Basics of Health Insurance Chapter 19

Introduction Health Insurance is designed to help individuals and families offset the cost of medical care. There are many types of health insurance available, but many individuals in the United States are not covered by any type of health insurance plan.

This chapter will examine: The purpose of health insurance Types of insurance policies How insurance benefits are determined Types of and use of fee schedules Preauthorizations and precertifications Major third-party payors

Cycle of Health Insurance The medical assistant plays a part in the provider’s reimbursement by providing accurate information on claim forms. Follow-up is sometimes necessary to make certain that claims are paid correctly and in a timely manner.

Cycle of Health Insurance Obtain information from the patient and insured. Verify the patient’s eligibility and benefits. Perform diagnostic and procedural coding Calculate deductibles and co-insurance amounts.

Cycle of Health Insurance Obtain preauthorization or permission, if applicable, for referral if advance permissions is needed. Complete the insurance claim form and submit it to the third-party payor. Post payments sent by insurance carriers. Bill the patient for remaining balances. Follow up on rejected or unpaid claims.

Cost of Coverage Patients may have to pay certain expenses related to their health coverage. Deductibles Amounts paid out of pocket before insurance will pay on a health claim Copayments Amount paid at the time of service Co-insurances Percentage paid by insured before insurance pays on a claim

Types of Health Insurance Group policies These policies cover a number of people under a single master contract issued to an employer or other association of individuals.

Types of Health Insurance Individual policies Usually more expensive than group policies, these are usually purchased by individuals who do not have access to any other type of health insurance.

Types of Health Insurance Government plans Sometimes called entitlement programs, these plans are sponsored by some branch or division of the government; examples include Medicare, Medicaid, TRICARE, and CHAMPVA.

Types of Health Insurance Medicaid A government program designed for medically indigent individuals who meet specific eligibility criteria

Types of Health Insurance Medicare A program established by the federal government for persons 65 and older, as well as persons with certain disabilities

Types of Health Insurance Workers’ compensation Laws that protect workers against the loss of wages and cost of medical care resulting from an occupational accident or disease

Types of Health Insurance Self-insured plans Often offered by large employers, which put a certain amount of money in an account per month, per employee; eligible medical bills are paid from that account.

Types of Health Insurance Medical savings accounts Tax-free accounts that allow the individual to make tax-free deposits into the account; the money is in turn used for medically related expenses

Types of Insurance Plan Benefits

How Benefits Are Determined By indemnity schedules By service benefit plans By determination of the UCR fee By relative value studies

Indemnity Schedules Often called fee-for-service plans. Usually any provider can be consulted. Payment is usually made directly to the provider. A certain percentage of the fee is paid by the plan, and the insured is responsible for the balance.

Service Benefit Plans No set fee schedule. Certain surgical and medical services are paid without any additional cost to the insured. Premiums sometimes higher, but payment is often larger as well.

Usual, Customary, and Reasonable Fee Charges for specific services are compared with a database of charges by physicians in the same geographic area for the same service.

Resource-Based Relative Value Scale Fee-scale payment system based on: Physician work Charge-based professional liability expenses Charge-based overhead

Health Insurance Providers Managed care plans Provide healthcare in return for preset scheduled payments. Care is coordinated through a network of contracted physicians and hospitals.

Advantages of Managed Care Costs are usually contained. Fee schedules are established. Authorized services are usually paid. Preventative treatment is usually covered. Patient out-of-pocket expenses are usually minimal.

Disadvantages of Managed Care Access to specialized care and referrals can be limited. Physician choices may be limited. Paperwork may increase. Treatment may be delayed because of preauthorization requirements. Reimbursement is historically less than through traditional insurance.

Models of Managed Care Health Maintenance Organization (HMO) Preferred Provider Organization (PPO)

HMO Contracts with a medical center or group of physicians to provide preventative and acute care for the insured Regulated by HMO laws Always require referrals to specialists Common HMO models are: IPA staff model group model

Comparison of HMO Models

PPO Preserves the fee-for-service concept. Predetermined list of charges is contracted with providers. No capitations or prepaid care. Usually has deductibles and/or copays. Rates for services usually lower than for non-PPO patients.

