2. coordinated home health
and hospice care
Federal Employee Health Benefits
Program (FEHBP)
Federal Employee Program (FEP)
for-profit corporation
Government-Wide Service Benefit
Plan
Healthcare Anywhere
indemnity coverage
medical emergency care rider
Medicare supplemental plans
member
member hospital
nonprofit corporation
outpatient pretreatment authoriza-
tion plan (OPAP)
PPN provider
precertification
preferred provider network (PPN)
prepaid health plan
prospective authorization
rider
second surgical opinion (SSO)
service location
special accidental injury rider
usual, customary, and reasonable
(UCR)
4. medical insurance pro-
grams in the United States. They began as two separate prepaid
health plans selling
contracts to individuals or groups for coverage of specified
medical expenses as
long as the premiums were paid. BCBS offer a number of
products to subscribers.
History of Bluecross and BluesHield
Origin of BlueCross
The forerunner of what is known today as the BlueCross plan
began in 1929
when Baylor University Hospital in Dallas, Texas, approached
teachers in the
Dallas school district with a plan that would guarantee up to 21
days of hospi-
talization per year for subscribers and each of their dependents,
in exchange
for a $6 annual premium. This prepaid health plan was accepted
by the teachers
and worked so well that the concept soon spread across the
country. Early
plans specified which hospital subscribers and their dependents
could use for
care. By 1932 some plans modified this concept and organized
community-
wide programs that allowed the subscriber to be hospitalized in
one of several
member hospitals, which had signed contracts to provide
services for special
rates.
The blue cross symbol was first used in 1933 by the St. Paul,
Minnesota,
plan and was adopted in 1939 by the American Hospital
Association (AHA)
5. when it became the approving agency for accreditation of new
prepaid hospi-
talization plans. In 1948 the need for additional national
coordination among
plans arose, and the Blue Cross Association was created. In
1973 the AHA
deeded the right to both the name and the use of the blue cross
symbol to the
Blue Cross Association. At that time the symbol was updated to
the trademark
in use today.
Origin of BlueShield
The BlueShield plans began as a resolution passed by the House
of Delegates at an
American Medical Association meeting in 1938. This resolution
supported the
concept of voluntary health insurance that would encourage
physicians to coop-
erate with prepaid health care plans. The first known plan was
formed in Palo
Alto, California, in 1939 and was called the California
Physicians’ Service. This
plan stipulated that physicians’ fees for covered medical
services would be paid
in full by the plan if the subscriber earned less than $3,000 a
year. When the sub-
scriber earned more than $3,000 a year, a small percentage of
the physician’s fee
would be paid by the patient. This patient responsibility for a
small percentage
of the health care fee is the forerunner of today’s industry-wide
required patient
coinsurance and copayment requirements.
The blue shield design was first used as a trademark by the
7. Association. All Rights Reserved.
a separate, nonprofit corporate entity that issued its own
contracts and plans
within a specific geographic area.
BlueCross BlueShield Joint Ventures
BlueCross plans originally covered only hospital bills, and
BlueShield plans
covered fees for physician services. Over the years, both
programs increased
their coverage to include almost all health care services. In
many areas of the
country, there was close cooperation between BlueCross and
BlueShield plans
that resulted in the formation of joint ventures in some states
where the two
corporations were housed in one building. In these joint
ventures, BlueCross
BlueShield (BCBS) shared one building and computer services
but maintained
separate corporate identities.
BlueCross BlueShield Association
In 1977 the membership of the separate BlueCross and
BlueShield national asso-
ciations voted to combine personnel under the leadership of a
single president,
responsible to both boards of directors. Further consolidation
occurred in 1986
when the boards of directors of the separate national BlueCross
and BlueShield
associations merged into a single corporation named the
BlueCross BlueShield
Association (BCBSA).
