FROM PATIENT TO PAYMENT Chapter 1 FROM PATIENT TO PAYMENT

FROM PATIENT TO PAYMENT Learning Objectives Explain the main differences between indemnity plans and managed care plans. Define the various types of insurance coverage. Identify five steps in the payment process of a patient’s insurance claim form. Discuss four primary responsibilities of a medical insurance specialist. List effects of insurance claim errors on medical office routines. Chapter 1

Key Terms Assignment of benefits Benefits Coinsurance Copayment Cost-containment practices Deductible Dependent Diagnosis (dx) Direct payment Electronic claims Electronic remittance advice (ERA) Encounter form Explanation of benefits (EOB) Fee-for-service Indemnity plans Indirect payment Chapter 1

Key Terms (cont’d) Insurance carrier Insurance claim form Insurance log Managed care Managed care organization Medical insurance Medical insurance specialist Patient information form Policyholder Preauthorization Premium Provider Release of information Schedule of benefits Chapter 1

Introduction to Medical Insurance Medical Insurance – is an agreement between a person, who is called the Policyholder, and a Health Plan. Health Plan– is also know as “Insurance Carriers or Payers” are organization that offer financial protection in case of illness or injury People buying medical insurance pay a Premium to the health plan. In Exchange for the Premium, the health plan agrees to pay amounts, called Benefits, for Medical Services. Medical Services – include the care supplied by a Provider, Hospitals, Physicians & other medical staff and facilities. Chapter 1

Introduction to Medical Insurance Insurance Policy – may contain a “schedule of benefits, which is a list of covered medical services. May include: Payment for medical necessary medical treatments received by policyholders & dependents Surgery, primary care, emergency care, hospital-based services, etc. Preexisting Conditions–may not be a covered service. It is an illness or disorder that existed before the effective date of the insurance coverage. Preexisting Conditions - are excluded from coverage under some policies, or a specified length of time must elapse before the condition is covered. Chapter 1

Indemnity Plan Indemnity Plan – An insurance company’s agreement to reimburse a policyholder a predetermined amount for covered losses. Also known as fee-for-service plans Providers charge a specific Fee for each service rendered. Fee paid by Patient and/or Patient Insurance. Allows insured individuals to choose any physician or hospital when seeking medical services. Chapter 1

Indemnity Plans Benefits paid when treatment is received Schedule of Benefits (list the services that are paid & the amounts that are paid) Patient pay a coinsurance, deductibles, and a premium Coinsurance – percentage of the Fee(s) that the policyholder pays. Deductibles – A certain amount of money that the patient must pay each year toward his/her medical expenses before health insurance benefits begin. Premium – Periodic amount of money the insured pays to a health plan for a health care policy Chapter 1

Indemnity Plans - Formula Charge – Deductible – Patient Coinsurance=Health Plan Payment Case Study An indemnity policy states that the deductible is the first $200 in covered annual medical fees and that the coinsurance rate is 80-20. A patient whose first medical charge of the year was $2,000 would owe $560. Charge $2,000 Patient owes the deductible $ 200 Balance $1,800 Patient also owes coinsurance (20% of the balance) $ 360 Total balance due from patient $ 200+$360=$560 Chapter 1

Indemnity Plans - Formula Charge – Deductible – Patient Coinsurance=Health Plan Payment Case Study In this case, the patient must pay an out-of-pocket expense of $560 this year before benefits begin. The health plan will pay $1,440, or 80% of the balance. Charge $2000 Patient payment $ -560 Health Plan Payment $1,440 Chapter 1

Indemnity Plans - Formula Charge – Deductible – Patient Coinsurance=Health Plan Payment Case Study If the patient has already met the annual deductible, the patient's benefits apply to the charge. Charge $2000 Patient Coinsurance (20%) $ 400 Health Plan Payment (80%) $1,600 Chapter 1

Managed Care Plans Manage Care Plan – is a plan composed of a group of providers who share the financial risk of the plan or who have an incentive to deliver cost-effective, but quality service. Manage Care – offers a more restricted choice of providers and treatments in exchange for lower premiums, deductibles, and other charges than traditional indemnity insurance. Chapter 1

