Description
Create one Word documents containing all parts of the assignment.
Format your document with one-inch margins and 12-point Times New Roman font.
One page, double-spaced for each part.
Instructions: Part 1
1. Read the scenario below:
It is time to renew the annual health insurance policy for employee coverage in the medical practice where you serve as administrator. The plan for the past three years has been a Blue Cross Indemnity Plan, a plan with great benefits that the employees like. The practice covers 80% of the premium regardless if it is for employee only, employee and spouse, or family.
The practice also offers:
A Prescription plan which covers brand name/first generation medications, dental plan through Delta Dental (nominal cost), and vision plan through VSP (nominal cost)
Currently 60 employees including the doctors are covered. Of these, 30 have family coverage, 20 employee/spouse, and 10 single coverage.
For the past three years, the premium costs to the practice have gone up by 12%, 13.5%, and 15%.
While the doctors want to continue to provide health insurance coverage for their employees, they have clearly stated that they cannot afford another double digit increase this year.
You have meetings lined up with sales reps from Blue Cross, Aetna, United, and Cigna.
2. Write the answer to the following question:
What will be your strategy and approach to provide the most comprehensive coverage possible, while maintaining a single digit increase this year?….Use concepts and types of health plans we discussed in class
Discuss the various types of plans available, and what you might do to restructure the plan, benefits, and out of pockets costs (premium responsibility, co-pays, deductibles, co-insurance ) for the employees? Address health insurance, pharmacy, dental, and vision options
Instructions: Part 2
1. Provide a real-life example of your personal experience with health insurance coverage, either directly or indirectly. Include answers to the following questions:
Which private company/government entity provided the coverage?
What were the positive and negative in working with the plan?
If you had to make a suggestion regarding your experience to the health plan’s CEO, what would it be?
Tie concepts from the class to your responses.
Unformatted Attachment Preview
HAP 410
Topic 5, Understanding Health Insurance
Review Attachment #1, Understanding Health Insurance
What is Insurance Defined?
From Wikipedia, the free encyclopedia
Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange
for payment. It is a form of risk management primarily used to hedge against the risk of a
contingent, uncertain loss.
An insurer, or insurance carrier, is a company selling the insurance; the insured, or policyholder,
is the person or entity buying the insurance policy. The amount of money to be charged for a
certain amount of insurance coverage is called the premium. Risk management, the practice of
appraising and controlling risk, has evolved as a discrete field of study and practice.
The transaction involves the insured assuming a guaranteed and known relatively small loss in
the form of payment to the insurer in exchange for the insurer’s promise to compensate
(indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract,
called the insurance policy, which details the conditions and circumstances under which the
insured will be financially compensated
…Give some examples……Think about your car insurance!
What is Included in Medical Services?
-Preventive Care
-Office Visits for Sick Care
-Emergency and Urgent Care
Lab work (e.g. blood tests)
-X-rays
-Complex Medical Imaging (e.g., CAT Scans and MRI)
-Inpatient hospital stays
-Surgeries
-Mental Health
-Durable Medical Equipment (e.g., Wheelchairs, hospital beds)
-Prescriptions
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-Very often…employees offer dental and vision insurance as well
– Long Term Care is not included
How Does Heath Insurance Work?
1.Member purchases insurance from carrier through
employer and pays a monthly premium …Paid monthly in
return for coverage under the policy. Price based on
contracted benefits in the health policy. Most employers pay a
portion of the premium, with the employee paying a portion
based on a designated payroll deduction.
– Co-Payment…. Required payment to the provider or
institution at the time of service, per the policy. Very
common for patient to pay a $10-$25 co-pay in a doctor’s
office.
– Deductible….First dollar out of pocket payment required by
some plans before the insurance company pays. The patient,
not insurance company at risk for payment of services at
the beginning of the plan year. Example, the policy
deductible is $1,000.
– Insurance payment…. Portion of health services paid by
the insurance carrier. Amount paid is in the insurance
policy.
– Co-Insurance…. Balance that remains after the
deductible, has been met, which is the responsibility of the
insured. In this example, the patient is responsible for the
$1,000, plus an additional 20% (insurance pays 80%) up to
an out-of-pocket maximum of $5,000. 2.
– Out of pocket maximum….in this example, once the patient
has reached the put of pocket maximum of $5,000, then
the insurance company pays 100%
Who’s Who in Health Insurance?
