UNIT 2 HEALTH INSURANCE BASICS CHAPTER 6 TRADITIONAL FEE-FOR-SERVICE/PRIVATE PLANS Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc.

What is Traditional Insurance? Fee-for-service (FFS), or indemnity, insurance Called traditional due to its established and universally familiar structure Fee-for-service (FFS), or indemnity, insurance is a traditional type of healthcare policy where the insurance company pays fees for the services provided to the people covered by the policy. Calledtraditional due to its established and universally familiar structure.

How Does Traditional Insurance Work? Patients can choose any doctor change doctors any time Coverage at any hospital Traditional insurance offers the most choices of doctors and hospitals. Patients can choose any doctor they want and can change doctors any time. They can go to any hospital in any part of the country and still be covered.

Let’s review… A third party payer covers a major portion of the insured's medical expenses if the person has health insurance. Group insurance is a contract between an insurance company and an employer (or other entity) that covers eligible employees or members. What are the main differences between group insurance and individual policies?

Two Broad Categories of Health Insurance Fee-for-service (traditional/indemnity) discussed in Slide 2, and Managed care - a group of providers who share the financial risk of a plan or who have an incentive to deliver cost-effective, but quality, service. How do traditional insurance plans differ from managed care plans?

Four Basic Types of Plans Traditional fee-for-service (FFS)/indemnity plans, Preferred Provider Organizations (PPOs) Point-Of-Service (POS) plans Health Maintenance Organizations (HMOs) Why are PPOs becoming more popular than HMOs in recent years? What are the main differences between PPO plans and POS plans?

Which is best? No one type of healthcare plan is universally better than the other. It depends on an individual’s (or group’s) needs and preferences.

Standard Costs for FFS A monthly (or quarterly) fee, called a health insurance policy premium A yearly deductible (out-of-pocket payment) before the health insurance carrier begins to contribute A per-visit coinsurance, or percentage of healthcare expenses Paying premiums, deductibles and coinsurance is referred to “cost sharing.” How does cost sharing affect health insurance in general?

3 Levels of Coverage (FFS) Basic health insurance Major medical insurance Comprehensive insurance What benefits do each of these levels typically provide

How a FFS Plan Works Healthcare policy is purchased. Periodic premiums are paid. Patient pays a specified amount (deductible) annually before FFS plan begins to pay. After this, patient and FFS plan share the cost of covered professional services (coinsurance).

What is an Insurance Cap? An insurance cap limits the amount of money the policyholder has to pay out of pocket for any one incident or in any one year. When is an insurance cap reached? Do premiums count toward an insurance cap?

Lifetime Maximum Cap The lifetime maximum cap is an amount after which the insurance company will not pay any more of the charges incurred. What is the difference between an insurance cap and a lifetime maximum cap? Often a lifetime maximum cap is quite high--$500,000 to $1,000,000. This can be a per incident cap or a lifetime cap, depending on the policy.

Reasonable and Customary This refers to fees commonly charged for professional health services within a specific geographic area. A participating provider (PAR) agrees to accept the third party carrier’s reasonable and customary fee as payment in full. Any difference between the providers’ fee and the carrier’s reasonable and customary fee (after deductible and coinsurance are satisfied.) cannot be billed to the patient What is meant by reasonable and customary fees?

Commercial/Private Health Insurance This is any kind of health insurance coverage available from private and/or commercial entities other than the government.

What is Self-Insurance? Self-insurance commonly refers to employers who assume all or part of the responsibility for paying the health insurance claims of their employees. Firms that self insure for health claims are exempt from state insurance laws mandating the illnesses that group health insurers must cover. What type(s) of organizations typically self-insure?

Employee Retirement Income Security Act (ERISA) of 1974 ERISA establishes guidelines for private pension & employee benefit plans. Guidelines affect how self-insured employers fund their programs A federal law that establishes legal guidelines for private pension and employee benefit plans. Requires plans to provide participants with specific information about features and funding; establishes certain fiduciary responsibilities for those managing the plan. ERISA guidelines affect how self-insured employers fund their programs.

TPAs & ASOs Business entities that process claims and perform other contractual administrative services for self-funded plans. They are neither a healthcare plan nor an insurer. What functions do TPAs and ASOs perform?

Single/Specialty Service Plans Health plans that provide services only in certain specialties, such as: mental health vision dental plans. They eliminate a certain specialty of health services from policy coverage. What is a “carve out?”