Managed Care Organization Managed Care Organizations (MCO) Responsible for both the delivery and financing of health care services Establish links among provider, patient and payer. Both Patient and Provider have agreements with the MCO. The Patient agrees to the payments for the services The Provider agrees to accept the fees the MCO offers for services   Chapter 1

Managed Care Organization Managed Care is the leading type of health plan. Patients maybe required to pay fixed premiums at regular time periods, such as monthly. A Patient may also pay a copayment. Copayments – A fixed fee, such as $10 that a health plan requires a policyholder to pay at the time of service for each health care encounter. Chapter 1

Cost Containment Cost-Containment Practices - is a method to help control cost. Patients may be required to choose from a specific group of physicians and hospitals. Visits to specialist often must be made by a Referral from the patient’s primary care physician. A second physician’s opinion may be required before surgery can be reimbursed. Many services that involved overnight hospital stays are now covered only if done during day-time hospital visits, with patients recuperating at home. Chapter 1

Cost Containment - Preauthorization Preauthorization – a cost-containment practice to help control cost. If preauthorization is required, the health plan must approve a procedure before it is done in order for the procedure to be covered. Referrals my be required from patients’ primary care physician before visits to a specialist. Nonemergency services must be approved before a patient is admitted to the hospital. Shorter hospital stays are encouraged, and weekend hospital admissions for Monday service may not be permitted. Chapter 1

Managed Care Plans Basic Type of Manage Care Plans Are : Health Maintenance Organization (HMO) Point-of-Service Plan (POS) Preferred Provider Organization (PPO) Consumer-Driven Health Plans (CDHP) Chapter 1

Managed Care Plans HMO Defined Health Maintenance Organization (HMO) Combine coverage of medical costs and delivery of health care for a prepaid premium. HMO creates a network of physicians, hospital, and other providers by employing or negotiating contracts with them. HMO then enrolls members in a health plan under which they use the services of those network providers. Chapter 1

Managed Care Plans POS Defined Point-of-Service Plan (POS) POS is also known as “Open HMO “ Reduces restriction by allowing members to choose out-of-network providers. Members must pay additional set fees when they use out-of-network services. The HMO pays out-of-network providers on a fee-for-service basis. Chapter 1

Managed Care Plans PPO Defined Preferred Provider Organization (PPO) PPO is another health care delivery system that manages care. PPO are the most poplar type of insurance plan. They create a network of physicians, hospitals, and other providers with whom they have negotiated discounts from the usual fee. Premiums & copayments are required, and maybe higher than HMO and POS plans PPO do not require a primary care physician to oversee patients’ care. Referrals to specialists are also not required. Members can use out-of-network Providers at a higher copayment & deductibles. Chapter 1

Managed Care Plans CDHP Defined Consumer-Driven Health Plans (CDHP) CDHP combine two elements: The first element is a health plan, usually a PPO, that has a high deductible (such as $1,000) and low premiums. The second element is a special “Saving Account” that is used to pay medical bills before the deductible has been met. The Saving Account, similar to an individual retirement account (IRA), it lets people put aside untaxed wages that they may use to cover their out-of-pocket medical expenses. Some employers contribute to employees’ account as a benefit. Chapter 1

Private Medical Insurance Private Insurance Private Insurance are health plans. Most are Group contracts/policies that covers people who work for the same employer or belong to the same organization. They include private companies such as professional association, labor unions and schools. Other plans are offered as individual contracts, which are policies purchased by people who do not qualify as members of a group Chapter 1

Private Medical Insurance Auto or liability insurance May also provide coverage for treatment Coverage may varies by State Self-Funded Health Plans Approximately 50 million employees have health insurance through employers that have established themselves as self-funded (self-insured) health plans. Chapter 1

Private Medical Insurance Self-Funded Health Plans – Cont. Examples of Self-funded health plans /companies are General Motors and, UPS (United Parcel Service) Rather than paying premiums to an insurance carrier, the organization “insures itself.” It assumes the risk of paying directly for medical services and sets up a fund from which it pays for claims. The organization establishes the benefit levels and the plan types it will offer. Self-Funded Health Plans may set up their own provider networks or, buy the use of existing networks from managed care organizations. Chapter 1

