Week 2 Thursday - Kinn's Chapter 12

Fundamentals of Health Insurance and Cost-Sharing

• Definition and Purpose of Health Insurance

  • Health insurance is defined as a contract for protection against financial losses resulting from illness or injury.

  • Its primary purpose is to help individuals and families offset the high costs of medical care.

  • The policy provides payment of monetary benefits for covered sickness or injury, which vary depending on the specific policy purchased.

  • A policy is maintained through the purchase of a premium (payment).

• The Concept of Cost-Sharing

  • Most insurance policies require the patient to pay a portion of their healthcare expenses.

  • Deductible: A specific amount the insured must pay before the insurance company begins to pay.

  • Co-insurance: The percentage of costs of a covered healthcare service the patient pays (e.g., after the deductible is met).

  • Copayment: A fixed amount paid by the patient for a covered healthcare service, usually at the time of service.

Essential Health Benefits and Service Categorization

• Ten Categories of Essential Health Benefits

  • Ambulatory patient services.

  • Hospitalization.

  • Mental health and substance use disorder services.

  • Prescription drugs.

  • Preventive and wellness services; chronic disease management.

  • Emergency services.

  • Maternity and newborn care.

  • Rehabilitative and habilitative services and devices.

  • Laboratory services.

  • Pediatric services, including oral and vision care.

• General Health Insurance Plan Types

  • Health insurance in the United States is divided into two primary types: Government health insurance plans and Private health insurance plans.

  • Medically Necessary Services: Services required to improve the patient’s current health or to treat a condition.

  • Elective Procedures: Medical procedures that are not deemed medically necessary to maintain health.

• Preventive Care Services Covered

  • Alcohol misuse screening.

  • Blood pressure screening.

  • Cholesterol screening.

  • Colorectal screening.

  • Depression screening.

  • Diabetes (type $2$) screening.

  • Diet counseling.

  • Hepatitis B and C screening.

  • Human immunodeficiency virus (HIV) screening.

  • Immunization vaccines.

  • Lung cancer screening.

  • Obesity screening and counseling.

  • Tobacco use screening.

  • Sexually transmitted infection (STI) prevention counseling.

Government Health Insurance Plans

• Qualifications for Government Plans

  • Patients qualify for government-funded plans based on factors including age, income, government occupation, or specific health conditions.

• Medicare

  • A federal health insurance program for individuals age $65$ or older, people who are disabled, and patients diagnosed with end-stage renal disease (ESRD).

  • Medicare Part A: Covers inpatient hospital charges.

  • Medicare Part B: Covers ambulatory care. Basic coverage is $80\%$ of the allowed amount after the deductible is met.

  • Medicare Part C: An option for Medicare-qualified patients to receive benefits through private health plans.

  • Medicare Part D: The prescription drug program.

  • Resource-Based Relative Value Scale (RBRVS): This system determines the allowed amount for services and consists of three components:

    • Provider work.

    • Charge-based professional liability expenses.

    • Charge-based overhead.

• Medicaid

  • A government program providing medical care for the indigent, funded by both federal and state governments.

  • Mandatory Benefits: Includes inpatient/outpatient hospital services, nursing facility and home health services, early and periodic screening, physician services, rural health clinic services, family planning, and transportation to medical care.

  • Eligibility groups: States determine eligibility, but recipients typically include low-income families, qualified pregnant women and children, recipients of Temporary Assistance for Needy Families (TANF), and individuals receiving Supplemental Security Income (SSI).

  • Additional groups include Qualified Medicare Beneficiaries (QMBs) and individuals in institutions or receiving long-term care.

• Children’s Health Insurance Program (CHIP)

  • A state-funded program for children whose family income exceeds Medicaid limits.

  • Benefits include routine checkups, immunizations, prescriptions, dental/vision care, lab tests, and emergency services.

• TRICARE and CHAMPVA

  • TRICARE: Comprehensive healthcare for uniformed service members, retirees, and their families; it is managed by the military in partnership with civilian clinics.

  • Civilian Health and Medical Program of the Veterans Administration (CHAMPVA): Similar to TRICARE; provides coverage for families of veterans who were permanently disabled or killed in the line of duty.

• Workers’ Compensation

  • Insurance for individuals injured on the job or who become ill due to job-related circumstances.

