1.3 Health Care Plans (Continued) 1-14

• Managed care offers a more restricted choice of providers and treatments in exchange for lower premiums, deductibles, and other charges

• Managed care organizations (MCOs) establish links between provider, patient, and payer– How many MCOs may a doctor choose to

participate in?• Thinking it Through, page 10

1.4 Health Maintenance Organizations 1-15

• A health maintenance organization (HMO) combines coverage of medical costs and delivery of health care for a prepaid premium

• Participation means that a provider has contracted with a health plan to provide services to the plan’s beneficiaries

• Capitation is a fixed prepayment to a provider for all necessary contracted services provided to each plan member– Per member per month (PMPM) is the capitated rate– Figure 1.3, page 11

1.4 Health Maintenance Organizations(Continued)

1-16

• A network is a group of providers having participation agreements with a health plan– Visits to out of-network providers are not covered

• HMOs…– Health Maintenance Organization…

• often require preauthorization before the patient receives many types of services

• When HMO members see a provider, they pay a specified charge called a copayment

• HMO members choose a primary care physician (PCP), who directs all aspects of their care

1.4 Health Maintenance Organizations(Continued)

1-17

• Open-access plans are those HMOs…– Health Maintenance Organization…

• that allow visits to specialists in the plan’s network without a referral

• A point-of-service (POS) plan permits patients to receive medical services from non-network providers for a greater charge

• Thinking it Through, page 14

1.5 Preferred Provider Organizations 1-18

• A preferred provider organization (PPO) is an MCO…– Managed Care Organization…

• where a network of providers supply discounted treatment for plan members– Most popular type of health plan– Creates a network of physicians, hospitals, and other

providers with negotiated discounts– Requires payment of a premium and often of a copayment

for visits– Does NOT require referrals or PCPs…

• Primary Care Physicians

• Thinking it Through, page 16

1.6 Consumer-Driven Health Plans 1-19

• A consumer-driven health plan (CDHP) combines a high-deductible health plan with a medical savings plan– The health plan is usually a PPO…• Preferred Provider Organization…

– with a high deductible and low premiums– The savings account is used to pay medical bills

before the deductible has been met

1.7 Medical Insurance Payers 1-20

• Three major types of medical insurance payers:1. Private payers—dominated by large insurance

companies2. Self-funded (self-insured) health plans—

organizations that pay for health insurance directly and set up a fund from which to pay

3. Government-sponsored health care programs—includes Medicare, Medicaid, TRICARE, and CHAMPVA

• The Patient Protection and Affordable Care Act (PPACA) is health system reform legislation that introduced significant benefits for patients

1.8 The Medical Billing Cycle 1-21

• A medical insurance specialist is a staff member who handles billing, checks insurance, and processes payments

• To complete their duties, medical insurance specialists follow a 10-step medical billing cycle– This cycle is a series of steps that leads to

maximum, appropriate, timely payment

1.8 The Medical Billing Cycle (Continued)1-22

• Step 1 – Preregister patients• Step 2 – Establish financial responsibility for

visits– Who is primary payer?

• Step 3 – Check in patients• Step 4 – Check out patients– A medical coder is a staff member with specialized

training who handles diagnostic and procedural coding

– The patient’s primary illness is assigned a diagnosis code

1.8 The Medical Billing Cycle (Continued)1-23

• Step 4 – Check out patients (continued)– Each procedure the physician performs is assigned a

procedure code– Transactions are entered in a patient ledger—a

record of a patient’s financial transactions• Step 5 – Review coding compliance– Compliance means actions that satisfy official

requirements• Step 6 – Check billing compliance• Step 7 – Prepare and transmit claims

1.8 The Medical Billing Cycle (Continued)1-24

• Step 8 – Monitor payer adjudication– Accounts receivable (A/R) is the monies owed to a

medical practice– Adjudication is the process of examining claims and

determining benefits• Step 9 – Generate patient statements• Step 10 – Follow up patient payments and

handle collections• A practice management program (PMP) is

business software that organizes and stores a medical practice’s financial information

1.9 Working Successfully 1-25

• Professionalism is acting for the good of the public and the medical practice

• Medical ethics are standards of behavior requiring truthfulness, honesty, and integrity– Thinking it Through, page 29

• Etiquette is comprised of the standards of professional behavior

1.10 Moving Ahead 1-26

• Certification is the recognition of a superior level of skill by an official organization– Provides evidence to prospective employers that

the applicant has demonstrated a superior level of skill on a national test