Presentation on theme: "Basics of Health Insurance"— Presentation transcript:
1 Basics of Health Insurance TEACH Lesson Plan Manual for Kinn’s The Medical Assistant: An Applied Learning Approach12th editionChapter 20Basics of Health Insurance
2 Types of Health Insurance Lesson 20.1Types of Health InsuranceDefine, spell, and pronounce the terms listed in the vocabulary.Discuss the purpose of health insurance.Differentiate among the various types of insurance policies.
3 The Purpose of Health Insurance Help individuals and families offset costs of medical careDefined as contract for protection against financial losses resulting from illness or injuryProvides payment of monetary benefits for covered sickness or injury, depending on policy purchasedThere are various types of health insurance, such as accident insurance, disability income insurance, hospitalization, medical expense insurance, and accidental death and dismemberment insurance.Most insurance policies do not cover "elective" procedures, such as certain cosmetic surgeries that are not considered medically necessary.More and more of today's health insurance policies cover "preventive" care.
4 Impact of Insurance Billing on the Medical Office Nearly all of physician’s income comes from insurance payments receivedRegular expenses, such as rent, salaries, medical and office supplies, equipment, and so on, depend on practice’s cash flowProper and timely filing of insurance claims to meet financial needs of medical officeThis is the most important job function of the coder/biller.
5 Cycle of Health Insurance Insured or policyholder pays a set amount called a premiumA premium is periodic payment of a speciﬁc sum of money to an insurance company for which insurer agrees to provide certain benefitsTreatment is provided by physician or other provider in a doctor’s office, emergency room, or hospital, and fee is paid by insurance company when medical necessity and covered benefits are metInformation that follows describes common types of insurance coverage and insurance carriers, the steps for obtaining insurance coverage information, and some of the terminology associated with obtaining insurance coverage and insurance billing.
6 Tasks Related to Cycle of Health Insurance Obtain demographic, employment, and insurance data from patient and insuredVerify patient’s eligibility for insurance payment by insurance carrierPerform diagnostic and procedural coding and review encounter form or charge ticket for completeness once patient has been seen by providerVerify the patient's eligibility for insurance payment by the insurance carrier or carriers, in addition to the benefits available and exclusions, and determining whether special authorizations are needed to refer the patient to specialists or for the performance of certain services or procedures (e.g., surgery or diagnostic tests).
7 Tasks Related to Cycle of Health Insurance, cont’d Calculate insurance deductibles and co-insurance amounts and provide patient with statement showing out-of-pocket amount owedObtain preauthorization for referral of patient to a specialist or for special services or procedures that require advance permissionComplete insurance claim form and submit to insurance company for reimbursement for services and procedures performed
8 Tasks Related to Cycle of Health Insurance, cont’d Post payments and adjustments on patient ledger or account and examine explanation of benefits (EOB), explanation of Medicare benefits (EOMB), or remittance advice (RA) from insurance companyAdjust account to reflect an allowable amount, which is either written off (adjusted) or passed on to patient for payment, and also any courtesy or professional adjustmentAllowed charges are also called allowable amounts.
9 Tasks Related to Cycle of Health Insurance, cont’d Bill patient for outstanding balance or complete secondary insurance claim form and submit it to insurance company with a copy of EOB showing payment from primary insurance carrierFollow up on any rejected or unpaid claims; any requests from insurance carrier for more information about specific claims answered as soon as possibleMeet timely filing requirements of medical office’s participating insurance carriersFailure to meet timely filing requirements results in zero payment from the insurance company and inability to bill the patient for the nonpayable amount.
10 Determining Primary and Secondary Coverage When patient is the insured, patient becomes the guarantor, and patient’s insurance is primaryIf patient also is covered by another policy, that policy becomes secondary insuranceOnly exception to is when patient is not insurance policy holder, such as when a child is insured by each parentApply the birthday rule; that is the insurance plan of the policyholder whose birthday comes first in the calendar year (month and day, not year) becomes the primary insurance.
11 Cost of CoverageMost insurance carriers do not reimburse full amount for services and procedures renderedCarrier is an insurance company or third party that pays for medical careThe insured, or beneficiary, in most instances is required to pay certain out-of-pocket expensesOut-of-pocket expenses include deductibles, co-payment or co-insurance charges, and costs for noncovered services.
12 Cost of Coverage: Terms Deductible is amount policyholder agrees to pay per claim or per accident toward total amount of insured loss before insurance company begins payment of benefitsNormally ranges from $100 to $500Under most circumstances deductible must be paid only one time per calendar yearA deductible amount is stated in the insurance contract.Some policies have a deductible per occurrence.
13 Cost of Coverage, cont’d Always verify effective date on patient’s insurance cardVerify eligibility, benefits, and exclusions with insurance company before patient’s visitVerification done by phone, fax, or Web siteAn excellent policy for any provider's office is to call the insurance company to verify insurance eligibility, benefits, and exclusions before the patient’s appointment or encounter with the provider.Most major insurance carriers have a Web site dedicated to verifying eligibility and claims payments.
