CHAPTER 10 GROUP MEDICAL EXPENSE BENEFITS: TRADITIONAL PLANS

Blue Cross and Blue Shield Blue Cross established by hospitals; Blue Shield by physicians Each had national governing boards which eventually merged. 50 plans in existence. Some are only Blue Cross or Blue Shield, but most are both. Most plans operate in a single state. Boards now dominated by nonproviders such as labor unions, consumer organizations, foundations, and the general public

Insurance Companies Most coverage is written by life insurers. Few companies specialize in health insurance only. Write more coverage than the Blues

Comparison of Insurers and the Blues-- Traditionally There Were Significant Differences, But as Time Goes on They Are Becoming More Alike. –Regulation and taxation –Form of benefits –Types of benefits –Reimbursement of providers Per diem on Blues

Comparison (cont.) –National coverage. Insurers operate nationally and may have competitive edge. However, the Blues do have procedures for handling national accounts. –Flexibility. Insurers typically offer employers more flexibility in designing own contract. –Rating--little difference because the Blues now also use experience rating for larger groups –Marketing

Hospital Expense Benefits Room and board Other inpatient charges Preadmission certification Outpatient benefits Exclusions –Possibly pregnancy for smaller employer (<15) Deductibles and coinsurance-- –Rarely used for basic coverage. Limitations in form of maximum benefits payable

Surgical Expense Benefits Covers physicians' charges associated with surgery Surgery defined to include items such as suturing, electrocauterization, and treatment of fractures or dislocations Covers both inpatient and outpatient surgery. Latter may be encouraged by higher benefits. Second surgical opinions

Physicians' Visits Expense Benefits Covers charges of physicians other than surgeons May be for in-hospital visits only or for both in-hospital and out-of-hospital visits

Other Basic Benefits Extended-care facility benefits Home health care benefits Hospice benefits Ambulatory-care expense benefits Birthing centers

Other Benefits (cont.) Diagnostic X-ray and laboratory expense benefits Radiation therapy expense benefits Prescription drug expense benefits Vision-care expense benefits Supplemental accident expense benefits

Types of Major Medical Coverages Supplemental--an add on to basic coverages Comprehensive--incorporates basic coverages Most new plans are comprehensive which are easier to administer and communicate than are supplemental plans. Reasons for using supplemental

Covered Major Medical Expenses Types (supplemental, comprehensive) Exclusions (some examples) –Occupational –Government agencies –Cosmetic surgery –Physicals –Experimental $ Limitations

Major Medical Deductibles Definition: The initial amount of covered expenses an individual must pay before benefits are paid. Types: initial, corridor, integrated Amounts Frequency Expenses to which deductibles apply

Major Medical Coinsurance Insured must bear a portion of medical expenses that exceed the deductible percent is normal. One coinsurance percentage may apply to all expenses. Separate coinsurance percentages may apply to different expenses. Most policies contain a stop-loss limit which is an amount of covered expense above which no copayments are required.

Major Medical Maximum Benefits Lifetime maximum Per-cause maximum

Managed Care in Traditional Plans Several managed care techniques (e.g., hospital certification and second surgical opinions) have already been discussed. Preapproval of visits to specialists Attempts to minimize use of specialists and emergency rooms when treatment can be provided by primary-care physician. Primary-care physician does not certify visit to specialist, but must be made aware of the visit.

Managed Care “Preventive” coverage Alternative facilities –Extended care –Home health care –Hospice –Birthing centers Alternative Medicines MSAs (next slide)

MSAs <50 ees or self employed High deductible plan –$1550 < dduct<$2350 for individual –$3100 < dduct < $4650 family Contibs by ee or er, but not both –Max 65% dduct for indiv, 75% family Balances carry over without penalty Balance is part of estate