Chapter 11 The Blue Plans, Private Insurance, and Managed Care Plans Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

2 Private Insurance  Blue Cross/Blue Shield  Pioneers in private insurance  Largest insurance company in the U.S.

3Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Prepaid Group Practice Health Plans  Pioneers  Ross-Loos Medical Group became CIGNA  Kaiser Permanente Closed Panel Program * Closed Panel Program *  Direct contract  Contracts directly with physicians in the community  Individual practice model  Practice physicians paid on fee for service from premiums paid

4Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Health Maintenance Organization Act of 1973  Created authority for federal government to assist HMO development by:  providing grants, loans, and loan guarantees to offset initial operating deficits of new HMOs that meet federal standards.  requiring most employers to offer an HMO to employees as an alternative to traditional insurance plans. *

5Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Healthcare Reform  growing number of uninsured  costs to employers  government deficits  rising costs of high-tech medicine  patient costs  fraud

6Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Managed Care Systems  Health Maintenance Organizations  Prepaid group practice model  Staff model  Network HMO  Direct contract  Individual practice model

7Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Managed Care Systems (cont’d.)  MCO  HMO  EPO  FMC  IPA  PPO  PPG  POS plan

8Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Exclusive Provider Organization (EPO) features similar to PPO  Members must choose care from network providers (emergency exceptions)  Generally, no reimbursement for out-of-network care  Regulated under insurance statutes

9Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Exclusive Provider Organization (EPO) features similar to HMO:  Enrolled population  Limited provider panel  Gatekeepers – incentives for keeping referrals at a minimum *  Utilization management  Capitated provider reimbursement *  Authorization system

10Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Exclusive Provider Organization (EPO) features:  Flexible benefit design  Negotiated fees  Fee-for-service payments

11Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Foundations for Medical Care (FMC)  First established in 1954, in Stockton, CA FMC Operations  Comprehensive type of foundation  Claims-review type of foundation

12Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Independent (or Individual) Practice Association (IPA)  Physicians are not employees, and do not receive salaries  Capitation or fee-for-service program

13Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Preferred Provider Organization (PPO)  Freedom to use any physician or hospital  Members receive highest level of benefits when using preferred providers  Coinsurance and deductibles

14Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Silent PPOs  Also called blind or phantom PPOs, discounted indemnity plans, nondirected PPOs, or wraparound PPOs  Provider income reduced  Complicates the appeal process

15Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Physician Provider Group (PPG)  Physician owned (unlike IPA)  Joint ventures with hospitals, labs, etc.  Can combine services for member physicians, cutting business costs

16Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Point-of-Service (POS) Plan  HMO cost management  PPO freedom of choice  Members choose services from participating and nonparticipating providers, with different benefit levels *

17Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Triple-Option Health Plans  Members choose from HMOs, PPOs, or “traditional” indemnity insurance  Members can change plans  Cost-containment measures

18Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Other Plans  Provider-Sponsored Organization (PSO)  Owned and maintained by a hospital or provider group  Religious Fraternal Benefit Society (RFBS)  Managed care plan associated with a church, group of churches, or convention

19Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Regulatory Considerations  Individual or employer paid?  Employee Retirement Income Security Act (ERISA)  liability issues  disability issues  state versus federal jurisdiction

20Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Quality Improvement Organizations  peer review  utilization review  Churning *  Turfing *  Buffing *  concurrent review  discuss pre-admission certification

21Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Plan Administration  patient information letter  medical records  scheduling appointments  encounter form

22Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Preauthorization/Prior Approval  formal referral  direct referral  verbal referral  self-referral

23Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Managed Care Plan Reference Guide

24Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Financial Management (Payment)  Deductibles *  Copayments *  Always collect up front *  payment mechanisms  contract payment time limits  scheduling appointments  monitoring payment  fee schedules

25Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Financial Management  statement of remittance  accounting  fee-for-service  year-end evaluation  explanation and coordination of benefits

26Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. Fee-for-Service  handling accounts similarly to fee-for-service  Copayment  Adjustment  overpayment  capitation versus fee-for-service