14 Co-InsuranceCo-insurance is a policy provision common in medical insurancePolicy holder and insurance company share cost of covered losses in specified ratioCo-payment is type of co-insurance collected at time of serviceMost managed care plans require co-paymentA specified ration would be like 80/20 (i.e., 80% of services are paid by the insurance carrier and 20% by the insured).Co-payments usually range from $10 to $25 for office visits but can vary according to the services rendered.Any services or procedures that are not covered under the terms of an insurance policy are the responsibility of the policyholder or insured.
15 Types of Health Insurance Health insurance is available to most in this country through group or individual plansTypes of health insurance available include group insurance, individual insurance, government-sponsored insurance, self-insured plans, and medical savings accountsMany people are covered by government plans or entitlement programsGovernment plans (state or federal) include Medicare, Medicaid, TRICARE, Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), and workers’ compensationA recent survey revealed that more than 40 million Americans have no regular source for obtaining medical care, and lack of health insurance was a major obstacle.
16 Group PoliciesInsurance written under a group policy covers a number of people under a single master contract that is issued to employer or to an association with which they are affiliatedGroup coverage usually provides greater benefits at lower premiums because of large pool of people from whom premiums are collectedPhysical examinations are normally not required, and preexisting conditions are often waivedA group policy is subsidized by employers.Often the employee shares the cost of coverage through payroll deductions.
17 Individual PoliciesIndividuals who do not qualify for inclusion in a group or government-sponsored plan may apply to companies that offer individual policiesApplicant required to fill out extended health questionnaire and undergo a physical examination before acceptanceWith personal insurance there is a risk that coverage may be denied, and premiums are almost always higher with fewer benefitsIndividual policies are often called personal insurance.Individuals may have to accept a rider, or limitation, on benefits the policy will cover.
18 Government PlansPatient who is 65 or older is covered by Part A and Part B of MedicareMedically indigent patient may be eligible for Medicaid, with or without MedicareDependents of military personnel covered by TRICARESurviving spouses and dependent children of veterans covered by CHAMPVASome are covered for loss of wages and cost of care through worker’s compensation insuranceTRICARE was formerly the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).Surviving spouses and dependent children of veterans who died as a result of service-related disabilities are covered by CHAMPVA.
19 TRICAREPublic Law 569 passed in 1956 authorizing dependents of military personnel to receive treatment from civilian physicians at expense of governmentThe program administering these benefits became CHAMPUS, which today is known as TRICARE.
20 Medicaid Medicaid started in 1965 to help medically indigent Cost sharing between federal and state government to provide medical care for those meeting specific eligibility criteriaTitle XIX of Public Law 89-97, under the Social Security Amendments of 1965, provided for agreements involving cost sharing between federal and state governments to provide medical care for people meeting specific eligibility criteria.
21 MedicareMedicare started in 1965 and is a federal health insurance program for people age 65 and over; is part of Social Security ActAlso covers some under 65 with disabilities or end-stage renal disease (ESRD)The HCFA now is known as the Centers for Medicare and Medicaid Services (CMS).
22 Workers’ Compensation All states have passed workers’ compensation laws to protect wage earnersState laws differ as to coverageAll state legislatures have passed workers' compensation laws to protect wage earners against the loss of wages and the cost of medical care resulting from occupational accident or disease, as long as the employee was not proven negligent.
23 Self-Insured PlansMany large companies or organizations have a large enough employee base that they choose to fund their own insurance program, called a self-insured or self-funded planSelf-funded plan is not insurance by true definition; employer pays employee healthcare costs from firm’s own fundsTend to work best for companies large enough to offer lower rates, better coverage, and pay large claims for expensive medical servicesOften a third-party administrator (TPA) or fiscal intermediary handles paperwork and claim payments for a self-insured group.
24 Self-Funded Healthcare Self-funded healthcare is a self-insurance arrangement where employer provides health or disability benefits to employees with its own fundsDifferent from fully insured plans, in which employer contracts an insurance company to cover employees and dependentsEmployer assumes direct risk for payment of claims for benefitsTerms of eligibility and coverage are set forth in a plan documentUnless exempted, such plans create rights and obligations under the Employee Retirement Income Security Act of 1974 (ERISA).
25 Medical Savings Account Type of self-insurance for small companies, self-insured, or uninsuredCan purchase health insurance policies and make tax-free deposits to a medical savings account (MSA)Use MSA money to pay small healthcare expenses, leaving catastrophic expenses to be paid by high-deductible insurance policyMoney remaining in MSA at year’s end earns tax-free interestPeople can also elect to use MSA money to pay their health insurance premiums during a job change, which should reduce job lock, a situation in which people do not change jobs for fear of losing their health insurance.
26 Medical Savings Account, cont’d Generally associated with self-employed individualsWithdrawals tax-free if used to pay for qualified medical expensesMSA must be coupled with a high-deductible health plan (HDHP)MSA funds can cover expenses related to most forms of healthcare, disability, dental care, vision care, and long-term careWithdrawals from MSA go toward paying the deductible expenses in a given year.Once the plan deductible is met in a given year, the HDHP pays any remaining covered medical expenses in that year.MSAs have been superseded by health savings accounts (HSAs), which were established as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
27 Lesson 20.2 Insurance Benefits Explain the numerous classifications of insurance benefits available.Explain how insurance benefits are determined.