Capitation Plans Found in HMOs. Providers are paid per member, per month. Patients may not even see the provider, yet he or she is paid a fee for that month.

Exclusive Provider Organization Combines features of HMO and PPOs. Employers agree not to contract with any other plan. Members must choose from a list of network providers. Exceptions are made for emergency and out-of-town care.

Blue Cross/Blue Shield America’s oldest and largest system of independent health insurers Offers incentive contracts to healthcare providers PAR—participating providers accept BC/BS payment as reimbursement in full

BC/BS ID Card

Medicaid Federal government assists states in providing healthcare services. States individually elect to provide funds for extension of benefits. Physicians may decide whether to treat patients with Medicaid coverage.

Medicaid ID Card

Qualifiers for Medicaid Medically needy Recipients of Aid to Families with Dependent Children Recipients of Supplemental Security Income (SSI) Persons receiving certain types of state aid Some Medicare qualifiers Persons in institutions or receiving long-term care in nursing facilities and intermediate care facilities

Medicare Qualifiers include: People 65 or older People who are permanently disabled or blind People receiving dialysis for permanent kidney failure or who have had a kidney transplant

Medicare Administration Medicare is administered by the Centers for Medicare and Medicaid Services Formerly known as the Healthcare Financing Administration (HCFA) Division of the Department of Health and Human Services

Medicare Parts A and B Part A Inpatient hospital care Skilled nursing facilities Home healthcare Hospice services Part B Outpatient hospital care Durable medical equipment Physician’s services Other medical services

Medicare Part “C” Not commonly called Part C Medicare + Choice Expanded benefits similar to those of HMOs and PPOs

Medicare Part D Drug and prescription benefits. Drug plan is chosen at a reduced cost. Usually a small copayment is required.

Medicare ID Card

TRICARE Formerly CHAMPUS. Comprehensive healthcare program for military dependents and retirees. Expands access to healthcare. All military hospitals and clinics are a part of TRICARE.

TRICARE Choices Prime Extra Standard similar to a civilian HMO similar to a civilian PPO Standard traditional fee-for-service option formerly known as CHAMPUS

CHAMPVA Similar to TRICARE. Established for spouses and dependent children of veterans who have total, permanent, service-related disabilities. Most participants receive services at VA hospitals.

Worker’s Compensation Protects wage earners against the loss of wages and the cost of medical care after an occupational accident or illness. Always check for coverage when the patient mentions a work-related illness. Benefits include medical care, weekly income replacement benefits, permanent disability settlements, and more.

Disability Programs Form of health insurance Provide periodic payments to replace income Can be obtained through employer-sponsored and/or government-funded programs

Commercial Insurance Issued by private companies Secured through employers or individually Payment usually made to subscribers unless authorization is given to pay providers

Verification of Insurance Benefits Identify type of insurance coverage when the patient first calls the office. Photocopy both sides of the insurance ID card. Contact the insurance carrier to verify coverage and eligibility.

Verification of Insurance Benefits Document information in the patient’s medical record. Explain covered and noncovered procedures and services to the patient, if necessary. Explain the referral procedure to the patient. Collect copayments and/or deductibles.

Precertification or Preauthorization Information needed: Patient name, address, phone number Patient ID number Provider name and information Plan name and address Preliminary diagnosis Planned procedures and treatments Facility addresses and phone numbers Copayments and deductibles Hospital benefits Participating facilities

Referrals Can take a few moments or a few days. Urgent referrals usually are done within 24 hours. STAT referrals may be offered. Regular referrals most common.

Utilization Management Making certain that medical care is necessary for the patient Utilization review committees determine whether certain procedures are medically necessary, which may influence reimbursement amounts

The Federal Register Official daily publication for rules, proposed rules, and notices of federal agencies and organizations Sponsored by the Office of the Federal Register (OFR)