Blue Cross/Blue Shield Blue Cross/Blue Shield is most popular commercial insurance company in the country. The national organization is made up of 39 independent regional companies providing healthcare coverage to more than 80 million Americans. What benefits does each plan provide?

Variety of BCBS plan types: indemnity insurance health maintenance organizations (HMOs) preferred provider organizations (PPOs) point-of-service (POS) plans fee-for-service (traditional) plans Some BCBS Association chapters are fiscal intermediaries (FIs) for Medicare. How does a BCBS plan become an FI?

BlueCard Program Links independent Blue Plans Members can obtain the same healthcare services/ benefits while traveling or working anywhere in the United States as they would if they were at home. To identify members who participate in the BlueCard Program Look for the suitcase logo on the ID card. If the member belongs to a BlueCard PPO, the initials PPO will appear inside the suitcase logo. BlueCard members can obtain the same healthcare services/ benefits while traveling or working anywhere in the United States as they would if they were at home. To identify members who participate in the BlueCard Program, look for the suitcase logo on the ID card. If the member belongs to a BlueCard PPO, the initials PPO will appear inside the suitcase logo.

BlueCard Worldwide BlueCard Worldwide provides Blue Plan members inpatient and outpatient coverage at no additional cost in more than 200 foreign countries. What are the basic differences between the BlueCard Program and BlueCard Worldwide? When plan members travel or live outside the Unted States and require inpatient hospital care, they show their ID card to a participating hospital, and their claim will be handled the same as if they were at home.

Federal Employees Health Benefits (FEHB) Program FEHB is the largest employer-sponsored group health insurance program in the world. FEHB covers over 9 million federal civilian employees, retirees, former employees, family members, and former spouses. Eligible members of participating insurance companies (including Blue Cross and Blue Shield) have access to a wide variety of health plans.

Federal Employee Program (FEP) FEP provides health benefits coverage for federal employees. FEP has covered federal workers and their families since the FEHB act was adopted in 1960. BCBS’s FEP covers nearly half of all people eligible for FEHB program benefits. What categories of individuals are eligible for benefits under the FEP program?

BCBS & Medicare BCBS/Medicare partnership Partnership began in 1966. The Blue System is the largest single processor of Medicare claims. What is the affiliation between Blue Cross/Blue Shield and Medicare? BCBS plans have partnered with the federal government in administering the Medicare program since its beginning in 1966. Blue Plans helped design the original infrastructure for tracking and processing Medicare payments. The Blue System is the largest single processor of Medicare claims—handling the majority of Part A claims (hospitals and institutions) and over half of Part B claims from physicians and other healtcare practitioners.

Medicare Supplement Plans (MSP) In addition to indemnity and managed care plans, BCBS also offers Medicare supplement plans (MSP). How do BCBS supplements work with the Medicare plan? In addition to indemnity and managed care plans, BCBS also offers Medicare supplement plans (MSP). MSP insurance is specifically designed to provide coverage for some of the services that Medicare doesn’t pay, such as Medicare’s deductible and coinsurance amounts and for certain services not allowed by Medicare.

PAR vs. nonPAR Providers A participating provider (PAR) enters into a contractual agreement with a carrier and agrees to follow certain rules involving claims and payment in turn for advantages granted by the carrier. Not all insurance companies offer such contracts to healthcare providers, but Blue Cross and Blue Shield do.

NonPARs Providers who are not a part of the previously described contractual agreement are referred to as nonparticipating providers (nonPARs). NonPARs do not have to file patient claims. They can balance bill the difference between their charges and BCBS allowed charges. BCBS nonPAR payments are mailed to the patients rather than the provider. The health insurance professional must collect the fees directly from the patient.

BCBS Claims BCBS member offices publish specialty-specific billing guides. These guides can be viewed online under “Provider Guides” on most member Web sites. Paper copies are also available upon request. How can the health insurance professional obtain current BCBS claims completion guidelines?

Timely Filing BCBS PARs must file claims within 365 days following the last date of service provided to the patient. BCBS PARs must file claims within 365 days following the last date of service provided to the patient. If a claim is not filed within this timely filing period, BCBS will normally not allow benefits for the claim. If payment on the claim is denied for this reason, the provider cannot collect payment from the patient.