8. Today, BCBSA consists of independent, community-based,
locally operated
BlueCross BlueShield plans that collectively provide health care
coverage to
more than 100 million Americans. The BCBSA maintains
offices in Chicago,
Illinois and Washington, D.C. and performs the following
functions:
● Owns and manages the BlueCross and BlueShield trademarks
and names
● Operates several business initiatives in support of the
BlueCross and BlueShield
companies
● Represents BlueCross and BlueShield in national forums
The Changing Business Structure
Strong competition among all health insurance companies in the
United States
emerged during the 1990s and resulted in the following:
● Mergers occurred among BCBS regional corporations (within
a state or with neigh-
boring states) and names no longer had regional designations.
ExAMPlE: Care First BCBS is the name of the corporation that
resulted from a
merger between BCBS of Maryland and Washington, D.C.,
BCBS.
● The BlueCross BlueShield Association no longer required
plans to be nonprofit
(as of 1994).
Nonprofit and Profit Corporations
10. after-tax profits.
Although some BCBS plans have converted to for-profit
companies, state
regulators and courts are scrutinizing these transactions, some
on a retroactive
basis, to ensure that charitable assets are preserved. For
example, Empire BCBS
in New York State publicly acknowledges its nonprofit
obligations and agrees
to preserve 100 percent of its assets for nonprofit charitable
purposes as part of
proposed conversions to for-profit corporations.
BCBS Distinctive Features
The “Blues” were pioneers in nonprofit, prepaid health care,
and they possess
features that distinguish them from other commercial health
insurance groups.
1. They maintain negotiated contracts with providers of care. In
exchange
for such contracts, BCBS agrees to perform the following
services:
● Make prompt, direct payment of claims.
● Maintain regional professional representatives to assist
participating provid-
ers with claim problems.
● Provide educational seminars, workshops, billing manuals,
and newsletters
to keep participating providers up to date on BCBS insurance
procedures.
2. BCBS plans, in exchange for tax relief for their nonprofit
11. status, are for-
bidden by state law from cancelling coverage for an individual
because
he or she is in poor health or BCBS payments to providers have
far
exceeded the average. Policies issued by the nonprofit entity
can be can-
celed, or an individual unenrolled, only:
● When premiums are not paid
● If the plan can prove that fraudulent statements were made on
the applica-
tion for coverage
3. BCBS plans must obtain approval from their respective state
insurance
commissioners for any rate increases and/or benefit changes
that affect
BCBS members within the state. For-profit commercial plans
have more
freedom to increase rates and modify general benefits without
state
approval when the premium is due for annual renewal if there is
no
clause restricting such action in the policy.
4. BCBS plans must allow conversion from group to individual
coverage
and guarantee the transferability of membership from one local
plan to
another when a change in residency moves a policyholder into
an area
served by a different BCBS corporation.
Participating Providers
As mentioned earlier, the “Blues” were pioneers in negotiating
12. contracts with
providers of care. A participating provider (PAR) is a health
care provider who
enters into a contract with a BCBS corporation and agrees to:
● Submit insurance claims for all BCBS subscribers.
● Provide access to the Provider Relations Department, which
assists the PAR pro-
vider in resolving claims or payment problems.
Note: For-profit commercial
plans have the right to cancel
a policy at renewal time if the
patient moves into a region
of the country in which the
company is not licensed to sell
insurance or if the person is a
high user of benefits and has
purchased a plan that does
not include a noncancellation
clause.
Note: The insurance claim is
submitted to the BCBS plan
in the state where services
were rendered. That local plan
forwards the claim to the home
plan for adjudication.
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not be copied, scanned, or duplicated, in whole or in part. Due
to electronic rights, some third party content may be suppressed
from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does
14. Preferred Provider Network (PPN)
PARs can also contract to participate in the plan’s preferred
provider network (PPN),
a program that requires providers to adhere to managed care
provisions. In this
contractual agreement, the PPN provider (a provider who has
signed a PPN con-
tract) agrees to accept the PPN allowed rate, which is generally
10 percent lower
than the PAR allowed rate. The provider further agrees to abide
by all cost-
containment, utilization, and quality assurance provisions of the
PPN program.
In return for a PPN agreement, the “Blues” agree to notify PPN
providers in writ-
ing of new employer groups and hospitals that have entered into
PPN contracts
and to maintain a PPN directory.
