UNIT 1 BUILDING A FOUNDATION CHAPTER 4 TYPES AND SOURCES OF HEALTH INSURANCE Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc.

2 Two Basic Types of Health Insurance  indemnity (fee-for-service)  managed care

3 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Main Differences  Choice of providers  Out-of-pocket costs for covered services  How bills are paid

4 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. How UCR is Calculated  Charges for same/similar service  Charge variance by providers for same service; same geographic area  Did procedure require more time, skill, or experience than usual?  Value of procedure compared to other services

5 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Out-of-Pocket Maximum  A specified amount the patient must pay out-of-pocket for covered services in a benefit period

6 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Basic Medical Coverage  Basic medical coverage pays for room and care while the patient is hospitalized.  It may also cover certain hospital services and supplies.  It pays toward the cost of surgery, whether it is performed in or out of the hospital, and for some doctor visits.

7 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Major Medical Coverage  Major Medical coverage takes over where basic coverage leaves off.  It covers cost of long and high-cost illnesses or injuries.  It combines basic and major medical coverage into one plan = comprehensive plan.

8 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Preexisting Conditions  A physical or mental condition that:  existed before the issuance of a health insurance policy or  existed before issuance and for which treatment was received

9 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Managed Care  Managed care is an organized way to manage the cost, use, and quality of a healthcare system.  There are several major forms of managed care.

10 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Managed Care Organizations  Managed Care Organizations tell patients which physicians they can see.  They monitor the medications and treatments they prescribe.  They ensure enrollees that their costs will remain as low as possible.

11 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc.  Managed Care Organizations (MCOs)  hire a medical staff  under contract  staff takes orders from MCO Managed Care Organizations

12 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Sources of Health Insurance  Group Contracts  Individual Policies  Medicare & Medicare Supplement Plans  Medicaid  TRICARE/CHAMPVA  Disability Insurance

13 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Medical Savings Account (MSA)  A MSA is a special tax shelter set up for the purpose of paying medical bills for individuals who choose a low cost, high deductible healthcare policy.

14 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Flexible Spending Account (FSA)  An FSA is a tax advantaged savings account set up through an employer to allow tax-free savings for qualified medical or dependent care expenses.

15 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Health Reimbursement Arrangement (HRA)  The HRA is a type of health insurance plan that reimburses employees for certain qualifying medical expenses.  It is open to employees of companies of any size.  It provides first-dollar medical coverage until funds are used up.

16 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Long-Term Care  Long-term care is medical, social, and/or personal care services, required over a long period of time by a person with a chronic illness or disability.  Long-term care is not necessarily medical care but rather custodial care.

17 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. COBRA  COBRA extends healthcare coverage after an individual leaves his or her place of employment.  Individual must pay the entire premium.

18 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Birthday Rule  This is a rule used to determine the primary and secondary carrier in administering benefits for a patient who has dual coverage and a coordination of benefits clause.  Person whose birthday comes first in the year (not the person who is oldest).

19 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. Other Terms to Know  Coordination of Benefits  Medical Necessity  Usual, Reasonable and Customary (UCR)  Balance Billing  Participating Provider (PAR)  NonPAR

20 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc. CMS-1500  This is the universal form created by the government for Medicare claims.  It has since been adopted by most third party carriers.  It may be submitted in paper form or electronically.

21 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc.