Transcript Insurance Terms and Concepts

Insurance Terms and Concepts
Medical Insurance involves a contract in which a
business agrees to pay a portion of a patient’s
medical expenses in exchange for a premium
payment or, for government plans, coverage is
offered to those who meet certain coverage criteria.
Out of Pocket Expense
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Premium is the payment to the insurance
to maintain coverage.
Deductible is the amount of covered
expenses the insured must pay out of
pocket before insurance pays.
Co-insurance is a percentage of covered
expense not covered by insurance.
Co-payment is a flat amount the patient
pays per encounter.
Types of Benefit Plans/Networks
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Indemnity is an insurance where
there is no participating or preferred
network. Usually paid on a
percentage of approved charges.
Managed care is insurance where
there is a contracted network that
has a reduced or discount fee for
services.
Managed Care
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PPO is Preferred Provider
Organization. PPO’s have a network
of providers who have a discounted
rate and better benefit levels. Nonnetwork providers have higher costs
for patients. Payments are for each
service or “Fee for Service.”
EPO is like a PPO but there is no
benefit for Non-Network providers.
Managed Care
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HMO or a Health Maintenance
Organization is a plan where
services are only provided by
network providers that are
designated to care for the patient. A
Primary Care Physician manages
the patient care and must give a
referral for specialist services or
tests. Expensive items must be
approved by the HMO.
Managed Care
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A PCP is usually paid on a CAPITATION
rate, which is a monthly stipend for
having a certain number of patients on
his roster. He does not receive money for
seeing the patients, only for having them
on his roster.
Some HMOs pay the doctors a salary and
some are both the insurance and the
healthcare provider, such as Kaiser.
Kaiser is called a “staff model” HMO.
Managed Care
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A POS or Point of Service plan has
several benefit “tiers” where there
are contracts with HMO, PPO and
other types of providers. The
provider contract type determines
how the patient’s insurance pays.
So the patient can see an HMO PCP
one day with a co-pay, and possibly
self-refer to a PPO specialist with a
co-insurance.
Eligibility
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Whether the patient has insurance
coverage and whether it covers the
service they need.
Can end if the patient does not meet
certain criteria (marriage, employment,
etc.,) or if the premium is not paid.
Should be checked BEFORE first
appointment and anytime there is reason
to believe it may have changed. With
Medi-Cal, it should be checked EVERY
visit.
People with Insurance
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Policy Holder or the Insured or the
Subscriber are all ways of describing the
person who took out the insurance and is
the main person on the policy.
Dependent is someone who meets certain
criteria (age, family relationship) who is
added by the policy holder to the policy
for additional premiums.
Insurance Notices
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EOB is Explanation of Benefits. This is a
notice to the insured about how the
insurance paid or did not pay a claim. An
MSN is a Medicare EOB.
Remittance Advice is just an EOB sent to
the healthcare provider. It contains
information about multiple patients and
its payment should be reconciled with all
the different patient accounts listed.
Payment
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If a service is not paid by insurance,
the EOB will contain a DENIAL
which should give a clear reason for
non-payment. This can be
contested or Appealed.
Payment is based on covered items
being priced by various pricing
methodologies.
Pricing Professional Services (Fee for
Service)
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Usual Customary and Reasonable (UCR)
and Customary and Reasonable (C&R) are
used on Indemnity plans and some PPOs
to price non-contracted services.
Fee Schedule is a series of prices for
procedures performed by a healthcare
provider. The provider has a price list and
the insurance has a price list. If there is
a contract, the contract rate is always the
rate that prices the services.
Medicare Fee Schedule
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For professional services Medicare has a
fee schedule called the Resource-Based
Relative Value Scale or RBRVS. This is
based on a Harvard Medical School study
and prices all physician services that have
a CPT or HCPCS code.
There is a Participating physician fee
schedule and a Non-Participating
physician fee schedule.
Pricing Inpatient Facility Services
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Hospital Inpatient bills may be paid on a daily
(per-diem) rate depending on the level of service
(Med/surg, ICU, CCU, etc) or they may have a
special contract rate or percentage payment.
Medicare Inpatient hospital is paid based on the
ICD-9 diagnosis code and the severity of the
condition(s) treated. This is called a Medicare
Severity Diagnosis Related Grouping (MS-DRG).
Because the rate is predetermined based on
illness, it is called a Prospective Payment System.
Pricing Outpatient Facility Charges
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Outpatient hospital facility charges may
be paid on a percentage or based on
allowances for CPT or HCPCS codes on
the bill.
Medicare prices with Ambulatory Payment
Classifications (APCs) which are similar to
the way professional charges are paid,
but Medicare refers to this as a
Prospective Payment System as well.
Coordination of Benefits
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When a patient has more than one
insurance plan, insurance
companies do not want to pay more
than 100% of the total allowable
bill.
In order to avoid the combined
insurances not exceeding the bill
amount, coordination of benefits is
applied.
Coordination of Benefits
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When a patient has multiple insurances, they are
sorted into primary, secondary and tertiary.
Primary insurance is the insurance that pays first
and generally covers the largest portion of the
bill.
Secondary insurance receives the EOB along with
a bill and pays remaining charges up to their
allowances, not to exceed the bill amount.
If there is a tertiary insurance, it may be billed to
pick up anything the first two insurances did not
pay. Tertiary insurance also must receive a bill
and the EOBs from primary and secondary
insurances in order to process the claim.