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Principles of Healthcare Reimbursement Third Edition
Chapter 1 Healthcare Reimbursement Methodologies
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General information Course Corrections
Informing me of any Personal Issues Late Assignments Completing Weekly Tasks Providing substance for discussions “looks good” Proof all submissions Completing the course
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Introduction to Healthcare Reimbursement
U.S. Healthcare Reimbursement is Complex Health Insurance System of reducing a person’s exposure to risk of loss by another party. Health insurance reduces the risk of loss related to health costs Premium
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Introduction to Healthcare Reimbursement (cont.)
Historical Perspectives Health insurance and employment Compensation for healthcare (reimbursement) Third party payment Characteristics of reimbursement methodologies
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Characteristics of Reimbursement Methodologies (cont.)
Description Unit of Payment Element that is the basis of payment Time Orientation Retrospective or Prospective Degree of Financial Risk Level of uncertainty
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Types of Healthcare Reimbursement Methodologies
Two Major Types Fee-for-service reimbursement Episode-of-care reimbursement
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Types of Healthcare Reimbursement Methodologies (cont.)
Fee-for-Service Episode-of-Care Self-Pay Capitated Payment Traditional Retrospective Payment Global Payment Managed Care* (*some forms) Prospective Payment
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Fee-for-Service Reimbursement
Terms Fee Charge Claim Advantages and Disadvantages Freedom Higher deductibles and copayments
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Fee-for-Service Reimbursement (cont.)
Self-Pay Guarantor Situations for self-pay Self-insured plan
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Fee-for-Service Reimbursement (cont.)
Traditional Retrospective Payment Fee schedule Allowable fee Discounted fee-for-service payment UCR CPR RBRVS Uncertainty for third party payers
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Fee-for-Service Reimbursement (cont.)
Managed Care (some forms) Features Purposes Forms Criticisms
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Episode-of-Care Reimbursement
Definition Description Particular health condition or illness Period of relatively continuous care from a provider
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Episode-of-Care Reimbursement (cont.)
Capitated Payment Method (Capitation) Per capita Per member per month (PMPM) Advantages and disadvantages
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Episode-of-Care Reimbursement (cont.)
Global Payment Method Combined payment Block grant Total episode-of-care payment rate
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Episode-of-Care Reimbursement (cont.)
Prospective Payment Method Predetermined rate Per-diem Case-based Criticisms
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Future Trends in Healthcare Reimbursement
Federal Healthcare Initiatives Healthcare Reform Use of Information and Communication Technologies Universal Healthcare Coverage Physician Care Groups Refined Case-based Payment Case-Mix Adjustment Models
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Principles of Healthcare Reimbursement Third Edition
Chapter 3 Voluntary Healthcare Insurance Plans
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Voluntary Healthcare Insurance
Denotes healthcare insurance that is purchased Related to employment 35% of healthcare payments It is not : Social health insurance (governmental programs based on past employment) Public welfare
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Voluntary Healthcare Insurance (cont.)
Indemnity health insurance (Retrospective fee-for-service) Guarantor Freedom of choice
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Types of Voluntary Healthcare Insurance
Umbrella term for 2 major categories, 3 classifications, and 1 minor category Commercial healthcare insurance plans (historically for profit) (1) Private (2) Employer-based (3) Blue Cross and Blue Shield plans (historically not-for-profit) Minor category: State Healthcare Plans for Medically Uninsurable
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Confusing Terminology
“Private” used two ways Synonym for commercial insurance Purchased for self and/or family rather than for group of employees or members of an association “Individual” used two Ways Not a group No dependents (no family members)
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Private (Commercial) Healthcare Insurance Plans
Private (“Individual”) Bought by individual for self and/or family Risk pool = self and/or family Employer-Based Purchased by employer for “group” of employees Group plan Risk pool = all employees
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Private Individual Healthcare Plans
Definition Coverage Evidence of insurability Policy provisions
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Employer-Based (Group) Healthcare Plans
Definition Policy Provisions
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Blue Cross and Blue Shield Plans
History Earliest plans American Hospital Association affiliation Blue Shield Blue Cross and Blue Shield Today 40 independent plans with 88.3 million enrollees Profit versus non-profit status
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Blue Cross and Blue Shield Plans
Historical not-for-profit, but now some Blue Cross and Blue Shield plans are for-profit Traditional distinction between commercial (for profit) and Blue Cross and Blue Shield is blurring
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Types of Blue Cross and Blue Shield Plans
Geographic State or substate level Locally administered Federal Employee Program (FEP) Federal government-wide program Service Benefit Plan
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State Healthcare Plans for Medically Uninsurable
State laws providing access to healthcare insurance for medically uninsurable (not substitute for Medicaid or Medicare) Funded through premiums and other mechanisms About 200,000 persons nationally High-risk pools Great variation among states’ plans
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Provisions and Functioning
Policyholders or insureds, certificate holders, or subscribers Payments of insureds under a policy Premiums Deductibles Coinsurance Copayments
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Provisions and Functioning (cont.)
