Unit 16 - Medical Expense Plans Flashcards
Fee-for Service vs. Prepaid
Fee-for-Service - Each time doctors/hospitals provide a service, they are paid a fee in return.
Prepaid - Individuals pay the HMO a specified amount and in return the HMO would agree to provide whatever care the individual needed during the year.
If the individual needed little care during the year, no money would be refunded. If the individual needed a great deal of care, no additional money would be charged.
Benefit Schedule vs. Usual/Customary/Reasonable Charges
Benefit Schedule - 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 showing in the schedule, the patient must pay the difference.
Usual/Customary/Reasonable Charges - Other medical expense policies pay providers to what amount is usual/customary and reasonable to charge for that service in that geographic area. Patient may be billed for the difference if they charge more.
Specified Coverages vs Comprehensive Care
Comprehensive medical plans cover preventive care and immunizations as well as necessary medical treatment.
Any provider vs Limited Choice Providers
Under older health insurance plans, the insured could us any provider. Under modern managed care plans, the choice of providers is limited to those participating in the managed care plan. HMO
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 chose 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 these plans are offered by entities consisting of the providers themselves, such as HMOs.
Fee-for-service
- provider is paid as services are provided
- customers called insureds
Prepaid
- provider is paid a set fee in advance
- customers are called subscribers/participants
Specified Coverage
Covers only specific services
Comprehensive Care
Covers broad range of services
Benefit Schedule
Pays only a specified amount regardless of actual charge
Usual / Customary / Reasonable (UCR)
Pays full charge if reasonable and customary in the same geographical area
Major Medical Insurance
Covers a much broader range of medical expenses with fewer gaps and provides higher maximum limits than basic coverage.
These more expensive policies are divided into two general groups:
1. Supplemental Major Medical Insurance
2. Comprehensive Major Medical Insurance
Supplemental Major Medical Insurance
Used to back up or enhance a basic policy. The basic plan will pay for covered expenses with no deductible up to the policy limits, then the supplemental plan kicks in. When leaving the basic plan, because the limits are reached, the insured must pay a corridor deductible to begin using the supplemental plan coverage.
Comprehensive Major Medical Insurance
Stand alone plan and benefits are available after the deductible is satisfied. Another feature is the concept of coinsurance, which is the sharing between the insurer and insured of covered expenses that exceed the deductible amount.
The sharing ends when the stop-loss limit (maximum out of pocket limit) is reached.
Marjor Medical Insurance (Supplemental or Comprehensive) covers:
- hospital inpatient room and board
- hospital medical and surgical services and supplies
- physicians’ diagnostic, medical and surgical services
- other medical practitioners’ services
- nursing services, including private-duty serivce outside a hospital
- anesthesia and anesthetist services
- outpatient services
- ambulance service to and from a hospital
- first aid and emergency room care
- x-rays, and other diagnostic and labratory tests
- radiological and other types of therapy
- prescription drug administration in the hospital
- blood and blood plasma
- oxygen and its administration
- dental services resulting from injury to natural teeth
- convalescent or rehabilitative facility care
- home health care services
- prosthetic devices when initially purchased
- casts, splints, trusses, braces, and crutches
- rental of durable equipment such as hospital type beds and wheelchairs
- hospice care - terminal illness care that includes pain relief, symptom management, and counseling but not curative treatment
Coinsurance
A cost-sharing feature that keeps major medical insurance affordable.
The most common coinsurance arrangment is 80%/20%, the insurer pays 80% and the insured pays 20% during the time the sharing arrangment applies.
Example: John has major medial insurance $500 deductible and an 80/20 coinsurance clause. He has a $1,200 medical expense and pays the $500 deductible, plus his 20% coinsurance of the remaining $700 ($140). John’s total medical expense is $640 and the insurer pays the remaining $560.
Stop-Loss Limits
Major medical policies often include a stop-loss limit, the insured is no longer required to pay coinsurance when medical expenses exceed this amount.
Example: John has a stop-loss limit of $5,000, he would no longer be required to pay coinsurance after medical expenses totaled $5,000. At that point, he would have paid $1,000 in coinsurance ($5,000 x 20%) plus the $500 deductible.
$1,500 would be his Maximum Out of Pocket
Limitations
- rehabilitation and skilled nursing care facility care
- home health care
- hospice care
- ambulance services
- outpatient treatment
- durable medical equipment, such as hospital beds
- infertlity treatment
- maternity care
- mental illness or substance abuse treatment
- organ transplants
- reimbrsements for chiropractic or other non-physician services
Exclusions
The following are typically excluded from coverage under medical expense plans:
- self-infllicted insuries
- injury resulting from war or acts of war
- illness or injury 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 worker’s comp
- care received in a government facillity
- elective cosmetic surgery
- hearing aids
- custodial care
