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PPT10.ppt PPT10.ppt Document Transcript

  • Chapter 10
    • Traditional Medical Expense Plans
  • Traditional Providers
    • Insurance companies
    • Blue Cross and Blue Shield
    • Self-funding (covered in more detail in chapter 16)
  • Blue Cross and Blue Shield
    • Blue Cross established by hospitals; Blue Shield by physicians
    • Each had national governing boards which eventually merged
    • 41 plans in existence; some are only Blue Cross or Blue Shield, but most are both
    • Many plans operate in a single state, but several plans are multistate
    • Boards now dominated by nonproviders such as labor unions, consumer organizations, foundations, and the general public
    • Traditionally not-for-profit, but several plans have changed to for-profit status
  • Insurance Companies
    • Most coverage is written by life insurers; few companies specialize in health insurance only
    • Write more coverage than the Blues
  • Comparison of Insurers and the Blues—
    • Traditionally There Were Significant Differences, But as Time Goes on They Are Becoming More Alike
      • Regulation and taxation
        • The Blues are usually regulated under special legislation and are often exempt from premium taxation but are subject to other more stringent regulations, such as prior approval of rates
        • The Blues have more favorable income tax treatment, but they are no longer exempt
  • Form of benefit s
    • Traditionally the Blues have provided service benefits, and insurers have provided indemnity
      • Service benefits
        • Services promised to subscribers
        • Provider under contractual agreement to provide services
        • Usually no claim forms
      • Indemnity benefits
        • Insured gets treatment and submits copy of bill to insurer
        • Insurer reimburses insured (or other party if benefits assigned)
    • Some of the Blues now have some indemnity plans while some insurers have arrangements involving service benefits
  • Types of benefits
    • Little difference any more; both write all types of medical expense coverage
    • Insurers have slight advantage in that they are more likely to be able to handle other benefit programs of the employee
  • Reimbursement of providers
    • The Blues pay hospital on a per diem basis not actual charges
    • The Blues often receive hospital discounts which in effect forces non-Blue patients to pay more
    • The Blues often reimburse physicians at less than actual charges, as do many insurers under their managed care plans
  • National coverage
    • While insurers once had competitive edge, it now rests with the Blues
      • Flexibility: Insurers typically offer employers more flexibility in designing own contract
      • Rating: little difference because the Blues now also use experience rating for larger groups
  • Marketing
      • The Blues have lower acquisition expenses; most coverage is sold by salaried employees
      • The Blues now often use agents to sell coverage, but commission rates are less than those of insurance companies
    • Today’s environment: Insurers and the Blues are heavily into managed care
  • Hospital Expense Benefits
    • Room and board
      • Covers semiprivate room, meals, and routine services provided to all patients
      • Duration of benefits can vary from 31 to 365 days
      • Amount of benefit can be expressed as
        • Flat amount or
        • Cost of semiprivate accommodations
      • Additional benefits often provided for intensive care
  • Other charges
    • These include items like drugs, operating room charges, and X-rays
    • Methods for determining benefits
      • Full coverage up to dollar maximum
      • Full coverage up to dollar maximum and partial coverage for some additional expenses
      • Full coverage as long as room-and-board benefits are payable
  • Outpatient benefits
    • Facility charges for surgery
    • Emergency room treatment within a specified period following an accident
  • Surgical Expense Benefits
    • Covers physicians’ charges associated with surgery
    • Surgery defined to include items such as suturing, electrocauterization, and treatment of fractures or dislocations
    • Covers both inpatient and outpatient surgery; latter may be encouraged by higher benefits
  • Benefits
    • Newer contracts cover assistant surgeons and anesthesiologists as well as primary surgeon
    • Benefit amounts may be based on
      • Fee schedule
      • Reasonable-and-customary charges—typically up to some percentile of charges within a geographic region
  • Physicians’ Visits Expense Benefits
    • Covers charges of physicians other than surgeons
    • May be for in-hospital visits only or for both in-hospital and out-of-hospital visits
  • Types of Major Medical Coverage
    • Supplemental—an add on to basic coverage
      • Covers expenses not within scope of basic coverage
      • Covers expenses no longer covered under basic coverage because benefits exhausted
      • Covers expenses excluded by basic coverage
  • Comprehensive—incorporates basic coverage
    • Most new plans are comprehensive which are easier to administer and communicate than are supplemental plans.
    • Reasons for using supplemental
      • To use more than one provider of coverage. Most often an insurance company plan to supplement basic coverage provided by the Blues
      • To provide first dollar coverage
      • To use different employer contribution rates for the basic coverage and the major medical coverage
  • Figure 10.1
  • Figure 10.2
  • Covered Major Medical Expenses
    • Types (some examples)
      • Hospital room, board, and other charges
      • Possibly benefits for care in other facilities or at home
      • Outpatient surgical center charges
      • Physicians
      • Prescription drugs
      • Therapy
      • X-rays and laboratory services
      • Artificial limbs and organs
      • Medical supplies and equipment
      • Ambulance services
  • Exclusions (some examples)
    • Occupational injuries or diseases to extent covered by workers’ compensation
    • Services furnished by governmental agencies
    • Cosmetic surgery, except as required by the Women’s Health and Cancer Rights Act, unless it corrects an accidental injury or birth defect
    • Most routine physical exams
    • Convalescent, custodial or rest care
  • Exclusions examples (cont.)
