1. The Blue Plans, Private Insurance, and Managed Care Plans
Chapter 11
The Blue Plans, Private Insurance, and Managed Care Plans
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2. Learning Objectives
State the difference between a traditional indemnity insurance plan and a managed care plan.
Explain health maintenance organization (HMO) benefits and eligibility requirements.
State the provisions of the Health Maintenance Organization Act of 1973.
List two types and two different functions of foundations.
List features of an exclusive provider organization (EPO).
Define independent practice associations.
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3. Learning Objectives (cont’d.)
Name the features of preferred provider organizations (PPOs).
Explain the features of a point-of-service plan.
State reasons for a quality improvement organization (QIO).
Explain how the Employee Retirement Income Security Act (ERISA) affects managed care insurance.
Identify four types of referrals for medical services, tests, and procedures.
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4. Learning Objectives (cont’d.)
State the purpose of creating a managed care plan reference guide.
Describe types of payment mechanisms used for managed care plans.
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5. Chapter 11
Lesson 11.1
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6. Private Insurance Blue Cross/Blue Shield Pioneers in private insurance
Largest insurance company in the U.S.
Blue Cross/Blue Shield carriers are independently owned and operated in each state but work together in a network.
Blue Cross plans originally covered hospital expenses, while Blue Shield plans covered physician visits and services.
Most affiliated organizations have converted to for-profit status and operate in much the same way as private insurers. They no longer have nationally recognized rules and regulations or standardized claim form guidelines.
Discuss some of the problems that can arise from these changes. (Answers will vary.)
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7. Prepaid Group Practice Health Plans
Pioneers
Ross-Loos Medical Group became CIGNA
Kaiser Permanente
Direct contact
Individual practice model
What is “capitation?” (A system of payment used by managed care plan in which physicians and hospitals are paid a fixed per capita amount for each patient enrolled over a stated period of time, regardless of the type and number of services provided)
Explain the histories of the famous medical groups that are considered pioneers of the prepaid group practice model.
Consider how this model works.
Discuss some ways that the pioneers have adapted the model to serve patients (fee-for-service, joint venture) with the insurance company.
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8. Health Maintenance Organization Act of 1973
Created authority for federal government to assist HMO development by:
providing grants, loans, and loan guarantees to offset initial operating deficits of new HMOs that meet federal standards.
requiring most employers to offer an HMO to employees as an alternative to traditional insurance plans.
Describe what an organization needs to do to qualify as an HMO and maintain its status with the federal government. (An organization must present proof of its ability to provide comprehensive health care, and must render periodic performance reports to the Department of Health and Human Services.)
Explain how HMOs are reimbursed by the government. (HMOs are paid a fixed per capita amount for each patient served without considering the actual number or nature of services provided to each person.)
Explain what makes an employer eligible to offer the services of an HMO to its employees. (Must have 25+ employees)
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9. Healthcare Reform growing number of uninsured costs to employers
government deficits
rising costs of high-tech medicine
patient costs
fraud
Describe some healthcare reform measures that have been made by the federal government over the last 60 years. (The adoption of capitation, instead of fee-for-service, insurance agreements, integrated healthcare delivery systems. Answers will vary.)
Discuss trends affecting the delivery and costs of health care in the U.S. (Growing percentage not covered by insurance, increased costs to employers, government decrease in Medicare/Medicaid services, physician/hospital costs have increased, patient costs have increased to compensate, overuse of services by patients)
Discuss specific examples of each bullet point on the slide as drivers for healthcare reform. (Answers will vary.)
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10. Managed Care Systems Health Maintenance Organizations
Prepaid group practice model
Staff model
Network HMO
Direct contact
Individual practice model
Ask students to identify each system. (See p. 399 of the textbook.)
Ask students to identify the key characteristics of each. (See p. 399 of the textbook.)
What is a participating physician? (Service provider in an HMO system)
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11. Managed Care Systems (cont’d.)
MCO
HMO
EPO
FMC
IPA
PPO
PPG
POS plan
Tell students what information is most useful for the medical office biller. (Group number, primary care physician, name and type of plan, copayment for some outpatient services)
Discuss what information is missing or too detailed for a card and should be kept at hand as the patient is processed through the practice. (Answers will vary.)