28 Types of Insurance Benefits An insurance package is tailored to the needs of each individual or group policy, and the combinations of beneﬁts are limitless.
29 Types of Insurance Benefits, cont’d This is also called "cafeteria style," in which the employers can choose the benefits they want for their employees.
30 Hospitalization Hospital coverage pays cost of all or part of: Hospital room and boardHospital services, such as having surgeryHospital policies usually set maximum amount payable per day and maximum days of careHospital insurance policies frequently set a maximum amount payable per day and a maximum number of days of hospital care, per the diagnosis-related group (DRG).Some insurance companies require that the hospital be accredited or licensed.
31 Surgical Surgical coverage pays all or part of a surgeon’s fee Some plans also pay for an assistant surgeonSurgery includes any incision or excision, removal of foreign bodies, aspiration, suturing, and reduction of fracturesInsurer frequently provides subscriber with surgical fee schedule that establishes amount insurer will pay for commonly performed proceduresSurgery may be performed in a hospital, physician's office, or elsewhere.
32 Basic MedicalPays all or part of physician’s fee for nonsurgical services, including hospital, home, and office visitsPatient usually pays deductible and a co-payment or co-insurance payment each timeMay include provision for diagnostic lab, radiology, and pathology feesSome medical plans do not cover routine physical examinations or preventive health checkups, such as mammograms or prostate examinations, if the patient does not have a specific complaint or illness.
33 Major MedicalProvides protection against large medical bills resulting from catastrophic or prolonged illnessesCovers most serious medical expenses up to a maximum amount, usually after a deductible and co-insurance have been metMajor medical insurance was formerly called catastrophic coverage.
34 Disability (Loss of Income) Protection Insures beneficiary’s earned income against risk that a disability will make working uncomfortable, painful, or impossibleEncompasses paid sick leave, short-term and long-term disability benefitsMany policies do not start payment until after a specified number of days or until a certain number of sick leave days have been usedPayment is made directly to individual, intended to replace lost incomeWeekly or monthly cash benefits are provided to employed policyholders who become unable to work as a result of an accident or illness.
35 Dental Care Dental coverage included in many fringe benefit packages Programs offer a variety of options of either fee-for-service or managed care plansSome policies are based on a co-payment and incentive programDental benefits programs offer a variety of options in the form of either fee-for-service or managed care plans that reimburse a portion of a patient's dental expenses and may exclude certain treatments.
36 Vision CareMay include reimbursement for all or a percentage of cost for refraction, lenses, and framesSome vision plans also pay for corrective procedures, such as laser eye surgery.
37 Medicare SupplementA supplemental health insurance policy to help defray medical costs not covered or only partially covered by MedicareMedicare supplements that cover Medicare recipients’ out-of-pocket expenses, called Medigap policiesFederal regulations now require Medicare supplement contracts to be uniform in benefits to avoid confusion for the purchaser.
38 Special Risk Insurance Special risk insurance protects a person in event of types of accident or for certain diseasesUsually a maximum benefitSpecial risk insurance protects a person in the event of a certain type of accident, such as an automobile or airplane crash, or for certain diseases, such as tuberculosis or cancer.
39 Liability InsuranceLiability insurance covers losses to a third party caused by the insuredTypes include automobile, business, and homeowners’ policiesLiability policies often include benefits for medical expenses resulting from traumatic injuries, lost wages, and sometimes pain and suffering payable to individuals who are injured in the insured person's home or car, without regard to the insured person's actual legal liability for the accident.
40 Life InsuranceProvides payment of specified amount on the insured’s deathSometimes provide monthly cash benefits if policyholder becomes permanently and totally disabledSometimes proceeds from life insurance are used to meet expenses of insured person’s last illnessLife insurance provides payment of a specified amount on the insured's death, either to his or her estate or to a designated beneficiary or, in the case of an endowment policy, to the policyholder at a specified date.
41 Long-Term Care Insurance Covers a broad range of maintenance and health services for chronically ill, disabled, or mentally retarded individualsServices may be provided on an inpatient basis, on an outpatient basis, or at homeLong-term care insurance is a relatively new type of insurance.The Health Insurance Portability and Accountability Act (HIPAA) of 1996 improved access to long-term care services and coverage.
42 How Benefits Are Determined Indemnity schedulesService benefit plansResource-based relative value scale (RBRVS)Determination of the usual, customary, and reasonable (UCR) feesRelative value scale (RVS)Insurance benefits may be determined and paid in one of several ways.
43 Indemnity Schedules More flexible yet more costly option Traditional health insurance plans that pay for all or a share of cost of covered services, regardless of which provider is usedOften called fee-for-service plansIn exchange for premiums members pay, indemnity plan reimburses members or provider when claims are filedAlso known as major medical, these plans preceded the advent of managed care.Policyholders of indemnity plans and their dependents choose when and where to get healthcare services.
44 Service Benefit PlansInsuring company agrees to pay for certain surgical or medical services without additional cost to person insuredNo set fee scheduleSurgery with complications would warrant a higher fee than uncomplicated procedurePremiums are sometimes higher for this type of coverage, but often payments are largerConsider this example: the service benefit plan states that it will pay $900 for a cholecystectomy.If Dr. Jones charges $1,500 for this procedure, he has the right either to accept the $900 as payment in full and write off the balance due, or to request payment of the remaining $600 balance from the patient or the guarantor.
45 Resource-Based Relative Value Scale Physician fee schedule amounts vary, depending on facility or nonfacilityAmount of resources required to perform a service is determined through use of relative value units (RVUs), which CMS assigns to Current Procedural Terminology (CPT) codesSystem was implemented to standardize payment while providing an adjustment for overhead costs in different geographic areasTakes into account these elements: physician expense, malpractice, geographic practice cost index, and conversion factorThe CMS annually publishes physician fee schedule information on its Web site, in addition to the formula for calculating physician fee schedule payment amounts.
46 Usual, Customary, and Reasonable Fee Charges for a specific service are compared with a database showing:Charges to other patients for same service by same type of physicianCharges to patients by other physicians performing same or similar services in same geographic areaInsurance company determines whether provider’s charge is UCR, and any amount over allowed charge is not paidSometimes UCR is used synonymously with fee allowance schedule when that schedule is set relatively high.
47 Managed Care Plans and Major Third-Party Payers Lesson 20.3Managed Care Plans and Major Third-Party PayersDifferentiate among the different types of managed care options.List and discuss other major third-party payers.
48 Health Insurance Providers Include managed care plans, Blue Cross/Blue Shield (BC/BS), commercial insurance companies, and federal and state government programs, including Medicare, Medicaid, TRICARE, workers’ compensation, and disability insurance
49 Managed CareUmbrella term for all healthcare plans that provide healthcare in return for preset scheduled payments and coordinated care through a defined network of physicians and hospitalsHealth maintenance organizations (HMOs) provide comprehensive healthcare to an enrolled group for a fixed periodic paymentSome of these plans pay by capitation, which means that the provider is paid a fixed amount for each individual enrolled in the plan during a specified period (usually 1 year), regardless of the expenses or number of services provided to the patient.
50 Managed Care, cont’dBe familiar with individual managed care contract benefits and with procedures and processes for filing insurance claimsReview managed care plan’s specific handbook, contracts, and required formsThis familiarizes the medical assistant with that plan's benefits and preauthorization and referral requirements, which enables him or her to discuss those requirements with the patient and to prepare the required forms and insurance claims properly.Procedure 20-1 (p. 359) describes the process for properly applying managed care policies and procedures.
51 Managed Care Policies and Procedures Advantages of managed care include the following:Healthcare costs are usually containedEstablished fee schedules are usedAuthorized services are usually paid forMost preventive medical treatment is coveredPatients’ out-of-pocket expenses tend to be less than with traditional insuranceManaged care has been met with considerable controversy, and it has pros and cons that must be considered.
52 Disadvantages of Managed Care Access to specialized care and referrals can be limitedPhysicians’ choices in the treatment of patients can be limitedMore paperwork may be requiredTreatment may be delayed because of preauthorization requirementsReimbursement historically is less than with traditional insuranceIt is important that medical assistants be well versed in the various types of managed care plans to fully understand their impact on healthcare costs.
53 Comparison of HMO Models HMO, Health maintenance organization; IPA, Independent practice association; PCP, primary care provider.The two basic models of managed care are the HMO and the preferred provider organization (PPO).The HMO can be structured as an IPA, a staff model, or a group model or as an exclusive provider organization (EPO).
54 Health Maintenance Organization Plan that contracts with a medical center or group of physicians to provide both preventive and acute care for insuredRegulated by HMO laws, which require them to include preventive care as part of their benefits packageAlways require referrals to specialists, precertification, and preauthorization for hospital admissions, outpatient procedures, and treatmentsAn HMO member is typically enrolled for a specified period (month, quarter, or year).If the HMO is a capitation plan, it receives a "per member per month" (pmpm) fee for each enrollee.
55 Health Maintenance Organization, cont’d Providers receive payment according to various structures:Capitation is payment in advance to provider by HMO for contracted group of patientsFees charged for services to group members may be billed directly to IPA rather than to patientMost common HMO models are IPA, staff model, group model, and EPOIn capitation, if the physician provides services that cost less than the capitation amount, the physician makes a profit.Conversely, if the physician's services cost more than the capitation amount, the physician takes a loss.
56 Independent Practice Association IPA is independent group of physicians and other healthcare providers under contract to provide services to members of different HMOs, in addition to other insurance plansUsually at a fixed fee per patientPayments to providers by an IPA can be structured either as a capitation or fee for serviceThe physicians in the IPA, who have separately owned practices, formally organize a physician association and continue to practice in their own offices.A physician may be contracted with several IPAs.
57 Staff Model A staff model HMO hires physicians and pays them a salary HMO owns the networkMedical care is given or authorized by patient’s PCPNo capitation or fee-for-service payment structure is used with this modelThe physicians may receive bonuses biannually or annually based on the number of patients treated and/or the cost savings.
58 Group ModelGroup model HMO contracts with a multispecialty medical group to deliver care to its membersHMO reimburses physicians’ group, which is responsible for reimbursing physician members and contracted healthcare facilitiesMultispecialty group may organize a physician association; group members typically practice together in one facilityThis arrangement is similar to an IPA in that the multispecialty group may organize a physician association.The payment structure to the providers can be either capitation or fee for service.
59 Exclusive Provider Organization EPO combines features of an HMO and a PPO“Exclusive” because providers agree not to contract with any other planMembers must choose medical care from network providers with certain exceptions for emergency or out-of-area servicesRegulated under insurance statutes, not federal and state HMO regulationsAn EPO combines features of an HMO (e.g., an enrolled group or population, primary care providers, and an authorization system) and a PPO (e.g., flexible benefit design and fee-for-service payments).
60 Preferred Provider Organizations Managed care network of physicians and hospitals joined to contract with insurance companies, employers, or other organizations to provide healthcare to subscribers for discounted feePreserves fee-for-service concept that many physicians preferNo capitation or prepaid careSometimes called a participating provider organization.An insurer representing its clients contracts with a group of providers; the providers agree on a predetermined list of charges for all services, including those for both normal and complex procedures.
61 Preferred Provider Organizations, cont’d Typically patient pays deductibles or co-insurance payments of 20% to 25% of predetermined charge and insurer pays balancePhysician treats patient and bills PPOFurnish subscribers with list of member-providers to get PPO ratesRates often lower than those charged to non-PPO patientsA provider who joins a PPO does not need to alter the manner of providing care and continues to treat and bill the patients on a fee-for-service basis.Technically PPOs are not HMOs, but they do have more patient care management than regular indemnity insurance plans.If a patient goes to a physician who is not in the PPO network, the out-of-pocket cost is higher.
62 Blue Cross/Blue Shield America’s oldest and largest system of independent health insurersOffers incentive contracts to healthcare providersParticipating providers agree to write off difference between amount charged by provider and approved fee established by insurerAgree to bill patient only for deductible and co-pay/co-insurance amountsBC/BS agrees to reimburse providers directly and in a shorter timeIt began in 1929 when an executive at Baylor University in Dallas came up with a plan for teachers to budget for their future hospital bills.If the provider chooses to sign a member contract, he or she becomes a participating provider (PAR).
63 Blue Cross/Blue Shield Identification Card BC/BS identification (ID) cards carry the subscriber's name and ID number with a three-character alphabetic prefix (or a single alphabetic prefix if it is a government policy).The letters are an important part of the number and must be included on the claim form.
64 MedicaidAll states and District of Columbia have Medicaid programs, but programs vary widelyPerson eligible for Medicaid in one state may not qualify in another; services may differFederal government provides basic funding to state, after which states individually elect whether to provide funds for extension of benefitsThe state determines the type and extent of medical care that will be covered within the minimum requirements established by the federal government.Some local areas and states are developing HMOs that serve only patients who qualify for Medicaid.
65 Medicaid, cont’dPhysician may accept or decline to treat Medicaid patientsPhysician who does accept Medicaid patients automatically agrees to accept Medicaid payment as payment in fullPatient cannot be billed for difference between Medicaid fee and physician’s normal feePatient can be billed for any services not covered by MedicaidEligibility for benefits is determined by the respective states.
66 Examples of Those Who Qualify for Benefits Individuals who are medically needyRecipients of Aid to Families with Dependent Children (AFDC)Individuals who receive Supplemental Security Income (SSI)Individuals who receive certain types of federal and state aidIndividuals who are qualified Medicare beneficiaries (QMBs)Individuals in institutions or receiving long-term care in nursing and intermediate-care facilitiesIndividuals who are qualified Medicare beneficiaries (QMBs)—Medicaid pays for Medicare Part B premiums, deductibles, and co-insurance for qualified low-income elderly.Depending on the state in which Medicaid is administered, Medicaid recipients are identified with a Benefits ID Card (BIC), a monthly sticker, a label, or a letter showing proof of eligibility.
67 Medicaid Benefits ID Card A BIC looks like a white credit card and is verified by a point of service (POS) device similar to a credit or debit card verification machine.Verify coverage each time the patient comes into the office, regardless of the type of ID the recipient is issued.
68 MedicareMedicare is a federal health insurance program for the following:People age 65 years or olderPeople who are permanently disabled or blindPeople receiving dialysis for permanent kidney failure or who have undergone kidney transplantationMedicare was established July 1, 1966, under the Social Security Administration as a national health insurance program for those age 65 or older.Before Medicare was created, only 50% of the nation's elderly had any health insurance.The scope of coverage increased in 1973 to include disabled persons younger than age 65 receiving Social Security benefits, railroad retirees, and civil service retirees.
69 Medicare Part A Part A is hospital insurance covering: Inpatient hospital careSkilled nursing facilitiesHome healthcareHospice servicesFinanced with special contributions deducted from employed individuals’ salaries, with matching contributions from employersThese sums are collected, along with regular Social Security contributions, from wages and self-employment income earned during a person's working years.A hospitalized patient on Medicare must pay a deductible toward hospital expenses.Typically the deductible amount changes annually by congressional enactment.