Nonparticipating Providers
Nonparticipating providers (nonPARs) have not signed
participating provider
contracts, and they expect to be paid the full fee charged for
services rendered.
In these cases, the patient may be asked to pay the provider in
full and then be
reimbursed by BCBS for the allowed fee for each service, minus
the patient’s
deductible and copayment obligations. Even when the provider
agrees to file the
claim for the patient, the insurance company sends the payment
for the claim
directly to the patient and not to the provider.
Bluecross BluesHield insurance
16. ° Second surgical opinion (SSO)
● Federal Employee Program (FEP)
● Medicare supplemental plans
● Healthcare Anywhere
Fee-for-Service (Traditional Coverage)
BCBS fee-for-service or traditional coverage is selected by (1)
individuals who
do not have access to a group plan and (2) many small business
employers.
These contracts are divided into two types of coverage within
one policy:
● Basic coverage
● Major medical (MM) benefits
Minimum benefits under BCBS basic coverage routinely include
the following
services:
● Hospitalizations
● Diagnostic laboratory services
● X-rays
● Surgical fees
● Assistant surgeon fees
● Obstetric care
● Intensive care
● Newborn care
● Chemotherapy for cancer
BCBS major medical (MM) coverage includes the following
services in addition
to basic coverage:
● Office visits
● Outpatient nonsurgical treatment
17. ● Physical and occupational therapy
● Purchase of durable medical equipment (DME)
● Mental health encounters
● Allergy testing and injections
● Prescription drugs
● Private duty nursing (when medically necessary)
● Dental care required as a result of a covered accidental injury
Major medical services are usually subject to patient deductible
and copayment
requirements, and in a few cases the patient may be responsible
for filing claims
for these benefits.
Some of the contracts also include one or more riders, which are
special
clauses that stipulate additional coverage over and above the
standard contract.
Common riders include special accidental injury and medical
emergency care
coverage.
The special accidental injury rider covers 100 percent of
nonsurgical care sought
and rendered within 24 to 72 hours (varies according to the
policy) of the acci-
dental injury. Surgical care is subject to any established
contract basic plan
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not be copied, scanned, or duplicated, in whole or in part. Due
to electronic rights, some third party content may be suppressed
from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does
19. such as “acute
upper respiratory infection” or “bladder infection” would not be
included on
the medical emergency diagnosis list.
Indemnity Coverage
BCBS indemnity coverage offers choice and flexibility to
subscribers who want to
receive a full range of benefits along with the freedom to use
any licensed health
care provider. Coverage includes hospital-only or
comprehensive hospital and
medical coverage. Subscribers share the cost of benefits through
coinsurance
options, do not have to select a primary care provider, and do
not need a refer-
ral to see a provider.
Managed Care Plans
Managed care is a health care delivery system that provides
health care and
controls costs through a network of physicians, hospitals, and
other health
care providers. BCBS managed care plans include the
coordinated home
health and hospice care program, exclusive provider
organizations, health
maintenance organizations, outpatient pretreatment
authorization plans,
point-of-service plans, preferred provider organizations, and
second surgical
opinions.
The coordinated home health and hospice care program allows
patients with this
option to elect an alternative to the acute care setting. The
20. patient’s physician
must file a treatment plan with the case manager assigned to
review and coor-
dinate the case. All authorized services must be rendered by
personnel from a
licensed home health agency or approved hospice facility.
An exclusive provider organization (EPO) is similar to a health
maintenance
organization that provides health care services through a
network of doctors,
hospitals, and other health care providers, except that members
are not required
to select a primary care provider (PCP), and they do not need a
referral to see a
specialist. However, they must obtain services from EPO
providers only or the
patient is responsible for the charges. A primary care provider
(PCP) is a physi-
cian or other medical professional who serves as a subscriber’s
first contact with
a plan’s health care system. The PCP is also known as a
personal care physician
or personal care provider.
