1. Basics of Health Insurance
Chapter 19

2. 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.

3. 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

4. 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.

5. 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.

6. 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.

7. 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

8. 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.

9. 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.

10. 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.

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

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

13. 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

14. 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.

15. 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

16. Types of Insurance Plan Benefits

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

18. 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.

19. 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.

20. 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.

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

22. 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.

23. 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.

24. 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.

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

26. 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

27. Comparison of HMO Models

28. 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.

29. 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.

30. 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.

31. 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

32. BC/BS ID Card

33. 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.

34. Medicaid ID Card

35. 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

36. 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

37. 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

38. 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

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

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

41. Medicare ID Card

42. 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.

43. 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

44. 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.

45. 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.

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

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

48. 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.

49. 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.

50. 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

51. 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.

52. 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

53. 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)