70 Medicare Part BPart B is medical insurance, requires a monthly premium, and covers:Outpatient hospital careDurable medical equipmentPhysicians’ servicesOther medical servicesThose eligible for Part A are also eligible for Part B, but they must apply for this coverage and pay a monthly premium.Some federal employees and former federal employees who are not eligible for Social Security benefits and Part A may enroll in Part B.Certain disabled people younger than age 65 are also eligible.
71 Medicare Part B, cont’dPatient with Medicare Part B must meet annual deductible before benefits become availableAfter which Medicare pays 80% of covered, or allowed, benefitsPhysician usually accepts assignment of benefits for Medicare patients and is paid directlyPhysician must accept payment that Medicare allows and bills patient only for 20%If physician does not accept assignment, patient must pay entire bill and receives reimbursement check directly from MedicareMany Medicare enrollees also carry private supplemental insurance (Medigap policy) that pays the deductible and the 20% co-payment not covered by Medicare.
72 Medicare Health Identification Card Medicare health insurance cards typically show nine numbers with a suffix of one or two alphabetic characters that denote the patient's status, such as wage earner (A), spouse of a wage earner (B), widow (D), or other designations.(From Fordney MT: Insurance handbook for the medical office, ed 12, St Louis, 2012, WB Saunders.)
73 Medicare Advantage (formerly Medicare + Choice) Medicare Advantage offers expanded benefits for a fee through private health insurance programs, such as HMOs and PPOs that have contracts with MedicarePatients must have a referral from their PCP before seeking treatment from another entityThe Medicare Advantage program is commonly referred to as Part C, although Medicare does not label it as such.
74 Medicare Part DPart D offers a prescription drug plan at a reduced costAll Medicare recipients eligible for Part D, hopefully reducing prescription drug costsPrivate companies provide the Medicare prescription drug plansBeneficiaries choose drug plan and pay monthly premiumIn 2006, drug and prescription benefits were added to Medicare, creating Part D.As with other insurance, beneficiaries who decide not to enroll in a drug plan when they are first eligible may pay a penalty if they choose to join later.
75 TRICAREComprehensive healthcare program for family members of active duty personnel, military retirees and their eligible family members under age of 65, and survivors of all uniformed servicesManaged by military in partnership with civilian hospitals and clinicsAll military hospitals and clinics are part of TRICARE program and offer high-quality healthcare at low costs to plan usersBefore January 1994, this program was known as CHAMPUS, created in 1966 under Public Law
76 TRICARE Eligibility Individual must be a TRICARE or CHAMPVA recipient Entitled to retired, retainer, or equivalent payMust be listed in Defense Department’s Defense Enrollment Eligible Reporting System (DEERS)Also available for a TRICARE-eligible spouse under age 65 and dependent, unmarried children under age 21, or age 23 if in college full-timeEligible spouses and children of active duty service members may enroll, as may TRICARE-eligible widows, widowers, and certain former spouses (those who have not remarried).
77 Types of TRICARE PlansTRICARE Prime: Department of Defense’s managed care plan, similar to a civilian HMOTRICARE Extra: preferred provider network planTRICARE Standard: traditional fee-for-service plan (formerly CHAMPUS)More information about TRICARE eligibility requirements and the benefits of the three plans is available on the Evolve Web site.
78 CHAMPVAHealth benefits program similar to TRICARE for spouses and dependent children of veterans suffering total, permanent, service-connected disabilities and for surviving spouses and dependent children of veterans who died as result of service-related disabilitiesDepartment of Veterans Affairs (VA) shares with eligible beneficiaries cost of certain healthcare services and suppliesAfter eligibility for CHAMPVA has been determined and ID cards issued, the insured may obtain covered services and supplies from any provider who is appropriately licensed or certified to perform the services offered.Exceptions include certain mental health categories and freestanding ambulatory surgical centers.
79 Workers’ Compensation Federal and all state legislatures require employers to maintain workers’ compensation coverage for work-related illnesses and injuriesThe law also protects wage earners against the loss of wages and the cost of medical care resulting from occupational accident or diseaseNo state’s workers’ compensation laws cover all employees; check with patient’s employer to verify insurance coverageState laws differ as to the classes of employees included and the benefits provided.If a patient says that he or she was injured in the workplace or is suffering from a work-associated illness, check with the patient's employer to verify the insurance coverage.
80 Workers’ Compensation, cont’d Compensation benefits include medical care benefits, weekly income replacement benefits for temporary disability, permanent disability settlements, and survivor benefits when applicableProvider of service accepts workers’ compensation payment as payment in full and does not bill patientEmployee is obligated to promptly notify employer, who must then notify insurance company and refer employee to medical careTime limitations are set for the prompt reporting of workers' compensation cases.The purpose of workers compensation laws is to provide prompt medical care to an injured or ill worker so that the person may be restored to health and return to full earning capacity in as short a time as possible.
81 Disability ProgramsHealth insurance that provides periodic payments to an individual to replace income when a sickness, injury, or disability that is not a work-related condition results in insured being unable to workA disability insurance policy can be obtained through employer-sponsored and/or government-funded programs, or private policies can be purchased through a commercial insurance company.