Payments of healthcare insurance companies under a policy Covered conditions Covered services Healthcare services Medical services (care) Preventive care
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Sections of Healthcare Insurance Policy
Definitions Eligibility and Enrollment Benefits Limitations Cost-sharing provisions Use of formulary Benefit cap Exclusions
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Sections of Healthcare Insurance Policy (cont.)
Riders and Endorsement Procedures Prior approval Coordination of benefits Appeals Processes
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Example: Determination of Mental Health Benefit
Def. Ben. Limit. Excl. Proc. Precertification IP Care $100 Copayment + Deductible + Coinsurance Treatment Preceding Certification Obtain Prior Approval Prior Approval Licensed Psychiatric Bed & Attending Psychiatrist Treatment from Noneligible Provider Obtain Pre-certification Delivered by Eligible Provider Treatment in Non-contracting Facility
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Filing a Healthcare Insurance Claim
Provider submits (files) Clean claim Adjudication Common errors delaying payment Remittance advice Write-off
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Explanation of Benefits (EOB)
Actual charge Allowable charge Deductible Applicable cost sharing Copayment Coinsurance Benefit paid Remainder owed by insured
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Increasing Private Healthcare Costs Consumer-Directed Healthcare Plan
Future Trends Increasing Private Healthcare Costs Consumer-Directed Healthcare Plan Value-based Insurance Design Prospective Payment Systems for Non-Medicare Populations
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Principles of Healthcare Reimbursement Third Edition
Chapter 4 Government-Sponsored Healthcare Programs
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Objectives To differentiate among and to identify the various government-sponsored healthcare programs To understand the history of the Medicare and Medicaid programs in America To recognize the impact that government-sponsored healthcare programs have on the American healthcare system
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Medicare Medicare Title XVIII of the Social Security Act
1965 (implemented 1966) Beneficiaries Age 65 or older Eligible for Social Security or Railroad Retirement Benefits Persons with permanent disability End-stage renal disease
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Medicare (cont’d) Medicare Part A: Hospitalization insurance
Inpatient hospital Long-term care Skilled nursing services Home health services Hospice care Beneficiary pays deductible and copayments after certain periods of time Part B: Voluntary supplemental medical insurance Physician services Medical services Medical supplies Beneficiary pays monthly premium plus annual deductible and copayments
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Medicare (cont’d) Medicare Part C: Medicare Advantage (MMA 2003)
Was Medicare+Choice (1997) HMO PSO PPO Beneficiary pays monthly premiums $50–$350 Expanded scope of services (e.g., vision services) Part D: Medicare Drug Benefit Implemented January 1, 2006 Outpatient drug coverage provided by private prescription drug plans and Medicare Advantage Beneficiaries pay monthly premium, deductible, and copayments Medigap: Supplementary insurance to cover items and services not covered by Medicare Must meet Federal guidelines
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Medicaid Medicaid Title XIX of Social Security Act (1965)
Individuals and families with low incomes and limited financial resources Joint program between federal government and states Administered by individual states Determine eligibility, type, amount, durations, scope of covered services Calculate the rate of payment May offer a managed care option 60.68% in 2004; up from 32.1% in 1995
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Required Medicaid coverage for
Medicaid (cont’d) Required Medicaid coverage for Low income families with children including Temporary Assistance for Needy Families (TANF) Supplemental Security Income recipients Infants born to Medicaid-eligible pregnant women Children under the age of six whose family income is at or below 133 percent of the federal poverty level Recipients of adoption assistance and foster care Certain Medicare beneficiaries Special protected groups
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Temporary Assistance for Needy Families
TANF Temporary Assistance for Needy Families The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (welfare reform) Provides states with grant money designated to provide low-income families with assistance Replaced Aid to Families with Dependent Children (AFDC) Many changes under welfare reform and the change from AFDC to TANF Many individuals are not aware that they are eligible for Medicaid under this program.
