Private Payers/ Blue Cross & Blue Shield OT 232 Ch 9 1OT 232 Ch 9, #1

Private Health Plans As opposed to… – Gov’t programs like Medicare and Medicaid Employer-Sponsored Medical Insurance – Important benefit for employees – GHP Group Health Plans – Federal tax benefit for the employer But employee benefits may get taxed – HR department negotiates with plans for coverage Size of business usually determines options Once a plan is chosen, riders may be added – Options » Vision, dental, etc. The more inclusive, the more expensive OT 232 Ch 9, #12

Private Health Plans (cont’d.) Employers may lower premiums with carve outs – Part of standard health plan that is changed under a negotiated employer-sponsored plan » Omit specific benefit, use different network for specific area, etc. State vs. Federal – what’s the rule? – Which ever has more restrictive laws mandating coverage of specific benefits or treatments and access to care must be followed Open enrollment plans – Employee may make changes to plan – Exceptions? » Marriage, birth, death, etc. OT 232 Ch 9, #13

Federal Employees Health Benefits Program FEHB Largest employer-sponsored health program in the U. S. Covers more than 8 MILLION people 250+ different plans OT 232 Ch 9, #14

Self-funded Health Plans Large employers choose to cover costs of employee medical benefits themselves May set up the own provider network or lease a managed care organization’s network Regulated by ERISA – Employee Retirement Income Security Act of 1974 Often hire 3 rd party claims administrators (TPAs) to handle paperwork – Often an insurance carrier or MCO is hired - not to take on the risk - but to do claim processing OT 232 Ch 9, #15

Individual Health Plans IHP For people not part of a group – Self-employed – Between jobs – Students – Early retirees 10% of private health plans Usually have basic benefits without riders or additional features OT 232 Ch 9, #16

Features of Group Health Plans Eligibility for Benefits – Waiting Period Often days – CC? » NONE!! Avoids paperwork of short-timers Minimizes pre-existing date fudging – Late Enrollees More stringent rules apply if you don’t enroll ASAP. – May require a physical OT 232 Ch 9, #17

Features of Group Health Plans (cont’d.) – Premiums and Deductibles Paid by employer and employee – Employers pay an average of 80% Individual vs. Family Non-covered services don’t count towards deductible – Benefit Limits Benefits end after a monetary amount is reached – Lifetime – Annual – Condition OT 232 Ch 9, #18

Features of Group Health Plans (cont’d.) – Tiered Networks Steers patients to providers that perform best under plan’s measures – Don’t order unnecessary tests – PCP vs. walk-in clinic Higher reimbursement for ‘cost effective’ providers Common for prescription drug coverage – Formulary vs. nonformulary drugs OT 232 Ch 9, #19

Features of Group Health Plans (cont’d.) Portability and Required Coverage – COBRA Consolidated Omnibus Budget Reconciliation Act Right to continue coverage under employer’s plan for a limited time at own expense Usually less than individual health coverage – But still expensive; many opt for individual catastrophic plan Important for pre-existing conditions; don’t want gap period OT 232 Ch 9, #110

Features of Group Health Plans (cont’d.) HIPAA – ‘Look back’ period Plans can exclude conditions that an employee has been seen for in the last 6 months, but not beyond that – This limitation cannot last longer than 12 months. – ‘Creditable coverage’ If recently covered, that must be taken into account when new plan is determining any limitations – If break is 62 days or less, all good OT 232 Ch 9, #111

Features of Group Health Plans (cont’d.) Other Federally Guaranteed Insurance Provisions – Newborns’ & Mothers’ Health Protection Act Not less than 48 hour hospital stay after birth – Women’s Health and Cancer Rights Act Covers breast reconstruction after mastectomy – Mental Health Parity Act Mental health benefits must equal medical benefits OT 232 Ch 9, #112

Types of Private Payer Plans Figure 9-1, page 292 Preferred Provider Organizations – Still most common – Generally pay participating providers based on a discount from their physician fee schedules – Annual premiums, deductibles and copayments are required OT 232 Ch 9, #113

Types of Private Payer Plans (cont’d.) Health Maintenance Organizations – Fewest providers, most stringent guidelines – PCP’s are assigned – Staff Model Physicians are employed by the HMO – Group (Network) Model Capitation method of payment used – Independent Practice Association Model (IPA) Independent physicians who contract together to provide services HMO pays IPA, who pays the physicians OT 232 Ch 9, #114