–
Carrier (insurance company) …company that writes and administers
the health insurance policy
– Self Insured (a company, usually large) that creates a fund for
collection of premiums/ payment of claims for its employees. The
Third-Party Administrator is the outside company that administers
the plan, processes the claims, etc. for the Self Insured.
– Provider…Medical Professional who provides the healthcare services
to the patient. In the medical office this is usually the doctor, nurse
practitioner, physician assistant.
– Beneficiary…Person eligible to receive benefits under the health
insurance policy. … (patient that the policy covers)
– Insured/Guarantor….policy holder in whose name is covered by the
insurance company. Ultimately responsible for payment of the bills.
Makes it possible for Dependents (spouse/, children/ significant
other) of the insured to be covered.
3.
Underwriting…the process of evaluating the risk through actuarial
procedures, which are highly mathematical, and model driven.
Underwriting has become less important with the passage of the
affordable care Act, as insurance applicants can no longer be rejected
because of pre-existing conditions. In the past this was a primary
function of underwriting and allowed the carrier to reject patients who
would undoubtedly use their insurance to incur significant costs. Today,
the primary method of underwriting is a community-based rating
system that takes into account the probable utilization of the entire
population of a specific area or community.
Types of Coverage
– Governmental
– Commercial Carriers/group insurance/employer based
– Commercial Carriers/individual polices
– Health Plans purchased on the exchanges through the Affordable
care Act
– Uninsured / Self pay
Governmental Insurance
I. Medicare…….started in 1965 under Pres. Lyndon Johnson. A
federal health insurance entitlement program…. complements
Social Security, passed in 1935.
– Beneficiary Eligibility Include………Individuals
65+…….Younger individuals with disabilities…. individuals
with end stage renal disease.
4.
A. Four Parts:
-Medicare, Part A …hospital services, including inpatient
hospitalization, Skilled nursing, home care, hospice care.
Patients have a 90-day hospital stay benefit in a given
benefit period (usually one year), plus a 60-day lifetime
reserve. Patient must enroll at the time just before or
after 65th birthday. Premiums covered under Social
Security.
-Medicare Part B….Physician/nurse practitioner services
services, outpatient hospital services, hospital and
ambulatory surgery, physical and speech therapy,
chemotherapy. Patient must be enrolled in Part A, and then
pays monthly premium out of pocket.
– Medicare Part C……. Started in 1997, also called Medicare
Advantage or Medicare Managed Care. Broader in-network
coverage (more restrictive), lower out of pocket costs vs.
Medicare Part B. Plans to phase this down/maybe out.
– Medicare Part D…..started in 2006. Voluntary drug
benefit program. Patient must enroll in a private insurance
plan approved by Medicare for Part D. Coverage. A
restricted formulary is provided based on the diagnosis and
treatment of a medical condition.
– Medigap, or Medicare Supplemental Insurance is an
insurance plan purchased by the beneficiary to cover out of
pocket costs not covered under Medicare, (i.e. 20% out of
pocket co-insurance required for Medicare Part B services)
5.
B. How Medicare Works….Key Players
– Federal Government….Congress mandates Medicare rules
and regulations
– Medicare Administrative Agencies….operational
responsibility. Under the Dept. of Health and Human
Services is CMS (Center for Medicare Services)
– Non-Governmental Medicare Agencies…Private companies
called intermediaries, who contract with CMS to process
claims. Also called MACs (Medicare Administrative
Contractor). Very often a private insurance company as Blue
Cross or Aetna may serve as intermediaries for Medicare in
different sections of the country, since they have the
infrastructure in place.
– Hospitals provide services under Medicare Part A.
.
Providers provide services under Medicare Part B… Note that a
physician can be a participating or non-participating provider. To be
participating, a physician must apply to Medicare to provide services to
beneficiaries. An NPI (National Provider Identifier) number is assigned
for billing
– Participating provider sees Medicare beneficiaries and
“accepts assignment” which means that they accept
Medicare’s fee schedule. Medicare pays 80% of allowable
reimbursement, with remaining 20% collected from the
patient.
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– Non-participating…doctor does not accept assignment. Fee
schedule is 95% of fee schedule for participating provider.
Payment of the claim sent to patient, not to doctor.
Beneficial for doctor to be participating.
II.
Medicaid
-Provides benefits to low-income groups with no or limited
health insurance. To qualify a family must be at or below the
federal poverty guideline of 135%:
2018 Federal Poverty Level (FPL) Guideline Tables
48 States and the District of Columbia 2018 Federal Poverty Level (FPL) Guideline
Table
Family Size
100%
135%
5
$29,420
$39,717
6
$33,740
$45,549
7
9 more rows
$38,060
$51,381
Federal government provides general guidelines and funding, but
Medicaid programs are administered by each state.