    • Dental care except treatment because of injury to natural teeth or hospital charges associated with confinement for dental surgery
    • Routine eye examinations
    • Preexisting conditions: Usually defined as condition for which treatment was received within 3 months prior to eligibility for coverage; exclusion ceases after earlier of (1) 3 consecutive months without treatment or (2) 12 months of coverage under the contract (HIPAA rules for preexisting conditions are covered in chapter 14)
  • Table 10.1
  • Limitations (some examples)
    • Hospital room and board: cost above semiprivate accommodations
    • Extended-care facilities, home health-care benefits, hospice benefits: daily dollar limitations and/or limited durations
    • Mental and nervous disorders, alcoholism, and drug addiction
      • Inpatient benefits traditionally limited by duration; outpatient benefits limited by coinsurance and dollar amounts per visit or annually
      • Under Mental Health Parity Act, employers with more than 50 employees cannot have plans that have dollar limits on mental health benefits less than those applying to other health benefits; the act allows other types of limitations and does not apply to benefits for alcoholism or drug addiction
  • Major Medical Deductibles
    • Definition: The initial amount of covered expenses an individual must pay before benefits are paid
    • Types
      • Initial: First X dollars
      • Corridor: $ amount in excess of basic coverages before major medical pays
  • Amounts
    • $100 to $500 are common
    • Sometimes equal to percentage of salary, subject to maximum
    • All-causes deductible: Must be satisfied only once during given period, usually a calendar year
    • Per-cause deductible: Must be satisfied for each illness or disability; much less common than all-causes deductible
  • Amounts (cont.)
    • Family deductible: Maximum amount that family must pay out of pocket before all deductibles are waived
      • Most common is to have it satisfied when two or three family members satisfy individual deductibles
      • Sometimes a dollar amount
    • Common accident provision: No more than one individual deductible must be satisfied if several family members injured in accident
  • Frequency
      • Usually calendar year
    • Expenses to which deductibles apply
      • Usually one deductible applies to all expenses
      • A plan may have two or more deductibles that apply to separate expenses. Example: $50 deductible for hospital; $100 for other expenses
  • Major Medical Coinsurance
    • Insured pays a specified portion of medical expenses that exceed the deductible; 75-85 percent is normal
    • One coinsurance percentage may apply to all expenses
    • Separate coinsurance percentages may apply to different expenses
      • When employee has little control over certain expenses
      • When there is a desire to provide first-dollar coverage for some expenses
      • When there is a desire to encourage the use of cost-effect treatment
    • Most policies contain a stop-loss limit which is an amount of covered expense above which insurer pays 100 percent
  • Major Medical Maximum Benefits
      • Lifetime maximum
        • Usually varies from $1 million to $2 million, but may be unlimited
      • Benefits reduce lifetime maximum
      • Some policies also have internal lifetime maximums for some types of expenses, such as treatment for mental or nervous disorders
    • Per-cause maximum
      • Used only if deductible on per-cause basis
      • Separate maximum applies to each cause
  • Managed Care in Traditional Plans
    • Preadmission testing
      • Done on an outpatient basis prior to surgery
      • Paid even if admission cancelled
    • Hospital precertification
      • Patient or physician required to obtain certification prior to admission or shortly thereafter in case of emergency admission
      • Certification determined by reviewer who authorizes length of stay; approval needed for extension of stay
      • Benefit usually reduced if procedure not followed
  • Second surgical opinions
    • Purpose: To eliminate unnecessary surgery
    • Voluntary
      • Second opinion covered, possibly for larger benefit
      • Third opinion may be covered if first two disagree
    • Mandatory
      • Other opinions covered
      • Benefits reduced if surgery performed without second opinion or contrary to final opinion
  • Alternative facilities for treatment
    • Extended-care facility benefits
      • Requirements to obtain
        • Recommeded by physician
        • Need for 24-hour-a-day nursing care
        • Within 14 days of prior hospital stay of at least 3 days or 14 days of prior confinement in extended care facility
        • Confined for same or related condition that resulted in hospitalization b. Benefit may be provided in full or up to specified dollar amount, usually for a specified maximum duration
  • Alternative facilities for treatment (cont.)
      • Home health care benefits
        • Must be ordered by a physician following hospitalization
        • Coverage includes
          • Nursing care
          • Physical, occupational, and speech therapy
          • Medical supplies and equipment
        • Benefits usually some percentage of reasonable-and-customary charges up to maximum number of visits or days
  • Alternative facilities for treatment (cont.)
      • Hospice benefits
        • For terminally ill person
        • May be provided in separate facility or at person’s home
        • Result in lower expenses than hospitalization
        • Birthing center
          • Lower cost alternative to hospital
          • Benefits paid at same or higher level than if mother hospitalized
  • Preapproval of visits to specialists
    • Attempts to minimize use of specialists and emergency rooms when treatment can be provided by primary-care physician
    • Primary-care physician does not certify visit to specialist, but must be made aware of the visit
  • Preventive care (examples)
    • Well-baby care
    • Childhood immunizations
    • Mammograms
    • Possibly routine physicals
  • Alternative Medicine
    • Used by over half the population
    • Often recommended by physicians
    • Examples
      • Acupuncture
      • Chiropractic feedback
      • Herbal medicine
      • Hypnosis
      • Vitamin therapy
      • Yoga
  • Alternative Medicine (cont.)
    • Reasons for attractiveness
      • Patient rapport with practitioners
      • Involvement of patients in the development of treatment plans and likelihood of patients to follow treatment plans
      • Complications less likely than with traditional medicine
  • Cost controls
    • Annual or lifetime dollar limits
    • Limits on number of visits
    • Treatment only for specified medical conditions
    • Referral from primary-care physicians