Types of Private Payer Plans (cont’d.) Point-of-Service Plans (POS) – Hybrid of HMO and PPO – Members choose from a primary or secondary network Primary is HMO-like, secondary is usually a PPO – May be structured as a tiered plan Different rates for different providers – Charge a premium and copayment OT 232 Ch 9, #115

Types of Private Payer Plans (cont’d.) Indemnity Plans – Require premium, deductible and coinsurance – Payers compete for employers’ contracts to try to control costs OT 232 Ch 9, #116

Consumer-Driven Health Plans Two components – High deductible health plan For catastrophes – One or more tax-preferred savings accounts For out-of-pocket or noncovered expenses Goal – people will research more and be more aware/conscious/careful of how their money is spent High-Deductible Health Plan (HDHP) – $1000+, BUT… Many covered services are not subject to deductible – Often preventive care, dental, vision, etc. OT 232 Ch 9, #217

Consumer-Driven Health Plans (cont’d.) Funding Options (Table 9.2, page 300) – Health Reimbursement Account (HRA) Set up and funded by employer Used by employees with high deductibles to reimburse for out-of-pocket expense – Health Saving Account (HSA) Set up by individual – Flexible Savings Accounts Use it or lose it OT 232 Ch 9, #218

Consumer-Driven Health Plans (cont’d.) Billing Under CDHPs 1.The GHP establishes a funding option 2.Patient uses the money to pay for allowed services 3.Total deductible must be met 4.Then the HDHP covers a portion of benefits Example, page 303 OT 232 Ch 9, #219

Major Private Payers & the Blue Cross & Blue Shield Association Private payers/Insurance organizations provide these services – Contract with employers and individuals to provide insurance benefits – Setting up provider networks – Establishing fees – Processing claims – Managing the insurance risk – Provide customer support to both providers and participant OT 232 Ch 9, #220

Major Private Payers & BCBS (cont’d) Major Payers & Accrediting Groups – Really just 8-10 major payers that have many smaller/regional affiliates – The smaller subsidiaries within the major payers are designed to meet different markets, companies, state laws, etc. – Huge variety in terms of customization OT 232 Ch 9, #221

Major Private Payers & BCBS (cont’d) Blue Cross and Blue Shield Association – Is not a payer! Is an association of more than 40 independent payers nation-wide – Independent payers under BCBS are called Member Plans The ‘association’ is good for advertising, networking – Subscriber ID card Since BCBS isn’t a payer, important to determine type of plan OT 232 Ch 9, #222

Major Private Payers & BCBS (cont’d) – Types of Plans HMO – patient must choose PCP from within network POS – use providers in network, or out of network (but for a higher fee) PPO – patients can see providers in directory for reduced fees – BlueCard program Benefit of BCBS Allows patients to receive treatment outside their local area – Is a nationwide network with a single electronic claim processing & reimbursement system – Flexible Blue Plan BCBS’s version of a CDHP OT 232 Ch 9, #223

Participation Contracts From the providers point of view Contract Provisions – How much money are they getting paid? Look at most frequent CPT codes Is scale too low to be worthwhile – How many patients is it bringing in? Are more needed? Does the incoming number justify the lower fees? Are there enough to make the lower fee profitable? – Administrative rules involved Will complying compromise medical judgement? Limit decision-making too much? – How are they paid and how much support do they get? Does complying take too much billing time and additional employee expense? OT 232 Ch 9, #224

Participation Contracts (cont’d.) Introductory Section – Names the contracting parties and how they can be used – Defines terms used Contract Purpose & Covered Medical Services – Types of plans – Services provided – What’s covered and what can be billed for OT 232 Ch 9, #225

Participation Contracts (cont’d.) Physician’s Responsibilities – Services that must be offered – Acceptance of plan members All or percentage? – Referral rule Can a referral be made to a non-participating provider? – Preauthorization Provider’s or patient’s responsibility? – Quality assurance/utilization review Allow access to files for payer’s quality assurance & to determine medical necessity Payers process to determine the ‘appropriateness’ of services to members – Other provisions Providers credentials, HIPAA privacy policies, etc. OT 232 Ch 9, #226

Participation Contracts (cont’d.) Managed Care Obligations – Identification of enrolled patients Usually ID card – Payments Defined turn-around time – Other compensation Incentives, bonuses, withholds, etc. – Can withhold 20% of payment if medical expenses are too high – Protection against loss Stop-loss provision Compensation and Billing Guidelines – Formats for billing, how much to expect from patients, coordination of benefits when more than one plan is involved, etc. OT 232 Ch 9, #227