1. Private Insurance Payers and Plans Chapter 3
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2. Learning Outcomes After studying this chapter, you should be able to:
3-1 Compare and contrast employer-based and individual plans.
3-2 Discuss the major types of health plans.
3-3 Describe patients’ financial responsibilities under various types of pharmacy benefit plans.
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3. Learning Outcomes (Continued)
3-4 Compare and contrast the three types of formularies.
3-5 Explain the concept of a tier.
3-6 Calculate patients’ payments due for pharmacy benefits under tiered private plans.
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4. Key Terms Any willing provider Capitation Closed formulary
Compounded medications
Consumer-driven health plan (CDHP)
Covered expense
Disease management (DM) programs
Drug utilization review
Family deductible
Group health plan (GHP)
Health maintenance organization (HMO)
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5. Key Terms (Continued) Individual deductible
Individual health plan (IHP)
Member pharmacy
Network
Open enrollment period
Open formulary
Out-of-network
Out-of-pocket expenses
Pharmacy benefit manager (PBM)
Preferred provider organization (PPO)
Prescription drug deductible amount
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6. Key Terms (Continued) Prescription legend drug
Prior authorization (preauthorization)
Restricted formulary
Specialty drug
Therapeutic interchange
Tier
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7. Private Insurance
People not covered by entitlement programs are usually covered by private insurance
Many employers offer their employees the opportunity to become covered under employee health care benefit plans
Self-employed people may buy individual health coverage
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8. Employer-Sponsored Medical Insurance
Group Health Plans are bought by employers from insurance companies
Employers may select certain benefits
Pharmacy Benefit Managers (PBMs) may be hired to operate the prescription drug benefit more inexpensively
PBMs are third-party administrators of prescription drug programs that processes and pays prescription drug claims
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9. Employer-Sponsored Medical Insurance (Cont.)
The group health plan specifies the rules for eligibility and the process of enrolling and disenrolling members
During open enrollment periods, the employee chooses a particular set of benefits for the coming benefit period
Employees can customize the policies by choosing to accept various levels of premiums, deductibles, and other costs
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10. Federal Employees Health Benefits Program
The largest employer-sponsored health program in the United States
Covers more than 8 million federal employees, retirees, and their families
The FEHB is administered by the federal government’s Office of Personnel Management (OPM)
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11. Self-funded Health Plans
Some large employers cover the costs of employee medical benefits rather than buying insurance from other companies
They create self-funded (or self-insured) health plans that do not pay premiums to an insurance carrier or a managed care organization
The employer establishes the benefit levels and the plan types offered to employees
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12. Individual Health Plans
Health plans are available for individual purchase
Almost 10 percent of people with private health insurance have individual plans
People often elect to enroll in individual plans, although coverage is expensive, in order to continue their health insurance between jobs
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13. Types of Health Plans The five major types of health insurance plans:
Preferred provider organization (PPO)
Health maintenance organization (HMO)
Point-of-service (POS)
Indemnity plans
Consumer-driven health plans (CDHP)
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14. Types of Health Plans (Cont.)
Preferred Provider Organization (PPO)
Most popular type of managed care organization (MCO)
The MCO creates a network of physicians, hospitals, and pharmacies for its policyholders
Patients are encouraged to use network services, like a member pharmacy
Patients may also go out-of-network
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15. Types of Health Plans (Cont.)
Health Maintenance Organization (HMO)
Another MCO, in which patients enroll by paying fixed premiums and very small (or no) copayments when they need service
In exchange for paying less, patients give up the flexibility of choosing their own physicians
For each patient visit there is a single fee; this way of paying is called capitation
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16. Types of Health Plans (Cont.)
Point-of-Service (POS)
Some HMOs offer this plan for patients who do not wish to accept services from only network providers
Patients may see physicians outside the HMO’s network, but must pay more, such as by making larger copayments
More like a PPO than a standard HMO plan
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17. Types of Health Plans (Cont.)
