2 Understanding Managed Care: Insurance Plans

Key Terms and Abbreviations assignment of benefits carriers coinsurance commercial health insurance copayment deductible enrollee group insurance

Key Terms and Abbreviations health maintenance organization (HMO) inpatient insured managed care managed care organization (MCO) outpatient point-of-service (POS) policyholder

Key Terms and Abbreviations preauthorizations preexisting condition preferred provider organization (PPO) premiums primary care physician (PCP) providers referral

Chapter Objectives After completing this lecture, you should be able to complete the following learning objectives: 2.1: Understand the history and impact of managed care. 2.2: Be able to discuss the organization of managed care and how it affects the provider, employee, and policyholder. 2.3: Calculate the financial responsibility of the patient.

2.1: Understand the history and impact of managed care.

2.1: Managed Care What Is Managed Care? Managed care is a system of providing and paying for healthcare services in which a member is enrolled in a specific healthcare plan.

2.1: Managed Care What Is Managed Care? The system evolved as a method to control healthcare costs and the way in which services are provided to enrolled members. Managed care uses a network of healthcare providers.

2.1: Managed Care History of Managed Care Managed care originated in the United States in the early 20th century with the advent of a few prepaid health plans that covered physician and/or hospital services for employees of certain companies and industry groups.

2.1: Managed Care History of Managed Care An aging population and increasing healthcare costs led to the rapid growth of managed care plans from the 1970s through the 1990s.

Table 2.1 -- Managed Care Timeline

Table 2.1 -- Managed Care Timeline

Table 2.1 -- Managed Care Timeline

Table 2.1 -- Managed Care Timeline

2.1: Managed Care Goals of Managed Care Ensure that medical care is provided in a facility that manages or controls costs. Ensure that services or procedures are medically necessary based on the patient’s condition or diagnosis.

2.1: Managed Care Goals of Managed Care Ensure that care is rendered by the most appropriate provider and in the most appropriate and least-restrictive setting.

The Provider, Employee, and Policyholder 2.2: Be able to discuss the organization of managed care and how it affects the provider, employee, and policyholder.

2.2: The Provider, Employee, and Policyholder Managed Care Organizations (MCOs) MCOs are organizations (usually health insurance carriers) that contract with physicians and healthcare facilities to provide services to enrolled members for a discounted fee (contract fee). Physicians and other healthcare professionals and facilities that bill for services are referred to as providers.

2.2: The Provider, Employee, and Policyholder Payment for Services MCOs establish reasonable and customary (R and C) or usual, customary, and reasonable (UCR) fees for services and procedures. Providers have standard or usual fees they customarily charge for a particular service or procedure.

2.2: The Provider, Employee, and Policyholder Payment for Services The MCO pays the provider the agreed-upon contract fee for a specified service or procedure.

2.2: The Provider, Employee, and Policyholder Payment for Services When the contract fee is lower than the provider’s standard fee, the provider will write off the difference.

2.2: The Provider, Employee, and Policyholder Payment for Services Medical office specialists may be responsible for determining the amount that will be paid by the carrier, the amount of write-off (adjustment), and the amount that will be due from the patient (called a member or policyholder).

2.2: The Provider, Employee, and Policyholder Payment for Services Patients (policyholders) are responsible for a share of the cost of healthcare services and procedures. Depending on the terms of the specific plan, patients will be charged a copayment at the time of service and, in many cases, must pay a deductible before the plan benefits take effect.

Financial Responsibility of the Patient 2.3: Calculate the financial responsibility of the patient.

2.3: Financial Responsibility of the Patient Step 1: Determine the carrier’s allowed amount. According to the MCO contract and fee schedule, determine the amount to be paid by the carrier for the particular service or procedure. This is the allowed amount. (In some cases, it may be necessary to contact the carrier to verify this amount.)

2.3: Financial Responsibility of the Patient Step 2: Determine the percentage of coinsurance. The patient’s plan may provide coverage for the majority of healthcare costs, such as 80%. The remaining 20% of the allowed amount for a service or procedure is the patient’s coinsurance, or the percentage of costs for which the patient is responsible.

2.3: Financial Responsibility of the Patient Step 3: Determine the amount of any unpaid deductible. Some plans require that patients pay an annual deductible, which is the amount a patient pays out of pocket for services before plan benefits take effect.

2.3: Financial Responsibility of the Patient Step 4: Determine the copayment. Most managed care plans require the patient to pay a specified amount at each time of service. This is the copayment.

Types of Managed Care Plan 2.4: Identify the type of managed care plan in which a patient is enrolled.

