Transcript BLUE CROSS/BLUE SHIELD

Chapter 5
PAYMENT METHODS:
Managed Care and
Indemnity Plans
PAYMENT METHODS:
Managed Care and Indemnity Plans
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Learning Objectives
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Discuss the major types of health plans and how the
various structures affect the payments that patients owe for
medical services.
Describe three ways in which payments to physicians are
set.
Compare the calculation of payments for participating and
nonparticipating providers, and describe how balancebilling rules affect the charges that can be collected from
patients.
List the types of charges for which a patient may be
responsible at the time of a visit.
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Key Terms
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Allowed charge
Balance billing
Capitation
Excluded services
Family deductible
Fee schedule
Health maintenance
organization (HMO)
Individual deductible
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Nonparticipating
(nonPAR) physician
Out-of-pocket expenses
Participating (PAR)
physician
Point-of-service (POS)
plan
Preferred provider
organization (PPO)
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Key Terms
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(cont’d)
Primary care physician
(PCP)
Referral number
Relative value scale
(RVS)
Resource-Based
Relative Value Scale
(RBRVS)
Usual, customary, and
reasonable (UCR)
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Usual fee
Walkout receipt
Write off
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Types of Health Plans
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Managed Care Plans
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Preferred Provider Organizations (PPOs)
Health Maintenance Organizations (HMOs)
Point-of-Service (POS) Plans
Indemnity Plans – An insurance company’s agreement to
reimburse a policyholder a predetermined amount for covered
losses.
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PPOs
(Preferred Provider Organization)
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Leading type of Managed Care
Organization (MCO)
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Plan contracts with providers
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Providers agree to accept reduced fees
Plan provides a large pool of potential patients
Patients pay premiums and copays
Patients may visit providers outside plan
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Plan pays lower benefits
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HMOs
(Health Maintenance Organization)
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Patients must use plan’s providers
Patients enroll by paying a fixed premiums, and a
small (or no) copays when they need service
PCP/gatekeeper may be assigned to each patient
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Referral number may be required from PCP to see specialist
Providers may or may not be employees of plan
Capitation - Is a method of insurance reimbursement to
physicians based on the number of patients seen rather than the
service performed.
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POS Plans
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Least restrictive for providers and patients
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Patients may visit providers outside plan
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Patients may pay increased fees, such as larger
copays
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Indemnity Plans
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Fee-for-service plans
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Fees physicians receive is based on their regular
charge for service.
Many payers and physicians negotiate fees as in a
PPO or POS plan
Patient may choose any provider
Require annual premiums, deductibles,
and coinsurance
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Setting Fees
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Fee Schedule – a list of fees
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Usual Fees
for the
procedures and services that physician frequently
performs. The fees called “usual fees”.
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Those fees that physician charged to most of their
patients most of the time.
Payers also set the fees that they pay providers.
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Setting Fees
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Most payers use one of three
methods to set fees that the health
plan will pay physicians
1)
2)
3)
Usual, Customary, and Reasonable (UCR)
Relative Value Scale (RVS)
Resource-Based Relative Value Scale
(RBRVS)
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UCR Method
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Usual, Customary, Reasonable
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Usual fee - an individual physician charges for
service
Customary fee charged by most physicians in
the community.
Reasonable fee for the service.
In indemnity plans, allowed charges are often
based on the (UCR).
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Relative Value Scale
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Based on Nationwide Research
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Scale assigns a numerical value to each Medical
Service
The values reflect the amount of skill and time the
procedure require of the physicians
Calculated by multiplying RVS by a dollar
conversion factor.
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Example: in an obstetrics practice, a hysterectomy
has a higher RVS number than a D&C, because the
hysterectomy takes longer to do and is considered to
require more skill.
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Resource-Based
Relative Value Scale
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Established by CMS for setting Medicare Fee
Schedule
Build on the RVS method by adding factors for the provider’s
expenses.
 Instead of valuing just the skill and time, the RBRVS also have
factors for:
 how much office overhead the procedure involves; and
 for relative risk that the procedure presents to the patient
and to the provider
Example: The cost of renting an office is higher in Chicago than in
rural areas of ILLINOIS, therefore, the compensation is different
in these two locations.
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Resource-Based
Relative Value Scale
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Mathematical Formula used to calculate
charge for every procedure/service
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The factors are multiplied by a dollar conversion
factor
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Methods of Setting Fees
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Usual, Customary, Reasonable
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Relative Value Scale
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Payment is based on Fee/Service
Payment is based on Skills/Time
Resource-Based Relative Value Scale
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Payment is based on Skills/Time &
Provider’s Expenses
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Payment Methods
After setting the fees for schedule benefits, health plans
work out various payment arrangements with providers.