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12. Chapter 11
Lesson 11.2
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13. Exclusive Provider Organization (EPO) features similar to HMO:
Members must choose care from network providers (emergency exceptions)
Generally, no reimbursement for out-of-network care
Regulated under insurance statutes
Explain why an EPO is called “exclusive.” (Employers agree not to contract with any other plan.)
Technically, many HMOs can be considered EPOs.
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14. Exclusive Provider Organization (EPO) features similar to PPO:
Enrolled population
Limited provider panel
Gatekeepers
Utilization management
Capitated provider reimbursement
Authorization system
Describe the benefits available to EPO members. (Can get all medical care under one system, regulated by insurance statutes [not HMO regulations])
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15. Exclusive Provider Organization (EPO) features:
Flexible benefit design
Negotiated fees
Fee-for-service payments
EPOs and PPOs both have fee-for-service payments. Explain how this aspect of these plans differs from other managed care options. (Patients pay fees based on services provided, instead of the capitation system in an HMO.)
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16. Foundations for Medical Care (FMC)
First established in 1954, in Stockton, CA
FMC Operations
Comprehensive type of foundation
Claims-review type of foundation
Describe the importance of the incentive reimbursement system to FMCs. (Reimbursement is directly proportional to the number of medical services delivered, making it important to have enough patient encounter to support the practice.)
Member physicians bill the foundation directly.
Many foundations submit claims using the CMS-1500 form, while others transmit data electronically.
The American Managed Care and Review Association (AMCRA) is the national society of the foundation movement.
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17. Independent (or Individual) Practice Association (IPA)
Physicians are not employees, and do not receive salaries
Capitation or fee-for-service program
A discount of up to 30% is withheld to cover IPA operating costs.
IPA physicians make contractual arrangements to treat HMO patients in their offices.
IPA physicians can also treat non-HMO patients.
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18. Preferred Provider Organization (PPO)
Freedom to use any physician or hospital
Members receive highest level of benefits when using preferred providers
Coinsurance and deductibles
PPOs may pay 100% of the cost of care, but most do not.
Coinsurance requires the patient to pay 20% to 25% of the allowed amount.
Predetermination of benefits may be required by the PPO.
Some hospital indemnity plans pay fixed fees for certain services; patients pay the difference if charges are higher.
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19. Silent PPOs
Also called blind or phantom PPOs, discounted indemnity plans, nondirected PPOs, or wraparound PPOs
Provider income reduced
Complicates the appeal process
Silent PPOs can limit reimbursement without the provider’s knowledge.
The phrase “network discount applied” on an EOB statement may indicate a silent PPO.
Explain how a provider can discover if patients are silent PPO participants. (The phrase “network discount applied” may appear on the EOB, precertify procedures, and check patient insurance cards for information.)
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20. Physician Provider Group (PPG)
Physician owned (unlike IPA)
Joint ventures with hospitals, labs, etc.
Can combine services for member physicians, cutting business costs
Explain the benefit of combined services for physicians and patients. (Flexibility to have contracted plans and still offer separate plans to other organizations outside of the contracts)
PPG physicians turn over a portion of their income to the PPG to cover joint expenses, such as billing.
Describe similarities and differences between PPGs and IPAs. (PPG functions like an IPA, but is physician-owned.)
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21. Point-of-Service (POS) Plan
HMO cost management
PPO freedom of choice
Members choose services from participating and nonparticipating providers, with different benefit levels
Explain the role of the primary care physician is the POS plan. (Members choose a primary care physician who managed specialty care and referrals.)
Describe how participants in POS plans can benefit by using network providers. (POS program pays members a higher level of benefits when they use program [network] providers.)
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22. Triple-Option Health Plans
Members choose from HMOs, PPOs, or “traditional” indemnity insurance
Members can change plans
Cost-containment measures
Describe the cost-containment measures used in triple-option health plans. (Precertification for hospital admission, hospital stays, and second surgical opinions)
See Table 11.1 in your text (p. 402) for an overview of managed care plans.
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23. Other Plans Provider-Sponsored Organization (PSO)
Owned and maintained by a hospital or provider group
Religious Fraternal Benefit Society (RFBS)
Managed care plan associated with a church, group of churches, or convention
A PSO is not managed by an insurance company.