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Programs of All-Inclusive Care for the Elderly
PACE Programs of All-Inclusive Care for the Elderly Balanced Budget Act 1997 (BBA) Joint Medicare-Medicaid venture Offers states the option of creating and administering a managed care option for the frail elderly population Enhance the quality of life for the frail elderly population Live in their own homes and communities Have service facilities in various geographical service areas Increased accessibility to frail elderly population
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State Children’s Health Insurance Program
SCHIP State Children’s Health Insurance Program Title XXI of Social Security Act BBA (Balanced Budget Act) 1997 Covers children who are not eligible for Medicaid Services Inpatient Outpatient Physician’s surgical and medical Lab and x-ray Well-baby/child care services and immunizations
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TRICARE TRICARE (formerly CHAMPUS: Civilian Health and Medical Program–Uniformed Services) Active-duty members of the military and qualified family members Activated guard or reserve members Three options TRICARE Prime and Prime Remote ADSM or ADFM TRICARE Extra ADFM TRICARE Standard TRICARE for Life Secondary coverage for those eligible for Medicare
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Civilian Health and Medical Program Veterans Administration
CHAMPVA Civilian Health and Medical Program Veterans Administration Dependents and survivors of disabled veterans Survivors of veterans who died of service-related conditions Survivors of military personnel who died in the line of duty Treated for free at participating VA healthcare facilities
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IHS Indian Health Service American Indians Alaska Natives Covers:
Preventive health services Primary medical services (hospital and ambulatory care) Community health services Substance abuse treatment services Rehabilitative services
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Worker’s Compensation
Work-related injuries Covers: Healthcare costs Lost income Legislated by individual states Set coverage Can exclude certain workers
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Worker’s Compensation
Federal Employee’s Compensation Act Federal government employees Established in 1916 and administered by the Office of Workers’ Compensation Programs Provides for Medical benefits Death benefits Income benefits
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Principles of Healthcare Reimbursement Third Edition
Chapter 5 Managed Care Plans
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Managed Care Plans Managed care systematically merges clinical, financial, and administrative processes to manage access, cost, and quality of healthcare Purpose of managed care is to provide affordable, high-quality healthcare
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History of Managed Care
1910, Western Clinic, Tacoma, WA 1929, First Blue Cross plan in Dallas, TX, form of managed care 1930s, Kaiser Construction Co., healthcare plan for workers 1973 HMO Act 1980s–1990s growth & development
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Benefits and Services Physician services Inpatient care Preventive care and wellness Prenatal care Emergency services Diagnostic and laboratory tests Home health services Access to mental and behavioral health and specialty care through referrals
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Characteristics of Managed Care
Selection criteria for providers Delivery of continuum of care to population including health and wellness management Care management tools Coordination of care by primary care provider Evidence-based clinical practice guidelines Disease management
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Characteristics of Managed Care (cont’d)
Quality assessment and improvement Performance improvement activities NCQA URAC CAHPS® HEDIS® Member Satisfaction
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Characteristics of Managed Care (cont’d)
Service management tools Medical necessity review Utilization management Case management Prescription management Episode-of-care reimbursement Capitated reimbursement Global payment Financial incentives
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Evolution of industry resulted in blurring of types and hybrids
Types of MCOs Evolution of industry resulted in blurring of types and hybrids Continuum of control HMOs most controlled PPOs least controlled
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HMO Types of MCOs (cont’d) HMO Act of 1973
Organized system of healthcare to geographic area Basic & supplemental services Voluntarily enrolled members Preset, fixed prepayments for enrollees Staff model Group practice model Independent practice association (IPA) Network model
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Types of MCOs (cont’d) PPO
Entity that contracts with employers and insurers to render care to members Virtual Decentralized Flexibility Negotiated fees Financial incentives No prepaid capitation Not subject to HMO regs Limited financial risk for providers
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Point-of-Service (POS) Plans
Types of MCOs (cont’d) Point-of-Service (POS) Plans Also known as “open-ended HMOs” Out-of-pocket costs increased if services out-of-network/plan Members choose how they will receive services at “point” they need services HMO PPO Fee-for Service Provider-sponsored organization (PSO) is similar
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Exclusive provider organization (EPO)
Types of MCOs (cont’d) Exclusive provider organization (EPO) Self-insured (self-funded) employers or associations Hybrid with characteristics of HMOs and PPOs Higher out-of-pocket costs for out-of-network services Aggressive medical necessity and utilization review
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Medicare Advantage Types of MCOs (cont’d)
Formerly known as Medicare+Choice MCO for Medicare beneficiaries Deductibles and copayments lower for Medicare Advantage Other potential benefits May incorporate case and disease management
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Integrated Delivery Systems (ISDs)
Collaborative integration of healthcare providers to deliver care to a population across the continuum Terms Health delivery network Horizontally integrated system Integrated services network (ISN) Vertically integrated system
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ISDs (cont’d) Types Models Hospital-led Physician-led
Physician-hospital organization (PHO) Insurance-led Models Integrated provider organization (IPO) Group practice without walls (GWW) Management service organization (MSO)
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Medical Foundations Non-profit service organization Multiple purposes
Physician-led Geographically based Characteristics Freedom of choice Preservation of physician-patient relationship Multiple purposes Continuing medical education Some managed care organizations PPO EPO MSO Peer review or quality improvement organizations
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Future Trends Access Utilization
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