Government Programs Military-Related Medicare Medicaid Tricare (formerly CHAMPUS) CHAMPVA Medicare Medicaid Workers’ compensation Chapter 1

Government Programs Military-Related TRICARE (formerly CHAMPUS) - is a government health program that serves: dependents of active-duty service members, military retirees and their families, some former spouses, and survivors of deceased military members. Chapter 1

Government Programs Military-Related CHAMPVA The Civilian Health and Medical Program of the Veterans Administration, which shares health care costs for families of veterans with 1—percent service-related disabilities and; for the surviving spouses and children of veterans who died from service-related disabilities. Chapter 1

Government Programs Military-Related Medicare – A federal health plan that covers persons aged 65 and over, peoples with disabilities, and dependent widows. Medicaid – A federal and state assistance program that pays for health care services for people with incomes below the national poverty level. Chapter 1

Government Programs Military-Related Workers’ Compensation - A State or Federal Plan that covers medical care and other benefits for employees who suffer accidental injury or become ill as a result of employment. Chapter 1

The Health Care Claim Billing & Payment Cycle A person covered by a health plan receives insurance benefits by filing a Health Care Claims. The Claim Identifies The Policyholder (and the patient). Tells health plans which medical services were performed and why. Chapter 1

The Health Care Claim Billing & Payment Cycle Five Steps in the Payment Process of Health Care Claim: Step 1 Patient information form Step 2 Doctor determines the dx Step 3 Medical insurance specialist collects data from patient records and completes claim form Step 4 Insurer reviews claim Step 5 Medical insurance specialist checks ERA/EOB for accuracy Chapter 1

Step 1 - Patient Information Form Patient Information Form –includes a patient’s personal, employment, and insurance company information needed to complete a health care claim. The patient information form is also known as the “registration form”. Chapter 1

Step 1 - Patient Information Form The Patient Information Form has space for the patient’s & guardian’s signature, signature for release of medical information or the phrase, “signature on file” (SOF). Assignment of Benefits Allows payment to be made directly to provider Release of Information Used to assist in patient treatment or processing of claims The patient completes (or updates) the patient information form. Chapter 1

Step 2 - Diagnosis and Encounter Form Completed by physician Diagnosis(es) determined Treatment documented Encounter form Also called superbill Compiles data for each office visit Details dx and procedure codes and charges Chapter 1

Step 3 - Data Collection Completed by medical insurance specialist Collects data from patient information form, patient medical record, and encounter form Completes and submits claim form Paper or electronic Insurance log Used to track status of claims Chapter 1

Step 4 - Claim Review Completed by insurance company Fee-for-service Compares dx and procedures Fee-for-service Compares fees to schedule of benefits Determines amount of benefit and coinsurance/deductible Claim is paid or denied ERA/EOB sent to provider Chapter 1

Step 5 - Follow-up Completed by medical insurance specialist Checks ERA/EOB for accuracy Payment/denial recorded in insurance log Patient account Payment recorded in patient ledger Patient Ledger – is a record of all charges and payments made on the patient’s account. Remainder billed to patient, if balance due Chapter 1

Responsibilities of Medical Insurance Specialists Gathering patient information Obtaining signatures Release of Information Assignment of Benefits Submitting insurance claim forms Paper or electronic Reviewing insurance payments/denials Resubmitting corrected claims Help patients understand insurance procedures Chapter 1

Effects of Errors Lower payments and denied claims Delayed payments Disruption of other work Patient questions and complaints Chapter 1

managed care organization medical insurance specialist Quiz Indemnity plans are also known as _________________ plans. fee-for-service The ___________ determines the dx code. physician The _______________________________ determines the payment for managed care insurance claims. managed care organization The ___________ ___________ ________ completes the claims process. medical insurance specialist Chapter 1

Critical Thinking What are some benefits of keeping an insurance log? The status of all claims is available at any time. Delays in payment can be investigated. Analysis of the efficiency of the practice’s and insurer’s claims process can be made. Chapter 1