  • Provides medical care, rehabilitation, weekly income replacement, and death benefits to dependents.

Private and Managed Care Health Insurance Plans

• Common Private Plans

  • Employer group plans.

  • Self-funded group health plans.

  • Individual health insurance plans.

• Traditional (Fee-for-Service) Plans

  • These plans pay for all or a share of the cost of covered services based on a fee schedule.

  • They provide the most flexibility for the patient but are the costliest.

  • Fee schedule amounts may be determined by Usual, Customary, and Reasonable (UCR) processes.

• Managed Care Organizations (MCOs)

  • Goal: Provide quality, cost-effective care. MCOs negotiate reduced rates with contracted providers and hospitals.

  • Often require a primary care provider (PCP), referrals, and preauthorization to control patient care.

• Models of Managed Care Organizations

  • Health Maintenance Organizations (HMOs): Regulated by HMO laws; goal is cost reduction. Typically feature the lowest monthly premiums and low out-of-pocket expenses. Patients must select a PCP, and the plan does not pay for out-of-network services.

  • Preferred Provider Organizations (PPOs): A managed care network that contracts with providers for predetermined charges. Uses a fee-for-service concept where patient responsibility is usually $20\%$ to $25\%$ of the allowed charge.

  • Exclusive Provider Organizations (EPOs): Combines HMO and PPO features. Members are not covered for services outside the network. They generally do not require a PCP or a referral for specialized care.

Clinical and Administrative Managed Care Requirements

• Referral Types

  • Regular Referral: Processing time of $3$ to $10$ working days.

  • Urgent Referral: Processing time of approximately $24$ hours.

  • STAT Referral: Can be approved online; reserved for emergency situations.

• Utilization Management and Review

  • Utilization Management: A review process by healthcare professionals employed by insurance companies who do not provide the direct care.

  • Utilization Review Committee: Reviews cases to ensure that the medical care services provided are medically necessary.

• Precertification/Preauthorization Process

  • The medical assistant calls the provider services number on the back of the insurance ID card.

  • The assistant provides the insurance company with the requested procedures, services, and diagnoses.

  • The assistant documents the call outcome and the precertification number in the patient health record.

• Participating Provider (PAR) Contracts

  • Providers must become PARs for government and most private plans through a process called credentialing.

  • Once credentialed, the provider is issued a contract as an in-network PAR.

  • Contracted Fee Schedules: Set based on time, expertise, and services. The Allowable Charge is the maximum dollar amount an insurance plan will pay for a specific procedure or service.

Administrative Documentation and Verification

• Insurance Identification (ID) Cards

  • Contains the health insurance company name, plan name/type, subscriber name and dependents, identification number, copay amounts, group number, and contact phone numbers.

• Verifying Eligibility

  • Confirming health insurance coverage before services are rendered.

  • The medical assistant gathers information, verifies the effective date, and uses online insurance portals to check full benefits.

Miscellaneous Insurance Types

• Disability Insurance: Provides income replacement for non-work-related disabilities.

  • Short-term: Covers $9$ to $52$ weeks.

  • Long-term: Starts when short-term benefits end; pays until the patient returns to work or based on a set number of years.

• Life Insurance: Pays a specified amount to an estate or beneficiary upon the insured's death. Medical facilities may need to complete physical exam forms for applicants.

• Long-Term Care Insurance: Relatively new; covers maintenance and health services for chronically ill, disabled, or developmentally delayed individuals (inpatient, outpatient, or home-based).

• Liability Insurance: Covers losses to a third party caused by the insured (Automobile, Business, Homeowners). Often covers medical expenses from traumatic injuries, lost wages, and pain/suffering.

Legislation and Patient Advocacy

• The Affordable Care Act (ACA)

  • Enacted in $2010$.

  • Increased health insurance quality, availability, and affordability for over $44 \text{ million}$ uninsured Americans.

  • Eliminated exclusions for preexisting conditions.

  • Prevents insurance companies from dropping coverage if a patient becomes sick or makes an unintentional mistake.

• Professional Responsibilities

  • Patient Coaching: Keeping patients informed and answering questions using communication skills, patience, and tact.

  • Legal Issues: A written release from the patient must be obtained before medical information is shared for insurance claims processing.

Questions & Discussion

• The material concludes with a dedicated opportunity for final questions regarding health insurance essentials.