2.4: Types of Managed Care Plan There are three types of managed care plans: Health maintenance organizations (HMOs) Preferred provider organizations (PPOs) Point-of-service plans (POSs) All three types of plans involve a network of contracted providers.

2.4: Types of Managed Care Plan Health Maintenance Organization (HMO) Most restrictive type of managed care plan Only pays for services performed by in-network providers

2.4: Types of Managed Care Plan Health Maintenance Organization (HMO) Members select a primary care physician (PCP), who may be a general practitioner, internist, OB/GYN, or pediatrician. The PCP coordinates care and makes referrals to specialists. Emphasis on preventive care with goal of containing overall healthcare costs.

2.4: Types of Managed Care Plan Preferred Provider Organization (PPO) Less restrictive than HMO plans Members can obtain care from both in-network and out-of-network providers. PPOs offer an incentive to obtain care from in-network providers by paying a higher percentage of costs.

2.4: Types of Managed Care Plan Preferred Provider Organization (PPO) Members are not required to have a PCP. Usually no referral is required to see a specialist.

2.4: Types of Managed Care Plan Point-of-Service (POS) Plan Some HMO plans offer a POS option, which makes it more like a PPO plan. POS plans allow the patient more flexibility and freedom of choice in obtaining care.

2.4: Types of Managed Care Plan Point-of-Service (POS) Plan Members can choose to receive services from out-of-network providers at a higher cost. POS plans encourage but don’t require members to select a PCP.

2.4: Types of Managed Care Plan Table 2.3 -- Various Types of MCOs and Their Characteristics

2.4: Types of Managed Care Plan Table 2.3 -- Various Types of MCOs and Their Characteristics

Types of Insurance Coverage 2.5: Recognize various types of insurance coverage.

2.5: Types of Insurance Coverage Health Insurance Classifications Commercial health insurance: Coverage is offered by for-profit companies Government-sponsored insurance: Government-funded programs include Medicare (for seniors), Medicaid (for low-income individuals and families), and plans for active members of the military, military dependents, and veterans

2.5: Types of Insurance Coverage Health Insurance Classifications Group insurance: One master policy is issued to an organization or employer covering members or employees. Provides more extensive benefits and lower premiums than individual plans.

2.5: Types of Insurance Coverage Health Insurance Classifications Individual insurance: One policy is issued to an individual covering that person and any dependents. Premiums are higher than with group plans.

2.5: Types of Insurance Coverage Major Types of Insurance Indemnity Plan/Fee for Service Covered individuals may obtain care from any provider they choose. Providers are reimbursed the usual and customary fee for services. There is no provider network, negotiated discounted rates, or requirement to obtain preauthorization for services.

2.5: Types of Insurance Coverage Major Types of Insurance Hospital Insurance Coverage for inpatient hospital care Covers room charges; medical, surgical, and diagnostic procedures; drugs; and other medically necessary items

2.5: Types of Insurance Coverage Major Types of Insurance Hospital Indemnity Insurance Limited coverage of hospital costs that may pay a per diem or a portion of costs after another policy has paid

2.5: Types of Insurance Coverage Major Types of Insurance Medical Insurance Covers outpatient medical care and diagnostic services Surgical Insurance Covers physician’s fee for surgery, regardless of location where the surgery was performed; also generally covers anesthesia charges

2.5: Types of Insurance Coverage Major Types of Insurance Outpatient Insurance Covers cost of emergency services and outpatient services provided by a hospital or other medical facility Major Medical Insurance Covers large medical expenses, such as those associated with a prolonged or catastrophic illness; usually involves added cost

2.5: Types of Insurance Coverage Major Types of Insurance Catastrophic Health Insurance One of the least expensive types of coverage but only covers costs associated with specific types of catastrophic illness Usually involves a high deductible Suitable for those individuals who have the means to pay for routine care on their own

2.5: Types of Insurance Coverage Major Types of Insurance Special Risk Insurance Covers only certain specified illnesses or accidents Short-Term Health Insurance Coverage provided for only a specified period of time Involves strict qualifying procedures

2.5: Types of Insurance Coverage Major Types of Insurance COBRA Insurance Federally mandated coverage in which employees can continue group health insurance coverage for a period of time following employment Covered individuals must pay the full premium (employer and employee share), so premiums are high.

2.5: Types of Insurance Coverage Major Types of Insurance Full-Service Insurance Broad-based coverage with minimal restrictions on benefits or location of services Long-Term Care Insurance Covers medical and custodial services provided in home, by a day care facility, or by an assisted living or nursing care facility

2.5: Types of Insurance Coverage Major Types of Insurance Supplemental Insurance Covers expenses not covered by a primary policy Medigap policies are supplemental insurance policies sold by private companies to augment benefits provided by Medicare.