health policy week 5

What is a deductible?

The amount you pay before insurance starts paying.
you pay 100% at the beginning of year until you hit deductible (resets every year)

what is a copayment

A fixed dollar amount you pay for a service.

You pay the copay each time you use a service

What is coinsurance

The percentage of costs you pay AFTER meeting your deductible
Example:

• Deductible = $1,500 (already met)

• Coinsurance = 20%

• Procedure cost = $1,000

You pay 20% = $200
Insurance pays 80% = $800

What is out of pocket maximum

The most you will pay in a year for covered services
Includes:

• Deductible + Copays + Coinsurance

• Once you hit this limit:

Insurance pays 100% of covered services
Doesn’t include monthly premiums

What is a maximum plan dollar limit?

The most an insurer will pay lifetime limit (ACA mostly eliminated this)

What is an FSA (Flexible Spending Account)?

Special account through your employer where you set aside pre-tax money to pay for medical expenses.

• Covers copays, deductibles, prescriptions

• If you don’t spend the money by the end of the year → you lose it

• reduced taxable income

What are UCR charges?

Usual, customary, Reasonable -

• typical price for a service in an area does not exceed customary fee in geographic area and is reasonable based on circumstances

Moral Hazard

People use more healthcare when they pay less out of pocket
Insurance reduces cost - Increased usage

Adverse selection

• sicker people are more likely to enroll in insurance than healthy people

• Insurers wanted healthy people only,

• They avoided sick people → less risk, more profit

• ACA said:
  “You must cover everyone, even if they’re sick”

Whats an HMO - Health Maintenance Organization

• plan that provides care through a restricted network for a fixed prepaid fee.

• focus on prevention and cost control

• limited provider choice

• requires referral to specialists

Different models of HMO

• Group Model HMO

• Staff Model HMO

• Network Model HMO

• Individual Practice Association (IPA) HMO

Group Model HMO

HMO contracts with one large physician group multi-speciality.

• HMO pays group a fixed amount per patient (capitation) the group then pays its doctors

• patients must go to specific group

• but doctors can treat non-HMO patients
  

Staff Model HMO

Doctors are employees of the HMO, work in HMO-owned facilities

• paid salary (not capitation)

• patient must stay in the system for care

Network Model HMO

HMO contracts with multiple physician groups

• several group practices in broader network

• providers may serve both HMO & non-HMO patients

Individual Practice Association (IPA) HMO

Independent doctors keep their own private practices and contract with the HMO to get patients & steady income.

• physicians are fully independent

• paid per patient or negotiated rates

• can see patients from many insurance types

Preferred Provider Organization (PPOs) plan

A plan with a network of providers, but allows out-of-network care at higher cost.

• Uses deductibles + coinsurance, increases costs of these if out of network

• More flexibility than HMO

Exclusive Provider Organization (EPO) plan

More restrictive type of PPO A plan that requires in-network care only

• no coverage out of network except for emergencies

• cheaper than PPO but less flexible

Point of service (POS) plan - hybrid

Hybrid between HMO & PPO

• plans resemble HMOS for in network services

• out of network more expensive, less coverage
  

What are Consumer- Directed health Plans (CDHPs)

health insurance plans that make YOU pay more upfront so you think more carefully about how you use healthcare.

• You pay more upfront → you become a “smart shopper”

• high deductible

• health savings account (HSA) or Health Reimbursement Arrangement (HRA) account

• information on cost/quality

Community rating

Everyone pays the same premium regardless of health status.
does not take in account:

• age

• gender

• occupation

• Lifestyles factors

Risk/experiencing rating

premiums based on individual risk factors such as

• age

• health

• behavior

• history

What is Employee Retirement and Income Security Act (ERISA) and its components

A federal law regulating employer-sponsored self-insured plans

• Employers pay claims directly

• Exempt from many state regulations

• Common in large companies

What are related laws under ERISA

COBRA - continue insurance after job loss
HIPPA - protects against pre-existing condition exclusions
Mental Health Parity Act

What is an Indemnity or Fee-for-service plan?

a plan where insurance reimburses after services are provided

• patients can see any provider

• Uses UCR charges

• Includes deductible + coinsurance