Membership in an RFBS is restricted to church members and is allowed regardless of the person’s health status.
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24. Regulatory Considerations
Individual or employer paid?
Employee Retirement Income Security Act (ERISA)
liability issues
disability issues
state versus federal jurisdiction
Explain why it is important to understand and distinguish plans purchased by an individual versus plans paid by an employer. (Employer-paid plans are regulated by the ERISA.)
Describe ERISA, and explain which agency regulates it. (ERISA regulates employer-paid plans, and is regulated by the Department of Labor.)
Discuss liability issues and immunities. (Congress has given certain immunities to employers that establish EBPs.)
Discuss circumstances in which state regulations are preempted by federal jurisdiction. (Employees cannot be protected by state laws that limit the excesses of other HMOs now subject to ERISA.)
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25. Chapter 11
Lesson 11.3
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26. Quality Improvement Organizations
peer review
utilization review
Churning
Turfing
buffing
concurrent review
discuss pre-admission certification
what do you do about insurance when planning patient’s discharge?
Ask students to:
suggest examples of cases that would be discussed in peer review.
discuss the red flags that might cause concern during utilization review.
define churning, turfing, and buffing. How might the management of the medical office be set up to prevent or spot these abuses? (Answers will vary.)
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27. Plan Administration patient information letter medical records
scheduling appointments
encounter form
Explain the function of the patient information letter. (Outlining noncovered procedures and listing copayment requirements)
Refer students to Fig (p. 404), a sample patient information letter.
Explain how many medical offices differentiate charts to reflect which organization the patient belongs to. (Using color-coded adhesive dots or color-coded folders)
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28. Preauthorization/Prior Approval
formal referral
direct referral
verbal referral
self-referral
Ask students to:
define and give an example of a formal referral.
define and give an example of a direct referral.
define and give an example of a verbal referral.
define and give an example of a self-referral.
What are the precautions to take with a patient regarding prior approval for treatment? (Ask about requirements when appointment is made, carefully review patient’s managed care plan and inform patient of requirements, remind patient to bring required forms to appointment, create tracking system for referrals, etc.)
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29. Managed Care Plan Reference Guide
Fig (p. 409).
A managed care plan quick reference guide like this one can help keep track of important information for each managed care plan that the physician participates in.
Describe additional information it might be useful to include in a more detailed medical office reference guide for MCOs. (Answers will vary.)
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30. Financial Management (Payment)
Deductibles
Copayments
payment mechanisms
contract payment time limits
scheduling appointments
monitoring payment
fee schedules
Define “deductible.” (A specific dollar amount that must be paid by the insured before a medical insurance plan or government program begins covering healthcare costs)
Explain where copayments might be applicable. (In managed care plan)
List and describe three types of payment mechanisms (contact capitation, case rate pricing, and stop-loss limit) in managed care plans.
Discuss what might happen after exceeding a contract payment time limit. (Interest may accrue on late claims.)
Define “COBRA.” (The Consolidated Omnibus Budget Reconciliation Act of 1985)
Ask students what they might do if claims are not paid in a timely fashion. (Answers will vary.)
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31. Financial Management statement of remittance accounting
fee-for-service
year-end evaluation
explanation and coordination of benefits
Some medical offices handle managed care patients just like fee-for-service.
Define the term “withhold.” (A portion of the monthly capitation payment to physicians retained by the HMO until after the end of the year to create an incentive for effective care.)
Explain why the year-end evaluation is important. (It will determine whether the provider receives the withheld amount from the HMO.)
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32. Fee-for-Service handling accounts similarly to fee-for-service
Copayment
Adjustment
overpayment
capitation versus fee-for-service
Explain how copayments, adjustments, and overpayments would be accounted for. (Post the charge, then the copayment/coinsurance in the patient’s account. Post an adjustment after receiving the EOB to show the disallowed amount, and show an overpayment as a refund or account credit.)
Describe how a capitation accounting sheet would be designed and used. (See Fig [p. 413])
It is important for the medical biller to understand financial management reports because he/she will be dealing with accounting in the medical office.
Indicate what useful information could be reported to the practice by monitoring plan payments from managed care patients. (Answers will vary.)
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