Quiz 1 Flashcards
For profit
- Any profit generated from the enterprise can be paid to shareholders (owners)
Example: insurance companies (united, humana, etc)
Not for profit
- Any profit generated from the enterprise is put back into the business; NO shareholders/owners
Deductible
the amount the patient must pay annually before the insurer will pay anything
Copay
- the amount patient pays at time of service ALL YEAR (even after deductible is met)
Coinsurance
- percentage of the total cost that the patient must pay
Private insurance
- non-government
Example: BCBS, United
Public insurance
- government insurance
Example: Medicare, Medicaid, tri-care
Fee for service (FFS)
AKA “indemnity” provider bills the insurer, so cost responsibility is that of the insurers
Preferred provider organization (PPO)
providers sign contracts governing payment and the number of physicians in the network is restricted
Health Maintenance Organization (HMO)
- cost responsibility lies with PCP’s through capitation = so this reduced health care costs
Consumer Directed Health Plan (CDHP)
cost responsibility of the patient
Claim
what the provider submits to insurance
Explanation of benefits
defines the allowable
Allowable
total amount the provider is paid per the contract with the insurer
Medicare
federal insurance for all elderly ages 65+
Medicare Advantage Plan
elderly patients can opt out of Medicare’s plan for another commercial insurer, but Medicare pays the patient’s premium to the commercial insurer
Medicaid
insurance plan for the poor
What is “risk”?
- Another party assuming financial risk for the customer; protects customer from financial ruin in case of expensive unforeseen incidents
Demand risk
- how many people seek out the service
Volume (utilization) risk
types of services performed, quantity of services, and length of time of service
FFS incentives
no incentives for quality or cost containment
FFS risk
insurer at financial risk
What is discounted fee for service (DFFS)?
attempt by insurers to decrease cost by establishing that a certain % of the charge is subtracted off the top
DFFS incentives
no incentive for quality or cost containment
DFFS risk
insurer at risk
What is fee schedule?
each billing code has a fixed payment tied to it
Fee schedule incentives
incentive to do more of the codes that pay well, less of the low-paying codes; no incentive for quality, some incentive for cost containment
Fee scheduling risk
insurer bears all demand and risk volume; provider bears some volume
Per Diem payment methods (outpatient)
pay per visit
Per Diem outpatient incentives
decrease overall clinic costs, decrease time span of visits, no incentive for quality
Per Diem outpatient risk
provider and insurer are both at risk
Per Diem payment methods (inpatient)
facility is paid all inclusive daily rate
Per Diem inpatient incentives
- efficient care, team-focused, no incentive for controlling length of stay
Per Diem inpatient risk
provider and insurer at risk
Case Rates (“Per case”)
Provider is paid for the whole case, no matter what was provided and no matter the LOS. Provider gets a “lump sum” for all appointments (example: OB/GYN gets paid lump sum for visits, delivery, etc.)
Case Rates Incentives
leads to VERY efficient care, want quick discharge, early discharge, want to see more patients in a day
DRG (Diagnosis Related Group)
Medicare related; case rates for acute hospital inpatient units, where facility is paid one lump sum for ALL services for entire LOS
DRG Incentives
want to reduce LOS, want quick discharge, want high volume of patients
DRG Risk
provider mainly at risk during acute stay, Medicare at risk in post-acute transfers
Capitation
- insurer pays a flat rate per member per month to the provider; no matter how many patients or services provided, it is still the same payment
- Capitation risk = provider assumes risk
Capitation incentives
provider held accountable for costs and care, decreased utilization/number of office visits, decrease LOS, want to focus on preventative care and keep patients out of the office
Global Capitation
one provider receives one lump sum per beneficiary per year for a given group of insured beneficiaries (that one lump sum covers ALL healthcare for patients for entire year)
Global Capitation Incentives
provider held accountable for all services and costs, decrease LOS, want to focus on prevention
Global Capitation Risk
full risk of provider
Bundled Payment
one provider is paid for the care provided by multiple providers OR one provider is put at financial risk for the care provided by multiple providers
Bundle Payment Incentives
incentive to discharge patients to home, or low-cost post-op care
What is the purpose of insurance?
Insurance is intended to mitigate (reduce) the financial risk of the insured (e.g., lost income)
What is community rating?
everyone in that insurance plan pays the same premium
What is experience rating?
businesses pay different premium amounts based on the health (or healthcare utilization) of their employees even if they are all covered by the same insurance company (so if an employer has healthy people, they pay less in premiums)
Who is discriminated against with higher experience ratings?
people with pre-existing conditions
What is indemnity?
patient pays for the health service first, then submists receipts to insurance for reimbursement
Utilization review/utilization management
retrospective auditing of medical records to judge validity of bill
With HMO’s PCP’s are considered
gatekeepers (so PCP must refer patients for other services)
HMO Type: Staff Model
providers are employees of the insurance company (encourages prevention since physicians are paid a salary)
HMO Type: Group Model
a large multi-specialty group serves as caregivers for large group of enrollees (group is paid by capitation )
HMO Type: Network HMO
HMO contracts with providers already in existence, so physicians do not work for HMO but still receive reimbursement from it
HMO Type: Independent Practitioner Association (IPA) Model
- providers contracted with HMO through a physician agency (IPA). Pros: can see patients of all insurers. Cons: middle man (IPA) takes some revenue, and some physicians in IPA may be higher utilizers than others in same group
HMO Type: Point of Service (POS)
encourages patients to seek out of HMO network. Pros: enrollees have more choice. Cons: more expensive, loss of gatekeeper function
Goal of High Deductible Health Plan
create financial incentive for patient to forego or put off purchasing healthcare (more finiancial risk on patient)
Consumer Directed Health Plan (CDHP)
medical savings account (MSA) + high deductible plan (basically, enrollees end up paying for their own services using their medical savings account, so patients become PRICE SENSITIVE)
Prescription Drug Act of 2003
authorized tax-exempt, employer sponsored MSAs, which increased the popularity of MSA’s.
Very High Premiums
indemnity plans using FFS payment methods
High Premiums
PPOs and DFFS payment methods
Medium Premiums
HMOs using per diem/visit, case rates, or capitation
Low Premiums
HDHP, CDHP
