Managed Care 101 serves as an overview of today’s Health Plans. Presenting …… Managed Care 101 Brought to you by Vanderbilt Managed Care Sales and Services 2005

Indemnity PPO - Preferred Provider Organization Majority of health plans currently on the market. Gatekeeper PPO - Preferred Provider Organization with PCPs POS - Point of Service HMO - Health Maintenance Organization EPO - Exclusive Provider Organization New Product: CDHC– Consumer Directed Health Care New Product shifting medical decision making and payment risk from the health plan to the member. Health Care Plans Include the following types

In the early days of healthcare, most patients had Indemnity insurance. Patients could go to any provider they wanted to, but paid a greater share of their healthcare bills. With the introduction of Managed Care, patients pay a lower portion of their healthcare bills for agreeing to go to specific providers within their health plan’s network of providers. HMO plans offer a smaller provider network than PPO plans. Patients in an HMO usually pay smaller premiums than those in a PPO or POS plan. Most patients today have a PPO plan. Managed Care Progression

In-Network vs. Out-Network Participating (PAR) vs. Non Participating (Non-PAR) MCOs build networks of providers that include physicians and hospitals. Patients access healthcare through their MCO's provider network. Unsure if a particular insurance includes our providers, go to MCIS and check for Vanderbilt participation. Out-of-Network Benefits may allow a patient to come to Vanderbilt at a higher out-of-pocket expense to the patient. Managed Care Plans have a designated Network of Providers

Members are usually not responsible for obtaining authorizations. MCOs may require the member to notify their PCP for a referral or authorization. It is the responsibility of the PCP or Specialist staff to obtain authorization for services which require authorization. Most Plans have a Pre-Certification List of services that require prior authorization before services can be rendered. Check MCIS for each Plan’s list of services that require prior authorization under the PreCert List link. When services are not authorized or considered not medically necessary, claims for those services are denied by the Healthplan and we must write off payment. The patient does not bear the burden of payment for those services. Managed Care Plans require Authorizations for certain services

In majority of cases, PCPs may refer to certain specialists without prior approval from the MCO. If the level of the referral is one which includes consult and treat, there may be services included in the referral that require prior authorization from the plan (i.e., MRIs, outpatient surgical procedures). Under a PPO, authorization is not necessary for visits to a specialist office. PPOs still require precertification of all inpatient admissions, selected outpatient procedures, and specific ancillary services. Managed Care Plans shall issue Authorizations through the Health Plan, and/or a Network designee or a Primary Care Provider (PCP)

PPOs shall have 2 benefit levels – one for In-Network and one for Out-of- Network services For Example: Vanderbilt University Hospital is contracted with Good Heath PPO Plan - Baptist Hospital is not. Patient comes to Vanderbilt and their In-Network or PAR benefit is 90%, so the patient’s out of pocket expense is 10%. Patient goes to Baptist Hospital which is out-of-network or NONPAR and their benefit is 70%, so the patient’s out of pocket expense is 30% Some PPOs Vanderbilt is contracted with: Aetna PPO Cigna PPO PHCS Signature Health Alliance

Higher Benefit - A PCP refers member to a network or approved non-network provider. Lower Benefit - A member self-refers to a network or non-network provider. Members of a Point-of-Service plan may not understand that they are required by their insurance to have a PCP referral for specialty services in order to receive their higher benefits. Point of Service (POS) plans shall have two benefit Levels:

HMO & EPO Plans strictly enforce this requirement with their members. HMOs and EPOs shall not provide benefits for out-of-network services (except for those specifically approved by the health plan or in emergency situations).

Accept that MCOs may question our practices and decisions. Employers expect MCOs and providers to work together to reduce costs and preserve quality. Respond to MCO questions in a concise, friendly, helpful manner. Be specific. When completing forms, include all information being asked for. When requesting a referral or authorization, include enough clinical information to support medical necessity and appropriateness of care for the services you are recommending. Document all managed care information for each patient (referring physician, # visits, etc.). Documentation provides evidence of plan or PCP approval for services rendered and may be presented during the appeals process if a claim is denied by a health plan for no authorization when in fact prior authorization had been obtained. Keys to Success in Managed Care

Avoid placing the patient in the middle of situations between the provider and the MCO. Patients don't always understand their health plan benefits or their responsibilities. Always look at both sides of a problem you encounter. For many payors, their customers and members choose to use our providers at their own discretion. Our managed care contracts obligate all parties to certain responsibilities. Our challenge is to fulfill those responsibilities to the best of our ability and foster continued utilization of our services. Keys to Success in Managed Care Remember MCOs are our customers, too!

