UNIT 17

Question 1

HEALTH MAINTENANCE ORGANIZATIONS

HMOs

Answer 1

• Are managed care entities
• provide BOTH health care service and the health care financing
• Individuals pay for services DIRECTLY to the HMO, and it agrees to provide needed medical care
• HMO is a financing entity and assumes that the cost of medical care will not exceed the subscription fees.
• HMOs are considered PREPAID plans because the consumer (subscriber) pays a subscription fee in advance for health care services they may need in the future.
• In addition to a co-payment paid by the subscriber, the HMO pays a CAPITATION fee to a health care provider.
• The capitation fee is a fixed monthly fee paid to the healthcare provided based on the number of HMP members, not per HMO subscriber visit or service.

Question 2

HMOs

Part 2

Answer 2

• HMOs introduced the concept of co-payments, or co-pays instead of deductibles or co-insurance.
• Another way HMOs control overutilization of their services by subscribers is with the GATEKEEPER concept.
• When subscribers join an HMO, they must choose a doctor with a general medical practice as their primary care physician (PCP) and they must ALWAYS see them FIRST (except in emergencies) when seeking medical care from the HMO.
• Subscribers cannot see specialists without a referral from a primary care physician.
• HMO subscribers must choose a provider/physician under contract with the HMO.
• HMOs operate within a specific geographic area or designated service area such as a certain county or within the surrounding area. Individual must live within the designated service area to subscribe to the HMO.

Question 3

HMOs

Part 3

Answer 3

Preventative Care

• A major difference between HMOs and traditional health care system is the emphasis on preventative care.
• HMOs seek to reduce the need for medical treatment by detecting conditions early before they require more extensive treatment.

Emergency Care
-HMOs must provide emergency care, including ambulance service, available 24 hours a day, and 365 days a year within its designated service area.

Hospital Services

• Inpatient hospital and physician care must be provided for a period per calendar year for treatment of illness or injury. Hospital services MUST include the following:
• room and board
• maternity care
• general nursing care
• use of operating room and facilities
• use of intensive care unit
• x-rays, laboratory, and other diagnostic tests,
• drugs, medications, and anesthesia
• physical therapy, and inhalation therapy

Question 4

HMOs

Part 4

Answer 4

Other Services
-HMOs must also provide for other basic office based care provided by physicians and other medical professionals such as diagnostic tests, treatment services, short term physical therapy and rehabilitation services, laboratory and x-ray services and outpatient surgery.

HMOs may include certain supplemental health care services or provide them for and additional fee, such as:

• prescription drugs
• vision care
• dental care
• home health care
• nursing care
• long term care
• substance abuse treatment

Question 5

PREFERRED PROVIDER ORGANIZATIONS

PPOs

Answer 5

• A managed care entity
• contract with a network of hospitals, physicians, laboratories, and other medical practitioners to provide medical services for a fee that is somewhat LOWER than the usual rate for that area.
• PPOs operate on a FEE-FOR-SERVICE rather than a prepaid basis like HMO.
• The premium is generally LESS than a HMO fee but PPO plans have deductibles, coinsurance and also have co-pays.

Question 6

PPOs

part 2

Answer 6

OPEN PANEL vs CLOSED PANEL
HMOs are typically closed panel, or closed network.
PPOs are typically open panel, or open network, entities and subscribers are not strictly limited to the plans providers. The reimbursement percentage on care received from out-of-network providers however is usually considerably lower (50% to 60% than that for in-network providers 80%-90%)

PARTIES TO THE PROVIDER CONTRACT
A PPO is a risk baring entity separate from the providers of health care services. The relationship between the PPO and its providers is contractual. 
-However, a PPO can be organized by a number of different types of organizations including:
-insurance companies
-Blue Cross/Blue Shield 
-a hospital or group of hospitals
-a group of physicians
-an HMO
-a large employer or group of employers
-a trade union

Question 7

POINT-OF-SERVICE PLANS

POS

Answer 7

-Is a type of HMO that allows subscribers to obtain care from providers who do not belong to the HMO as well as those who do. The name of the plan highlights the fact that subscribers can choose their point of service.

