals
Some insurers (e.g., Blue Cross/Blue Shield)
Some nursing homes
FFS, who has the cost risk/responsibility
insurer
what type of plan uses DFFS & utilization review
PPO
HMO’s cost responsibility borne by PCP’s through _____
capitation
if the allowable amt is 60$, but you bill 150$, how much are you actually paid by insurance
only the allowable (60)
medicare is for who
ALL elderly (65+ years old)
this is used by Medicare,
Payment system whereby the payor knows what will be paid AHEAD OF TIME (prospectively) for diagnoses or procedures
PPS
another party assuming financial responsibility for the customer
Is meant to protect the customer from financial ruin in the case of expensive uncommon or unforeseen incidents
risk
in FFS, what payment is fixed and what varies
The Insurer is paid a fixed amount in the form of premiums from employers, but payments insurer makes to providers are variable based on demand and volume of health care services.
what is medical expense ratio
a term that applies to FFS
the ratio btwn the premiums paid TO the insurance co and the payments paid to providers FROM the insurance co
the very first attempt by insurance cos to decrease costs for themselves (lowers the allowable)
Discounted Fee-For-Service (DFFS)
example of DFFS:
Total bill for PT = $1,000 and contract is for 40% DFFS =
(40% of 1000 = 400)
1000 - 400 = 600 (new allowable)
600
Fee schedule is a form of DFFS, but what is the main diff btwn the 2
Major difference is that if the provider raises prices then the provider will collect more with percent discount but will NOT collect more with a fee schedule
Paid per visit no matter what is performed or how long the visit lasts
Same payment for 10-minute visit versus a 90-minute visit
describes what type of plan
perdiem
example of case rate
OBGYN (baby delivery)
case rates are considered very___
efficient
in case rate, insurers hold 100% of the ___ risk while providers hold 100% of the ___ risk
insurers hold all demand risk
providers hold all volume risk (providers can determine LOS)
primary objective of a DRG
to reduce LOS
now hosp will get them out of the acute setting quicker bc of DRGs
example of a DRG
Example: DRG payment = $30,000 for five days.
Patient stays three days before being transferred to a SNF.
The per diem rate is $30,000 / 5 days = $6,000 per day. Therefore, the hospital is paid $6,000 X 3 days = $18,000 and not the full DRG amount of $30,000.
with a DRG, the hospital is only paid for the previously allotted days that the DRG accounts for based on their dx,
if they are transferred before the full DRG days, then the hospital is only paid perdiem for the days they were there
example of capitation
Physician signs up to cover 8,000 covered lives
Contract states physician receives $5 PMPM
8,000 X $5 = $40,000 per month to physician.
Physician receives $40,000 per month NO MATTER HOW MANY pts COME IN THAT MONTH OR HOW THEY ARE TREATED.
*
with capitation, provider may have free reign, but what is the downfall
if pt needs alot of care/tx and multiple visits, then the provider is loosing money
Is the only payment system that creates incentive for PREVENTION
Is the only payment system that creates provider incentive for patient not to use healthcare services
capitation/global capiation
order of progression of provider risk of all the plans
FFS plans DFFS Per Diem/Visit Case Rate/DRG then capitation
what % of pop was insured pre and post WW2
- Before WW2 only 9% of the population had insurance
2. By 1952 over 50% of the population had insurance
true indemnity vs FFS
True indemnity plans differ from fee-for-service plans in that indemnity plans have the patient pay for health services FIRST. FFS is that the pt pays nothing up front and the provider sends claim to insurer.
BCBSMedicare of KC now requires (as of Jan 2016)
all pts to receive a PCP referral for all speciality services
medicare is a ____ org
FEDERAL
co insurance IN NETWORK fees are usually
10-20%
out of network are more
what can be a downfall of fee schedule
insurer pays on a per CPT code basis, but the amount paid is a pre-negotiated amount that is NOT based on actual charges
No matter what you charge, you will only be paid what the prenegotiated amt is.
The dollar amount is the final result of your pre negotiations with the insurer
any profit made is put back into the business
not for profit
type of managed care where providers sign contracts with insurance co governing payment
PPO
Medicare is the same for all states T or F
T
it’s FEDERAL
in a CDHP, who takes up the cost responsibility
the pt
consumer directed health plan
a CDHP is a combo of ___ and ___
medical savings
high deductible
what plan used utilization review
PPO
fee schedule is related to
CPT codes
if deductible is met does pt still pay copay
yes
Keiser Permentente is an ex of what type of plan
staff HMO
co owns ALL (providers to insurers)
in group model, do physicians work for the HMO
no
what does IPA stand for
independent practitioner associate
these guys are contracted by docs to negotiate with HMOs
what does POS stand for
point of service
5 diff types of HMOs
staff group network POS IPA
with a fee schedule, does it make a difference if you charge more money for a tx
no, you only get the pre-negotiated amt that you and the insurance co decided for that cpt code
per diem, the longer the LOS the ____ $$ provider gets
more
with DFFS, providers would sometimes raise their individual tx prices in order to compensate for the overall cost of the visit…now, eventhough fee schedule is a form of DFFS, can fee schedule do this?
no, with fee schedule pricing is all based on the cpt codes