Self-Insured vs Fully-Insured Terms are used to describe the type of insurance which an Employer Group provides. When an Employer Group is Self-Insured, this means the insurance company manages the employer’s funds to cover healthcare costs through an Administrative Services Only (ASO) agreement. A Self-insured Group pays administrative costs to the health plan for their services. Many large Employer Groups opt to self-insure their employees healthcare costs because they are exempted from certain insurance laws and believe they will spend less money. (Vanderbilt University is a self-insured Employer Group). When an Employer Group is Fully-Insured, this means the employer group pays healthcare premiums to the health plan for their services. Employees or Patients will not be able to discern if their Employer is Self- insured or Fully-insured, since all paperwork and Id Cards usually contain the name of the Insurance Company.

National Employee Enrollment % of Covered Employees Indemnity6%5%3% POS 15%14%22% HMO 35%30%18% PPO44%51%55% CDHP2% Indemnity, POS, HMOs are declining while PPOs continue to gain

Health Care Price Increases Employer’s health care expenses increased an average of 12% in Employer’s health care expenses are expected to rise 8% in Employee share of premium costs will increase 12% in Employers report an average 2% reduction in benefit levels for 2005.

Predictions for the future Managed Care backlash will continue Prescription (Rx) Costs may surpass managed care backlash as the #1 health care “hot seat” PPO enrollment increases will continue HMOs will continue to reduce plan restrictions HMOs & PPO/POS plans differences will blur Provider clout will continue to increase Employer Groups will reluctantly continue to accept premium price increases Medicare Advantage Plans will continue to grow Rise in “Consumer-Directed HealthCare Plans” –Health Affair’s Market Watch projects 50% of the market by 2008 –Today, 2% of employees currently enrolled in CDHC Plans

Medicare Advantage Plans Medicare Advantage Plans are offered by private companies that sign a contract with Medicare. Enrollee must have Medicare Part A & B to join a Medicare Advantage Plan. Medicare Advantage Plans may offer extra benefits that traditional Medicare does not cover, such as, Vision, Dental & Rx benefits. Medicare Advantage Plans may charge a monthly premium and co-pays.

Medicare Advantage Plans (continued) Medicare Advantage Plans include: –Medicare Health Maintenance Organization (HMO) Plan –Medicare Point-of-Service (POS) Plan –Medicare Private Fee-For-Service (PFFS) Plan –Medicare Preferred Provider Organization (PPO) Plan

What is a Consumer-Directed HealthCare Plan? Consumer-driven healthcare plans are often called health spending accounts, personal care accounts, or defined contribution health plans, but they all function similarly: Your employer funds your account with money to pay for health care and prescription drugs. You can choose any doctor without ever needing a referral, and often you can use the money to pay for health care services that are not covered under traditional plans, e.g. massage therapy. If you spend all the money before the end of the plan year, you must first meet a deductible before the plan will pay a percentage of your eligible health care costs. You may roll over any unspent funds from year to year. However, some companies limit the amount that you can have in your account at any one time.

How does a Consumer-Directed HealthCare Plan Work? Typically, here is how it works: Each employee is given an annual tax-free healthcare account of, say, $1, Employee may spend this money on any medical expenses he or she chooses with any doctors, from eye exams to alternative medicine. No copay, no PCP, and no paperwork for reimbursements. If there is money left over in the account at the end of the year, it can be rolled over to the next year. This gives workers an incentive to research health providers, chose generic drugs, and make sure doctor visits are really necessary.

How does a Consumer-Directed HealthCare Plan Work? (continued) If expenses rise above $1,000, the employee has a high deductible, say, $1,000 they must pay. After the health care account is depleted and deductible are met, $2,000, health insurance coverage takes over. Often a PPO plan with, say, 90% employer coverage and 10% coinsurance for the employee.

Healthcare Discount Cards Vanderbilt does NOT accept or participate in any discount card programs. These cards are not insurance policies and do not make payments or reimbursements. Many cards imitate a legitimate insurance card, and when you call, may imitate a legitimate insurance company. Because discount card programs are not insurance, these programs are not regulated by most state insurance departments.