UNIT 16 Flashcards
FREE-FOR-SERVICE VS PRE-PAID
Traditionally, physicians and hospitals provided care on a fee-for service basis–that is , each time they provided a service, they were paid a fee in return. One of the new ideas that health maintenance organizations (HMOs) brought to health care was providing service on a prepaid basis–that is, individuals would pay the HMO a specified amount, and in return the HMO would agree to provide whatever care the individual needed during the year. If a particular individual needed very little care during the year, no money would be refunded. At the same time, if an individual needed a great deal of care, no additional money would be charged.
SPECIFIED COVERAGES VS COMPREHENSIVE CARE
Comprehensive medical expense plans cover all those types of care in one plan. The most comprehensive types of medical expense plans will cover preventative care and immunizations as well as necessary medical treatment. HMOs were among the first health care providers the cover preventative care.
BENEFIT SCHEDULE VS USUAL/CUSTOMARY/REASONABLE CHARGES
Some medical expense policies pay providers for their services according to a benefit schedule. Each type of service is listed with the amount of payment. If a provider bills more for a service than is shown in the schedule, the patient must pay the difference.
Other medical expense policies pay providers according to what amount is usual, customary and reasonable to charge for that service in that geographic area. As long as the provider’s charge is in line with the amount other providers in the area are charging for that service, the policy will pay the full amount. However, if the provider’s charge is more than the usual, customary, and reasonable amount, the patient may be billed for the difference.
ANY PROVIDER VS LIMITED CHOICE OF PROVIDERS
Under older health insurance plans, the insured could use any provider. Under modern managed care plans, the choice of providers is limited to those participating in the managed care plan. For example, HMOs only pay providers who are members of the HMO. The insured could use a non-HMO provided, but they must pay for those visits.
Preferred provider organization (PPO) plans have a panel of physicians and hospitals under contract to provide health care services and generally cover 80%-100% of the cost. Individuals who choose to use other providers are covered for a smaller percentage of the visits such as 60%.
INSUREDS VS SUBSCRIBERS/PARTICIPANTS
Customers can be the insured, subscriber, or participant depending on the type of plan:
Traditional fee-for-service plans- refer to customers as insureds because these plans are issued by insurance companies.
prepaid plans- refer to their customers as subscribers/participants, there plans are offered by entities consisting of the providers themselves, such as HMOs.
TYPES OF MEDICAL EXPENSE PLANS
BASIC HOSPITAL, MEDICAL AND SURGICAL POLCIES
- the original medical expense plans.
- they were characterized by:
- low coverage limits
- first dollar coverage (no deductible)
MAJOR MEDICAL INSURANCE
Covers a much broader range of medical expenses with fewer gaps and provides higher maximum limits. These more expensive policies are divided into 2 general groups.
Supplemental major medical insurance- is used to back up or enhance a basic policy.
Comprehensive major medical insurance- is a stand alone plan and benefits are available AFTER the deductible is satisfied.
MAJOR MEDICAL
DEDUCTIBLES
Requires the insured to pay a certain amount of their medical expenses each calendar year before coverage begins.
For example if an insured has a $500 deductible and the cost of medical treatment received totaled $750, they would pay $500. They remaining $250 would be eligible for payment by the insurer.
Policies that cover entire families usually have a family deductible rather than an individual deductible.
For example, the individual deductible is $500 and the family deductible is $1000. A family of 6 would pay no more than $1000, not $3000 that would apply if each individual paid a $500 deductible.
CORRIDOR DEDUCTIBLE
With supplemental major medical insurance, the deductible kicks in after the basic policy limits are reached .The corridor deductible applies to begin using the supplemental plan and another deductible would apply.
For example, Ray has a basic medical policy with a $1000 limit and supplemental major medical insurance with a $500 deductible. Ray exceeds the $1000 medical expense plan limit, pays a corridor deductible and any expenses that exceed $1000 will be picked up by the supplemental major medical policy after its deductible has been satisfied.
COINSURANCE
Is a cost-sharing feature that keeps major medical insurance affordable. The insured pays a certain percentage of medical expenses after the deductible has been satisfied. Most common is 80-20, the insurer pays 80% and the insured pays 20% during the time the sharing arrangement applies.
STOP-LOSS LIMIT
The insured is no longer required to pay co-insurance when medical expenses exceed this amount.
If Brian had a stop-loss limit of $5000, he would no longer be required to pay co-insurance after medical expenses totaled $5,500. At that point , he would have paid $1,000 in coinsurance ($5000x20%) plus the $500 deductible.
MAXIMUM OUT OF POCKET
The deductible plus the insureds coinsurance percentage times the stop-loss limit. using the previous notecard’s example, Brain’s maximum out of pocket limit would be $1500: the $500 deductible + the $1000($5000x20%)coinsurance amount
LIMITATIONS
MEDICAL EXPENSE POLICIES
Medical expense polices often place limits on coverage or benefits for certain types of treatment. The most common limitations are for the following:
- rehabilitation
- home health care
- hospice care
- ambulance services
- outpatient treatment
- durable medical equipment
- infertility treatment
- mental illness/substance abuse
- organ transplants
- reimbursement for chiropractic or other non physician services
EXCLUSIONS
Medical expense
- Self inflicted injuries
- injury resulting from war or acts of war, whether or not war is officially declared
- illness or injury suffered during active military duty
- injury resulting from air travel unless the insured is a paying passenger
- injury suffered while committing a felony
- experimental procedures
- care covered by workers compensation
- care received in a government facility
- elective cosmetic surgery
- hearing aids
- custodial care
