provided a set allowance (or level of benefits) for hospital/medical services and paid them directly to the provider. Underwritten by community rating, an insurance approach hereby a uniform rate is used for all subscribers or insureds within a given geographical area
Pre-paid plans
plans that reimbursed a set dollar amount to the subscriber. Unlike the BC/BS plans, the insurance companies were for-profit, not open to all and not community rated.
indemnity plans
plans pay benefits from the “first dollar” of expense incurred. The subscriber pays no expense. This model was used in early hospital and medical plans when costs and utilization patterns were lower
first-dollar coverage
What are the types of hospitalization benefits covered in health plans?
- (a) Inpatient room and board
- (b) Emergency care
- (c) Intensive and specialty care
- (d) Maternity and newborn care
- (e) X-ray, diagnostic testing and laboratory expenses in a hospital
- (f) Skilled nursing facility care
- (g) Radiation and chemotherapy
- (h) Inpatient mental and nervous care
- (i) Inpatient drug and alcohol substance abuse care
- (j) Physical, inhalation and cardiac therapy
- (k) Home health care
- (l) Hospice care
- (m) Respite care.
What are the types of medical benefits covered in health plans?
- (a) Surgeons
- (b) Anesthesiologists
- (c) Nurse and other surgical assistants
- (d) Service fees associated with inpatient medical care
- (e) Second surgical opinions
- (f) X-ray, diagnostic and lab expenses in a doctor’s office or by an independent laboratory
- (g) Skilled nursing care
- (h) Obstetricians and pediatricians associated with prenatal, delivery and newborn care
- (i) Inpatient intensive care and concurrent care in a hospital
- (j) Allergy testing
- (k) Transplant services
- (l) Administration of radiation and chemotherapy
- (m) Inpatient physical therapy
- (n) Immunizations for children.
Explain the early cost-sharing techniques used in major medical coverage
deductible - is the amount of covered medical expense that a subscriber must pay before the plan pays benefits coinsurance - some percentage of total charges for which the plan participant is responsible once the deductible is exceeded
Proponents argue that deductibles and coinsurance:
- (a) May lead to a reduction in the use of health services and, thus, a reduction in costs
- (b) May reduce premiums because the health plan pays less. Savings are theoretically passed on to the employer and employee, although practically speaking, some of the costs are shifted from the employer to the employee.
- (c) Create equity because the amount insured persons pay is related to their use of health services.
Opponents argue that deductibles and coinsurance:
- (a) May not reduce utilization of health services because physicians, not consumers, make such decisions
- (b) May discourage preventive care
- (c) Present a financial barrier to necessary care.
Covers the expenses associated with serious illness or hospitalization. Usually have a set amount, or deductible, for which the patient is responsible. Once that is paid, the plan covers most of the remaining cost of care, subject to co-pays or co-insurance paid by the patient.
Major Medical
An adaptation of the major medical approach. Up-front deductibles and coinsurance are applied to all hospital and medical services and procedures, not just to the supplemental charges as in a major medical plan. Thus, the subscriber shares in the cost of all benefits and charges. These plans are easy to communicate to plan participants.
comprehensive plans
other cost-control features, in addition to deductibles and coinsurance
- (a) Second surgical opinions—This is a prospective technique in which an additional medical opinion on the necessity of elective or nonemergency surgery (or other procedure) is either required or suggested (voluntary).
- (b) Full coverage for diagnostic testing—Certain tests that help detect specific medical conditions are fully paid without a deductible or coinsurance requirement.
- (c) Preadmission certification—requires the participant or hospital to check with the insurer before admission for treatment
- (d) Utilization review—examines medical treatment patterns on a concurrent, prospective or retrospective basis
- (e) Incentives for using an outpatient facility—Because outpatient centers are less costly, participants are provided a financial incentive such as no deductible or copayment, to use them instead of a hospital.
Cost sharing is a key issue in medical plan design. It usually takes four different forms. These include the use of
- deductibles
- coinsurance
- copayment
- premium contributions by employees
A common provision of health insurance plans used as a cost-containment technique to prevent duplication of payment under two insurance policies and limiting the aggregate benefits an insured receives to an amount not exceeding the actual amount of the loss.
Coordination of benefits (COB)
when a patient is a dependent child covered under separate plans of the father and mother who are not divorced, the primary plan is the plan covering the parent whose birthday falls earlier in the year.
Birthday Rule (applies to COB)
The substitution of another party, in this case the employer or insurer, in place of a party (the employee or dependent) who has a legal claim against a third party. Provides certain rights to an employer or an insurer with respect to claims that covered employees might have against negligent third parties. It allows them to receive reimbursement from employees or dependents who receive a liability recovery from the third party and thus limit costs.
Subrogation
helps contain hospital costs by reducing the number of in-hospital patient days by having the necessary x-rays, laboratory tests and examinations conducted on an outpatient basis prior to a scheduled hospital admission and reimbursed as if on an inpatient basis.
Preadmission testing
inappropriate, experimental, educational or unproven treatments are eliminated from coverage for benefits, and only conditions requiring confinement for safe and effective treatment will be covered on an inpatient basis.
Medical necessity language
By providing a lower level of care than acute care during the latter days of a hospital confinement, this care can produce cost savings compared with a hospital’s charges.
Skilled nursing care
provides supportive care at costs considerably less than inpatient hospital care especially for chronically ill or disabled persons and for patients who require only monitoring during rehabilitation or maintenance care.
home health care
Three types of managed care arrangements are
- HMO’s (health maintenance org)
- PPO’s (preferred provider org)
- POS’s (point of service)
benefits managed care arrangements cover that traditional plans generally do not.
- routine physical exams
- preventive screenings and diagnostic tests
- prenatal and well-baby care
- immunizations
- vision and dental checkups
- allowances for health club memberships
Health maintenance organizations (HMOs) can take a variety of forms including:
- (a) Individual practice model—An HMO contracts with individual physicians or associations of individual physicians to provide services.
- (b) Group model—An HMO purchases services from an independent multispecialty group of physicians.
- (c) Network model—It is similar to a group model, but includes more than one multi specialty practice.
- (d) Staff model—Physicians are employed and paid a salary by an HMO.
an outgrowth of HMOs and PPOs that expand to include a managed care company, physician practices, multi specialty practices, hospitals and ancillary service providers.
integrated health systems
first started appearing shortly after the turn of the latest century. Link a high-deductible supplemental major medical plan with a savings account that can be accessed to pay health expenses
consumer-driven health plans (CDHPs)
