1. 2
Understanding Managed Care: Insurance Plans

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

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

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

5. 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.

6. 2.1: Understand the history and impact of managed care.

7. 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.

8. 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.

9. 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.

10. 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.

11. Table 2.1 -- Managed Care Timeline

12. Table 2.1 -- Managed Care Timeline

13. Table 2.1 -- Managed Care Timeline

14. Table 2.1 -- Managed Care Timeline

15. 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.

16. 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.

17. 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.

18. 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.

19. 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.

20. 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.

21. 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.

22. 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).

23. 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.

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

25. 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.)

26. 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.

27. 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.

28. 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.

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

30. 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.

31. 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

32. 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.

33. 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.

34. 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.

35. 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.

36. 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.

37. 2.4: Types of Managed Care Plan
Table Various Types of MCOs and Their Characteristics

38. 2.4: Types of Managed Care Plan
Table Various Types of MCOs and Their Characteristics

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

40. 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

41. 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.

42. 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.

43. 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.

44. 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

45. 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

46. 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

47. 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

48. 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

49. 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

50. 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.

51. 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

52. 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.