Fee schedule is usually less than Medicare, maybe 75-80% of
Medicare fee schedule. Usually $3.00 co-pay. The indigent
population, along with low reimbursement makes it unpopular with
most doctors.
– Covers basic preventive services, “bare bones coverage” 7.
CHIPS…Children’s Health Insurance Program
CHIP provides low-cost health coverage to children in families
that earn too much money to qualify for Medicaid. In some
states, CHIP covers pregnant women. Each state offers CHIP
coverage and works closely with its state Medicaid program.
Indian Health Service
The IDS is the principal federal healthcare provider of a
comprehensive delivery system for American Indians and Alaskan
Natives. Its mission grew out of the special government to
government relationship between the federal government and the
federally recognized Indian tribes.
III. Tricare
– Worldwide health services with military facilities that
provides services for the military and their families. Which
includes……active duty……retired service
members,…….active/non active/retired National Guard.
– Tricare provides network (military medical personnel and
facilities) and non-network benefits. Only
specialized/medically necessary services usually provided
out of network
– The VA (Veterans Administration) provides acute care,
ambulatory, and rehabilitation services to veterans.
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–
There are also military hospitals (Walter Reed. Bethesda
Naval) for active military
Commercial Insurance/Group/Employer Based
I. In the U.S. we have an employer-based health insurance system,
although it is more common for patients to purchase indivual
polices based on the current economic situation. Most
commercial insurance companies are for-profit including most
Blue Cross Plans, except for some non-profit Blue Cross Plans
– Major insurance carriers/companies
-Blue Cross/Blue Shield…50+ plans, all independent across
the United States
– Aetna
-Cigna
-United Healthcare (formerly MAMSI)
-Humana
-Kaiser Permanente
-Molina Healthcare
-Highmark
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II.
Major Categories of Commercial Insurance
–
Fee for Service/Indemnity…. Health insurance of the
1960’s, now rare because it is so expensive. First dollar
coverage, usually 80% covered, 20% out of pocket coinsurance. Flexibility to choose any doctor or hospital.
Preferred Provider Organizations (PPO)…. (Has some
–
model features of Fee for Service) Insurance companies’
contract with networks of providers and hospitals, from which
the patient can select. Doctor accepts/insurance and patient
pays a lower rate, in exchange for joining the network.
-In Network…. providers are contracted to participate in the carrier; s
network, with co-pays and negotiated rates for medical services. 10
With in-network, the provider submits the claim to the carrier on the
member’s behalf. Provider responsible for prior authorizations
-Out of network. The provider is not contracted with the carrier.
Member is responsible for charges above the carrier’s reasonable and
customary amount. Patient submits claim to the carrier, and is
personally responsible for prior authorizations
–
Exclusive Provider Network (EPO)….. same elements of
a PPO, except the provider network is much larger that the
PPO, sometimes covering multiple states. But because of
this, and unlike the PPO, out of network services are not
covered.
–
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–
Health Maintenance Organization (HMO)…focuses on
preventive care. Primary care physician is the gatekeeper in
the network established by the insurance carrier, which
means that referrals are required to see a specialist, and
pre-authorizations to be admitted to a hospital. Going out
of network usually prohibited. Per some plans, the primary
care doctor paid on a captitated basis, which means a set
fee, is received per member per month, to manage the care
of the patient with a focus on prevention. Kaiser
Permanente is a nationally known HMO
–
Open panel under an HMO. Under this arrangement a
physician and other providers maintain an independent
practice contract with an HMO (in-network Providers) to
see HMO as well as non-HMO patients.
–
Closed panel under an HMO. The physicians and other
providers are typically employees of the HMO or under
exclusive contact to see only HMO patients
Point of Service Plans (POS) are health plans that are a hybrid
of PPO and HMO. They allow a wide range of options to the
patient in seeking care, but pay for these benefits at different
levels , depending on whether or not the service was delivered by
an in-network provider.
– High Deductible Health Plans/Consumer Directed Plans
Due to high healthcare costs, many companies are shifting costs
to their employees through higher deductibles. To go with the
“stick” of higher deductibles, the ‘carrot” is allowing individuals 11
and companies to put “pre-tax” dollars in accounts to help pay for
the high front end deductibles.
Laws have been passed by Congress, where Health Savings
Accounts (HAS), Health Reimbursement Accounts (HRA) and
Flexible Spending Accounts (FSA) have been created.