82 Eligibility Procedures Lesson 20.4Eligibility ProceduresExplain the procedure for verifying insurance benefits.Perform eligibility and verification of benefits procedures.Explain how to make managed care referrals and obtain precertifications.Perform a preauthorization procedure.Discuss the different types of fee schedules.Demonstrate how insurance benefits are determined by calculating deductible and co-insurance payments.
83 Commercial InsuranceMany people are covered by health insurance issued by private (commercial) insurance companiesPhysicians and medical societies control neither premiums paid nor benefits received from such policiesPayment is normally made to subscriber unless subscriber or insured has authorized that payment be made directly to physicianSome examples of private (commercial) insurance companies include Aetna, Connecticut General, Metropolitan, and Prudential.
84 Understanding Insurance Plan Requirements Be familiar with handling of other tasks associated with an individual insurance plan or policyReview carrier’s handbook, contracts, and required forms to familiarize themselves with plan’s benefits and preauthorization and referral requirementsPrepare required forms and insurance claims properlyIt is important for one to be familiar with the particular procedures and processes for filing insurance claims set by individual insurance carriers, third-party payers, and government programs.Procedure 20-2 (p. 364) describes the process for properly applying third-party payer policies and procedures.
85 Utilization Management/ Utilization Review A form of patient care review by objective professionalsComponent of managed care to control costsUtilization review committee reviews cases to ensure services provided were medically necessary and see how providers use medical care resourcesAlso reviews physician referrals and emergency/urgent care casesThe specificity of diagnosis coding is critical.For referrals, the committee reviews the referral and either approves or denies it, so it is important to submit exact documentation and precise statements.
86 Verification of Insurance Benefits Verifying benefits is necessary to ensure patient is covered by insurance and to determine what benefits will be paid for routine and special procedures and servicesVerification protects physician and patient against unexpected medical care costsIt is important to verify insurance benefits before providing services to patients.Procedure 20-3 on p. 366 describes how to perform a verification of eligibility and benefits.
87 Verification of Insurance Benefits Form An example of a Verification of Insurance Benefits form is shown.
88 Steps for Verification of Benefits When patient calls for appointment, identify type of insurance or managed care organization to which patient belongsWhen patient arrives for appointment, photocopy both sides of patient’s ID cardContact insurance carrier to verify patient is eligible for benefits and determine basic benefits, exclusions or noncovered services; also find out whether preauthorization is required for specific types of procedures and servicesObtain name, title, and phone number of person contactedPhotocopying of the patient's ID card is done to ensure the information obtained is correct, and because co-payments or amounts to be paid may appear on the back for hospital, office, and emergency department visits.
89 Steps for Verification of Benefits, cont’d Document information in patient’s medical record and on a verification of benefits formGive patient a letter to read and sign outlining his or her insurance plan’s requirements and possible restrictions or noncovered itemsWhen referrals are required, explain procedure to patientCollect any co-payments or deductiblesMake sure he or she understands that without the referral, the patient is responsible for paying for the physician's services.
90 Sample Patient Responsibility Notification This letter can also outline the patient's responsibility in helping with this process.
91 Precertification and Preauthorization Many insurance companies require precertification or preauthorization if a patient is to be hospitalized or undergo certain proceduresMost managed care systems require preauthorization for patient to be referred to specialist or even for certain laboratory tests or other proceduresInsurance claims for payment will be denied if proper authorization is not obtainedMany insurance companies require precertification or preauthorization, usually within 24 hours.
92 Precertification and Preauthorization, cont’d For new patients, collect type of insurance and demographic information of patient and the insuredFor an HMO, check plan’s contract for precertification or preauthorization requirementsDocument information in writing or EMR before any services are givenTypically, only HMOs require preauthorization (precertiﬁcation); however, it is wise to check on the need for preauthorization for all insurance carriers during the verification of eligibility and benefits.
93 Sample Preauthorization and/or Referral Form This information should be obtained and recorded before the insurance carrier is contacted.
94 Precertification and Preauthorization, cont’d Fax form to insurance companyIn emergency, obtain authorization by phone and fax form as soon as possibleForm faxed back with authorization number and other vital informationPCP or “gatekeeper” generally responsible for obtaining authorizationObtaining preauthorization for referrals or certain procedures and services is required.Typically, the PCP, or "gatekeeper," is responsible for obtaining the authorization.
95 Referrals When a patient is referred to specialist by PCP Referral form must be completed in entirety for approval or denialThree types of referral:RegularUrgentSTATApproval or denial of a referral can take anywhere from a few minutes to a few days.Procedure 20-4 on p. 369 describes how to perform a preauthorization and a referral procedure.
96 Three Types of Referrals Regular referral: usually takes 3 to 10 days for review; used when PCP thinks patient must see specialist for further treatmentUrgent referral: usually takes 24 hours for review; used when urgent, but not life-threatening situation occursSTAT referral: can be approved immediately by phone; used for emergenciesNever tell the patient the referral has been approved unless you have a hard copy of the authorization.A referral becomes an authorization after it is reviewed by utilization management and/or the medical director and has been approved.The patient must bring the authorization to the specialist's office on the day the services will be provided.
