1. Health Care 101 Understanding the Basics
Presented by
Angela Marese Boyle
CTA NODD Specialist, Region 3
Mary Jordan
CTA Regional UniServ Staff, Region 3
Mark DeWeerdt
CTA Regional UniServ Staff, Region 1

2. Health Care Who Delivers the Package?
Individual School Districts
Jointly Managed Trust (JMT)
Joint Powers Authority (JPA)
Other Risk Pools (i.e. CalPERS, Medicare, SISC,etc.)

3. What are the Main Plans? Health Maintenance Organization (HMO)
Preferred Provider Organization (PPO)
Point of Service (POS)

4. How Do They Differ?
HMO
A pre-paid medical group practice that provides comprehensive predetermined medical care.
Access is restricted to a prescribed set of providers.
Access to non-HMO providers is severely restricted–generally out-of-network emergency services only
Few patient choices
Less costly since a portion of the physician compensation is provided on a pre-paid, capitation basis (puts physicians on risk)

5. How Do They Differ?
PPO
A managed care plan that contracts with physicians and hospitals to provide comprehensive medical services. Contract providers exchange discounted services for increased volume–termed In-Network benefits.
Access to all providers is allowed
Reduced benefits, however, for non-network utilization.

6. How Do They Differ?
POS
A plan that provides coverage for care received from both participating providers and non-participating providers.
Patients whose care is directed through referrals from their primary care physician (PCP) receive a higher level of benefits, while patients who go directly to other physicians or facilities receive a lower level of benefits.

7. How are the Plans Funded?
Fully Insured
Partially Self-Funded/Insured
Self-Funded/Insured
Fully Insured- An employer who pays a premium to a health benefit plan provider to provide and administer benefit plans for its employees is said to be “fully insured”. This means the insurer, not the employer, is liable for the cost of medical claims.
3. Self-Insured-also called “self-funded”.

8. How Do They Differ? Fully Insured Plans –
The Insurance Company takes the risk
The Group may be pooled with others
The Group may be Experienced Rated, which could result in refunds or deficits
All services come from the selected carrier, such as the network, billing, claim payments, etc.

9. How Do They Differ? Partially Self-Funded Plans
A finite portion of the claim risk is shifted from the Insurance Company to The Employer or Group
Rewards include savings, greater freedom in plan design and more information in a timely manner on utilization
Mixture of Specific (for individual cost) & Aggregate (for employer’s liability) Stop-Loss contracts are purchased to cover the costs of large unpredictable large claims

10. How Do They Differ? Partially Self-Funded Plans
Stop-Loss Insurance is purchased where costs are high and the risk is predictable. This is usually done for “Carve Outs”
The most common carve outs are for pharmaceutical benefits, vision, and dental

11. How Do They Differ?
Self-Funded Plans –

12. How Do They Differ? Self-Funded Plans ….
The Employer or Group assumes the full risk
Benefits are administered by the Employer or Group, or may be handled through an Administrative Service Only (ASO) agreement with an Insurance Carrier or Third party Administrator (TPA)
Mixture of Specific (for high individual claims)& Aggregate (for high cumulative claims) Stop-Loss contracts are purchased to cover the costs when claims reach a certain level

13. Components of the Rates
Paid Claims
Incurred But Not Reported Reserves (IBNR)
Administrative Expense
Margin
Profit

14. Paid Claims
Claims that result in a payment during a specific period of time.

15. IBNR-Incurred But Not Reported
Claims that have not been reported to the Insurer as of some specific date for services that have been provided. The estimated value of these claims is a component of an Insurer’s current liabilities.

16. Administrative Expense
Billing/Eligibility
Claim Paying Services
Medical Network
Identification Cards
Communication Materials
Client services
Stop Loss Premium

17. Margin the “Fudge Factor”
An amount added to the rates to help ensure that the Insurance Company will have a profit.
Sometimes this is referred to as…
the “Fudge Factor”

18. In most plans, the profit margin is in the range of 1-2%

19. What is the Basis for Rate Changes?
That is
the million dollar question!

20. Just To Name a Few… Utilization Paid Claims Trend Demographics
Plan Design
Quality of Health care
Disease Management Programs
Formularies
Margin
Wellness Programs
Rx Plan
Opt Outs

21. Questions?