If subscribers choose to access care within the HMO, they choose a primary care physician who acts as a gatekeeper to the HMO’s network of providers. For this reason, POS plans are sometimes referred to as gatekeeper PPOs. In-network care is covered by the subscriber’s prepaid fee. No billing is done and no claim forms need to be completed.

If subscribers choose to access care OUTSIDE of the HMO, the plan operates like a PPO or traditional insurance plan.

• there is no primary care physician who acts as gatekeeper
• providers bill the individual for a fee for services rendered
• subscribers are not reimbursed for 100% of their expenses but rather for only a percentage, such as 60% or 80%, like a coinsurance requirement.

Because subscribers are not limited to selecting only providers which belong to the HMO, POS plans are sometimes called OPEN-ENDED HMOs

Question 8

INDEMNITY PLANS (TRADITIONAL INSURANCE)

Answer 8

Traditional indemnity plans are still offered by commercial insurers. They are characterized by the following:

• provision of care on a fee-for-service basis
• billing and submission of claims forms
• deductibles and coinsurance requirements
• complete freedom and choice of provider*****
• ability to access to specialist without referral ****

Some traditional insurance plans employ certain cost containment methods such as preauthorization, second surgical opinion, or utilization management. Some do not.

Question 9

HEALTH CARE COST CONTAINMENT

MANAGED CARE

Answer 9

PREVENTATIVE CARE

• One of the cost saving measures insurers implemented was to encourage preventative care.
• Well checks
• Annual Visits
• Routine Visits
• Wellness programs
• Smoking cessation programs
• Weight loss programs

Question 10

OUTPATIENT BENEFITS

Answer 10

Many procedures can be performed safely and effectively without the patient staying in the hospital overnight. Insurers began encouraging use of a hospital’s outpatient facilities by providing relatively higher levels of reimbursement for treatment received on an outpatient rather than an in-patient basis. In addition, insurers began approving payment for treatment received in ambulatory care centers other than hospital outpatient departments such as surgicenters and urgent care centers.

Question 11

SECOND SURGICAL OPINION

Answer 11

Doctors do not always agree on whether surgery is needed to treat a particular condition. Second surgical opinion allows or requires consultation with a doctor other than their attending physician to see if an alternative method of treatment would be desirable.

Question 12

PREAUTHORIZATION

Answer 12

If treatment requiring hospitalization is recommended, precertification is required prior to obtaining the treatment.

Question 13

LIMITS ON LENGTHS OF STAY

Answer 13

In consultation with medical experts, insurers determined the appropriate number of days for various types of treatment. They limited payment to a certain number of days for a given procedure, assuming no complications.

Question 14

ALTERNATIVES TO HOSPITAL CARE

Answer 14

Facilities other than a hospital may provide a more appropriate and cost effective level of care for some patients.

• Skilled nursing facilities- provide around the clock care for patients who need impatient supervision by a registered nurse, but who do not require the acute level of care provided by a hospital.
• intermediate nursing facilities-provide intermediate nursing care for patients who do not need 24 hour supervision.
• Rehabilitative facilities- provide a limited amount of medical care along with the personal care necessary for patients to recover from major surgeries or serious injuries or illnesses.
• Home health care- is provided by agencies that employ a staff of nurses that make visits to a patients home on a regular basis. It is used when patients need some sort of ongoing medical care but do not need supervision.

Question 15

UTILIZATION MANAGEMENT

Answer 15

Utilization Management- places oversight on the provision of medical care to make sure it is appropriate and effective. This oversight can occur at any of all of the following points in the process.

Prospective Review- Occurs BEFORE an expensive test or treatment recommended by a physician is actually provided, requires a second opinion, or both. Information on the case is reviewed to determine necessity and cost effectiveness. This review process is referred to as precertification or preauthorization.

Concurrent Review- takes place WHILE treatment is being provided. The insured’s hospital stay is monitored to assure that everything is proceeding according to schedule and that the insured will be released from the hospital as planned.

Retrospective Review- is done AFTER treatment is complete. The outcome is evaluated to see if treatment was effective and if anything could be changed to produce a better or most cost-effective outcome in the future.