EXAMPLE: In some cases, physicians agree to discount
their usual fees. In other cases, physicians receive
payment for each patient rather than services.
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Most payers use one of three methods of
paying Providers:
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2)
3)
Allowed charges
Contracted fee schedule
Capitation
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Payment Under an Allowed
Charge Method
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Allowed charge
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Maximum amount policy covers for each service
Determined by policy guidelines
Example:
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The payer’s allowed charge for a new patient’s
evaluation & management service is $160 (CPT
99204)
Provider A Usual Charge = $180 Payment = $160
Provider B Usual Charge = $180 Payment = $140
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Allowed Charges
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(cont’d)
Participating Providers (PAR) – are
physicians/providers who agree to provide medical
services to a payer’s policyholders according to the terms
of the plan or program’s contract.
Participating Providers (PAR)
 PAR = accept assignment
 Provider accepts amount paid by plan as payment in
full
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Balance Billing
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Balance Billing - Charging the patient for the difference
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Write-offs - Different between provider’s charge and the
between a provider’s higher fee and a lower allowed charge
 PAR (participating providers) – can not ” balance bill”
the patient.
 PAR (participating providers) must “write-off” the
difference
allowed charge.
 Can not bill patient for this amount (no balance billing)
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Allowed Charges
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(cont’d)
Nonparticipating Providers (nonPAR) – A physician
or other Health Care Provider who chooses not to join a particular
government or other program or plan.
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Nonparticipating Providers (nonPAR)
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NonPAR = does not accept assignment
Provider may often balance bill patients
 Provider collects difference between higher fee and lower
allowed charge from patient
Balance Billing is prohibited by Medicare & other
government-sponsored programs.
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Contracted Fee Schedule
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Payers establish fixed fees with their PAR
providers
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With this method, payer’s allowed charge and provider’s
charge are the same
Contract sets fees for covered procedures and services
Fees vary for different geographical areas
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Capitation
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Capitation – is a method of insurance reimbursement
to physicians based on the number of patients seen
rather than the service performed.
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Used by HMOs
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Cap rate/Capitation Rate is the fixed payment for each
plan member in a capitation contract.
Cap rate is set by the HMO that initiates contract with
provider
Paid to provider regardless of number of patient visits
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Patients’ Charges
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Individual Financial responsibility:
 Periodic premiums
 Possible out-of-pocket expenses
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Deductibles
Copayments
Coinsurance
Excluded and over-limit services
Balance billing
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Deductibles,
Copays, Coinsurance
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Deductible
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Amount patient must pay for covered services before
insurance benefits are due.
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Copay
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Benefits begin after deductibles are paid
Individual or family deductibles
Small fee paid at time of service
Coinsurance
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Portion for covered services the patient must pay beyond the
deductible
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Payments Due
at Time of Service
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Usually Collected during visit
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Copayments
Usual fees for:
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Excluded services under patient’s plan
Services by nonPAR providers
Services by HMO out-of-network providers
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Estimating
Patient’s Charges
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Contact patient’s plan and verify:
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Patient’s deductible amount and whether paid
in full
Covered benefits
Coinsurance or other obligations
Payer’s allowed charges or fee schedule for
anticipated services
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Quiz
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A Patient’s insurance policy states:
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Annual Deductible: $300.00
Coinsurance:
70-30
This year, the patient has made payments totaling $533.00 to all providers.
Today, the patient has an office visit (fee: $80.00). The patient presents a
credit card for payment of today’s bill. What is the amount that the
patient should pay?
30% of $80.00, or $24.00
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Quiz
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A Patient is a member of a health plan with a 15
percent discount from the provider’s usual fees
and a $10.00 copay. The days’ charges are
$480.00. What are the amounts that the plan
and the patient each pay?
 The discounted rate the Physician receives is
$480.00 - 15%, or $408.00.
 The Patient pays $10.00
 The Plan pays $398.00
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Quiz
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A Patient is a member of a health plan that has a
20 percent discount from the provider and a 15
percent copay. If the day’s charges are $210.00,
what are the amounts that the plan and the
patient each pay?
 The discounted rate the Physician receives is
$210.00- 20%, or $168.00.
 The Patient pays $25.20
 The Plan pays $142.80
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Critical Thinking
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Describe the difference between PAR and
nonPAR providers.
PAR providers accept the payment from the insurance
carrier as payment in full for the covered service (after
deductible, copays, and coinsurance). Differences are
written off.
NonPAR providers may bill the patient for the
difference between the insurance payment and the
allowed charge.
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