97 Provide Information to Specialist and PCP Authorization codeDate on which referral request was received by utilization review departmentDate on which referral was approved and its expiration dateDiagnosis codeAn authorization is typically good for 60 days.If the authorization expires and services have not been provided, an extension may be requested.If services are provided after the expiration date, the claim will be denied.
98 Provide Information to Specialist and PCP, cont’d Name, address, and telephone number of contracted specialistComments section: this is most critical area of a referral, because this area designates services that have been approvedSometimes the PCP refers the patient to a specialist but does not receive approval for that specialist and must get approval for another.Always be sure that any specialist to whom the physician refers a patient is contracted with the same managed care plan as the PCP.
99 Denial of a ReferralPCP’s office notified if referral is denied because of insufficient information or lack of medical necessityWhen PCP’s office provides lacking information, referral is reviewed againSome medical groups notify both the PCP and the patient.
100 Self-ReferralTo be more competitive, some insurance companies allow patient to self-referAuthorization not required to see specialistProcedure for obtaining a self-referral is essentially the same as for a provider of serviceAuthorization form is completed by patient or with assistance of referred provider and faxed to insurance companyMany plans for senior citizens now have a self-referral and a co-payment, in addition to some other insurance coverage.
101 Fee SchedulesHealthcare practitioner must place a value on three commodities: time, judgment (expertise), servicesFees differ for each office based on type of practice and needs of facilityThe physician or physicians normally set the fees for procedures and services.
102 Third-Party Payers and Fee Schedules Government and managed healthcare organizations influenced costs by establishing allowable charges (maximum amount paid out for a procedure or service)When providers set a fee schedule, RBRVS and the lesser used RVS also affect chargesRBRVS-based fee schedule adjust fees for amount of resources required for servicesResources required determined through use of RVUs, assigned to CPT codesThe CMS developed the first comprehensive RBRVS-based fee schedule, which was adopted by Medicare in 1992.The amount of resources required to perform a service is determined through the use of RVUs, which are assigned to the CPT codes developed by the AMA with an adjustment for overhead costs in different geographic areas.Since Medicare's introduction of RBRVS, most third-party payers have adopted similar approaches in developing their fees.
103 Resource-Based Relative Value Scale RVRVS fee scale consists of three parts:Physician workCharge-based professional liability expensesCharge-based overheadThe physician work component includes the degree of effort invested by a physician in a particular service or procedure and the time it consumed.The professional liability and overhead components are computed by the CMS.
104 Resource-Based Relative Value Scale, cont’d RBRVS fee schedule designed to provide uniform payments, after adjustmentConversion factor is a single national number applied to all services, set by CongressProvider either writes off difference between RBRVS schedule and fee or passes on nonallowed portion of charge to guarantor for paymentContracts between the provider of service and the insurance payer vary greatly, depending on the insurance or third-party payer.It is important to know the contract terms for each different third-party payer and, upon receipt of payment, to examine the EOB from the carrier closely to ensure that all benefits have been reimbursed correctly.
105 Deductibles and Co-Insurance Many plans require patient to pay out-of-pocket deductible and co-insuranceOften have annual deductible amount patient must pay before plan pays anythingMost indemnity plans have annual out-of-pocket limit on amount members pay for co-insurance paymentsTakes major expense out of medical bills and helps keep premium costs down
106 Calculation of Deductible and Co-Insurance Column A shows that Mrs. Jones' total out-of-pocket expense is $1,000. She paid the $500 deductible, and 5% of $10,000, or an additional $500.The insurance company then paid the remaining balance of $9,000.
107 Calculation of Allowable Amount Column B shows that the cardiac surgery in this instance cost $20,000.Mrs. Jones' total out-of-pocket expense remains $1,000; therefore, in this case the insurance company is responsible for payment of the balance of $19,000.Because her maximum out-of-pocket expense, according to the plan described, is $1,000, even though the charges were doubled, she still pays only the $1,000 total out-of-pocket expense.
108 Allowable AmountsLimit placed on amount that will be reimbursed for any procedure or service is called an allowable amountAmount can be all or part of a chargeExamine EOB from insurance carrier closely; contracts varyDeductibles and co-insurance generally deducted from total charge for services renderedAllowable amounts are almost always deducted from an individual charge.
109 Calculating Deductible, Co-Insurance, and Allowable Amounts Deductible and co-insurance are subtracted from total charge for services and proceduresSum becomes patient’s responsibilityCan be billed to secondary insurance carrier if patient has oneThe steps for calculating deductible, co-insurance, and allowable amounts are presented in Procedure 20-5 (p. 372).
110 Closing CommentsResponsibilities include keeping patient informed and answering questions as they ariseUse good communication skills, patience, and tact when discussing third-party reimbursement issues with patientsWritten release must be given for medical information to insurance claims processingUnderstanding how insurance plans handle reimbursement of benefits is challenging both for patients and for medical assistants.If patients are well advised and comfortable with insurance facts before treatment begins, the medical experience will go more smoothly, and collection of fees not covered by the carrier will be easier.