All BCBS corporations now offer at least one health
maintenance organiza-
tion (HMO) plan that assumes or shares the financial and health
care delivery
risks associated with providing comprehensive medical services
to subscrib-
ers in return for a fixed, prepaid fee. Some plans were for-profit
acquisitions;
others were developed as separate nonprofit plans. Examples of
plan names
are Capital Care and Columbia Medical Plan. Because familiar
22. precertification.
A point-of-service (POS) plan allows subscribers to choose, at
the time
medical services are needed, whether they will go to a provider
within the
plan’s network or outside the network. When subscribers go
outside the net-
work to seek care, out-of-pocket expenses and copayments
generally increase.
POS plans provide a full range of inpatient and outpatient
services, and sub-
scribers choose a primary care provider (PCP) from the payer’s
PCP list. The
PCP assumes responsibility for coordinating subscriber and
dependent medical
care, and the PCP is often referred to as the gatekeeper of the
patient’s medi-
cal care. The name and telephone number of the PCP appear on
POS plan ID
cards, and written referral notices issued by the PCP are usually
mailed to the
appropriate local processing address following the transmission
of an elec-
tronic claim. Because the PCP is responsible for authorizing all
inpatient hos-
pitalizations, a specialist’s office should contact the PCP when
hospitalization
is necessary and follow up that call with one to the utilization
control office at
the local BCBS plan office.
A preferred provider organization (PPO) offers discounted
health care
services to subscribers who use designated health care providers
(who
23. contract with the PPO) but also provides coverage for services
rendered by
health care providers who are not part of the PPO network. The
BCBS PPO
plan is sometimes described as a subscriber-driven program, and
BCBS sub-
stitutes the terms subscriber (or member) for policyholder (used
by other com-
mercial carriers). In this type of plan, the subscriber (member)
is responsible
for remaining within the network of PPO providers and must
request refer-
rals to PPO specialists whenever possible. The subscriber must
also adhere
to the managed care requirements of the PPO policy, such as
obtaining
required second surgical opinions and/or hospital admission
review. Failure
to adhere to these requirements will result in denial of the
surgical claim or
reduced payment to the provider. In such cases, the patient is
responsible
for the difference or balance between the reduced payment and
the normal
PPO allowed rate.
The mandatory second surgical opinion (SSO) requirement is
necessary when a
patient is considering elective, nonemergency surgical care. The
initial surgical
recommendation must be made by a physician qualified to
perform the antici-
pated surgery. If a second surgical opinion is not obtained prior
to surgery, the
patient’s out-of-pocket expenses may be greatly increased. The
patient or sur-
24. geon should contact the subscriber’s BCBS local plan for
instructions. In some
cases, the second opinion must be obtained from a member of a
select surgical
panel. In other cases, the concurrence of the need for surgery
from the patient’s
PCP may suffice.
Federal Employee Program
The Federal Employee Health Benefits Program (FEHBP) is an
employer-sponsored health
benefits program established by an Act of Congress in 1959.
The BlueCross
BlueShield Federal Employee Program® (FEP) (Figure 13-1)
began covering federal
Note: When subscribers go
outside the network for health
care, the approval of the PCP
is not required, and costs are
usually higher. When subscribers
undergo procedures/services
that are not covered by their
policy, they are responsible for
reimbursing the provider for
such care.
Note: The federal government’s
Office of Personnel Management
(OPM) oversees administration
of the FEHBP, and BCBS is just
one of several payers who reim-
burse health care services. Oth-
ers include the American Postal
Workers Union (APWU) Health
Plan, Government Employee Hos-
26. Medicare Supplemental Plans
BCBS corporations offer several federally designed and
regulated Medicare
supplemental plans (described in Chapter 14), which augment
the Medicare pro-
gram by paying for Medicare deductibles and copayments.
These plans are bet-
ter known throughout the industry as Medigap Plans and are
usually identified
by the word Medigap on the patient’s plan ID card.
Healthcare Anywhere
Healthcare Anywhere coverage allows “members of the
independently owned and
operated BCBS plans [to] have access to health care benefits
throughout the
United States and around the world, depending on their home
plan benefits.
Generally, the BlueCard® …