In 2011, pre-tax medical savings accounts under high deductible
account allowances are now $1,200 per individual, and $2,400 for
a family. Insurance benefits start after the deductible is met.
–
Health Savings Account (HSA)….HSA is a medical
savings account funded in pre-tax dollars by the employee
(insured) although the employer may make a match. Use for current
and future health expenses. It is portable to other companies as the
HAS is owned by the employee.
–
Health Reimbursement Account (HRA)…. Same concept,
except that the medical savings account is funded entirely
by the employer, who enjoys the full tax advantage. This is
owned by the employer, not employee, and is not portable or
carried over to future years.
–
Flexible Spending Accounts (FSA)… Can apply to any
type of health plan, other than high deductible. Allows
employees to set aside pre-tax dollars to pay for qualified
medical expenses.
–
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Note that most get health insurance covered by their employer,
or may not be employed /or their employer does not provide
health insurance, it is possible to purchase an individual plan from
a commercial carrier for these who do not qualify for Medicare
and Medicaid.
– Other Insurance “Circumstances”
COBRA (Consolidated Omnibus Budget and Reconciliation act of
1978) …Employee can pay out of pocket to continue employer
sponsored health plan 18 months after leaving the organization. Can be
up to 102% of premium.
Workers Compensation…Companies must pay for worker
compensation insurance. Covers employees who become hurt in a workrelated accident or become ill on the job. Workers Comp Review
Boards in each state make decision on claims. Typical allowed benefits
included 66% of wages, plus direct cost for medical treatment.
Required by law!
Other Terms
– Exclusions…services not covered in the policy (common are
laser eye surgery, cosmetic surgery, fertility treatments.)
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– Referrals…Process of sending a patient to another
provider for services that the referring source believes is
outside their scope of practice. A full transfer of patient
care to the other provider. Referrals must be approved by
the insurance company. Meant to cut down on unnecessary
services.
– Consults…This is when a patient is referred to another
provider for an advanced opinion. Unlike referral, the intent
is that the patient will return to the provider for
continuation of care
–
Pre-Certification…refers to discovering whether a
treatment (surgery, hospitalization, tests) is covered under
a patient’s contract.
.
– Pre-Authorization…. Process of reviewing certain medical,
surgical, behavioral health services to ensure necessity and
appropriateness of care. Many times, requited for nonemergency inpatient and certain outpatient services.
– Pre-Determination…. means discovering the maximum dollar
amount that the carrier will pay for services (surgery,
consulting services, radiology.)
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Plans purchased thorough the Health Care
Exchanges/Affordable Care Act
Healthcare Reform
Affordable Care Act
The theoretical driving force…. a model/plan to make healthcare
affordable/accessible/high quality. The ACA was passed in 2010.
Driven by President Barak Obama, with passage by Democratic votes
exclusively in the House of Representatives and Senate and deemed
constitutional by the Supreme Court in 2012.
Driving forces…….
1. Aging and increasing population
2. 30 million uninsured in the US
3. Escalating healthcare premiums for insurance, and costs, as
healthcare consumes 17% of our GNP
4. Desire to provide affordable/accessible/high quality healthcare
The lynchpin of the ACA Act is that the entire population of the U.S.
must be covered. Why? Because many the young and healthy do not
have health insurance… by choice.
“I do not need health insurance, because I never need to go to the
doctor and/or hospital. Money spend on premiums can be spent on fun
stuff instead” ……. Until a catastrophic event happens when insurance is
needed.
Again, the concept of insurance is that many pay premiums into a pool.
Very few will need insurance for a “catastrophic” event. In theory the
more in the national health insurance pool, the greater number of
enrollees to spread the risk, and in theory, the lower the premiums,
and healthcare costs……. 15.
There are different levels of plans, platinum, gold, silver, bronze.
Some private insurance companies offer plans in the exchanges.
Many states 36 total, have elected not to create a health
exchange, thus requiring its citizens to purchase from the
federal exchange.
For individuals with incomes between $14,400 and $43,320,
and for families with incomes between $29,330 and $88,200
the government will offset the costs of the premiums with tax
credits.
To summarize, and simply put, in 2017 the Supreme Court said
that the tax for non-compliance for the individual mandate
requiring the purchase of insurance was unconstitutional. The
whole concept of a large pool of health people supporting the true
sick and chronic patients could not take place, and the model did
not work. Now the ACA covers only a small segment of the
population.
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