Indemnity (or fee-for-service) Plans
Traditionally the payments physicians receive are based on their regular charges for services, and patients owe coinsurance based on those fees
Currently many plans allow the payer to negotiate physician discounts for members
Generally a higher-cost option
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18. Types of Health Plans (Cont.)
Consumer-driven Health Plans
Combine two elements:
A health plan with a high deductible and low premiums
A special “savings account” is used to pay medical bills before the deductible is met
The patient is paying for health care services directly, thus limiting expenses
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19. Pharmacy Plan Benefits
Vary according to the type of health plan
Covered Expenses
Prescription legend drugs, and compound medication containing them
Various other drugs accompanied by a doctor’s written prescription
Noncovered Expenses
Those the policy does not cover that must be paid by the insured
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20. Pharmacy Benefit Management Techniques
Employers have a number of techniques to control costs, including:
Pharmacy network management
Formulary management
Drug utilization management
Mail service
Disease management programs
Cost-containment efforts are balanced with employee satisfaction
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21. Formulary
A list of the plan’s preferred drugs within each therapeutic class
Open formulary – least restrictive, may cover unlisted drugs
Closed formulary – most restrictive, unlisted drugs usually not available
Restricted formulary - limits the drugs listed in the formulary to only generics, or limited medications within a drug class
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22. Tiers A tier is a specific list of drugs
Plans may have several tiers; a drug’s tier determines its copayment cost
Example of tier system:
Level 1 – Generic drugs (lowest cost)
Level 2 – Preferred brand medications
Level 3 – Nonpreferred brand medications (most expensive option)
Compound medications are Tier 3 level
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23. Specialty Drugs
Separate category of medications, including biotech and other drugs that are designed to treat:
Serious diseases, such as cancer
Multiple sclerosis
Rheumatoid arthritis and other inflammatory maladies
Demand is growing for these drugs and cost-containment practices are being considered by health plans and PBMs
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24. Drug Utilization Review
A tool for controlling costs used to:
Ensure safety
Improve care quality
Promote compliance with the formulary
For example, prior authorization programs target specific drugs and require special authorization at the pharmacy for coverage by the plan
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25. Generic Substitution and Drug Interchange
Substitution of generic drugs for their brand name equivalents is a common cost-saving measure
Therapeutic interchange is the substitution of one drug for another in the same therapeutic class
Physician permission and compliance with state pharmacy law to interchange drugs is required
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26. Other PBM Techniques Internet and Mail-order Services
Dispensing medications by the Internet and mail order is cost-effective
Some PBMs own and operate their own mail order pharmacies
Disease Management
Provided for common and potentially high-cost conditions, such as asthma, diabetes, heart disease, and depression
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27. Patient Charges
Aside from periodic premium payments, there are five other types of payments (known as out-of-pocket expenses) patients may pay:
Deductibles
Copayments
Coinsurance
Noncovered (excluded) and over-limit services
Balance Billing
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28. Patient Charges (Cont.)
Deductibles
Most payers require policyholders to pay their deductibles before insurance benefits begin
Individual deductibles – for each individual
Family deductibles – combined payments
For prescription benefit plans, the deductible is referred to as the prescription drug deductible amount
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29. Patient Charges (Cont.)
Copayments
Required by many health care plans
Always due and collected at the time of service
Usually stated as a dollar amount, such as $15 for an office visit or $10 for a prescription
Practices may inform patients of their copay ahead of time to prepare them for payment
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30. Patient Charges (Cont.)
Coinsurance
Required by many health care plans
Noncapitated health care plans such as PPOs usually require patients to pay a greater percentage of the charges of out-of-network providers than of plan providers
Patients pay a percentage of a charge
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31. Patient Charges (Cont.)
Noncovered (Excluded) and Over-Limit Services
All payers require patients to pay for noncovered (excluded) services
Providers generally can charge their usual fees for these services
Patients are sometimes responsible for usage beyond the allowed number of covered services
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32. Patient Charges (Cont.)
Balance Billing
Pharmacy technician insurance specialists need to know when to charge patients for their medications, and how to determine the appropriate charges based on their insurance
Examining and extrapolating necessary information from medical insurance ID cards is critical
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