OT 232 Ch 9, #1 1

Private Payers/Blue Cross & Blue Shield

OT 232Ch 9

OT 232 Ch 9, #1 2

Private Health Plans• As opposed to…– Gov’t programs like Medicare and Medicaid

• Employer-Sponsored Medical Insurance– Important benefit for employees– GHP

• Group Health Plans

– Federal tax benefit for the employer• But employee benefits may get taxed

– HR department negotiates with plans for coverage• Size of business usually determines options• Once a plan is chosen, riders may be added

– Options» Vision, dental, etc.

• The more inclusive, the more expensive

OT 232 Ch 9, #1 3

Private Health Plans (cont’d.)• Employers may lower premiums with carve outs

– Part of standard health plan that is changed under a negotiated employer-sponsored plan» Omit specific benefit, use different network for specific

area, etc.

• State vs. Federal – what’s the rule?– Which ever has more restrictive laws mandating coverage of

specific benefits or treatments and access to care must be followed

• Open enrollment plans– Employee may make changes to plan– Exceptions?

» Marriage, birth, death, etc.

OT 232 Ch 9, #1 4

Federal Employees Health Benefits Program

• FEHB• Largest employer-sponsored health program

in the U. S.• Covers more than 8 MILLION people• 250+ different plans

OT 232 Ch 9, #1 5

Self-funded Health Plans

• Large employers choose to cover costs of employee medical benefits themselves

• May set up the own provider network or lease a managed care organization’s network

• Regulated by ERISA– Employee Retirement Income Security Act of 1974

• Often hire 3rd party claims administrators (TPAs) to handle paperwork– Often an insurance carrier or MCO is hired - not to take

on the risk - but to do claim processing

OT 232 Ch 9, #1 6

Individual Health Plans• IHP• For people not part of a group– Self-employed– Between jobs– Students– Early retirees

• 10% of private health plans• Usually have basic benefits without riders or

additional features

OT 232 Ch 9, #1 7

Features of Group Health Plans

• Eligibility for Benefits– Waiting Period• Often 30-90 days

– CC?» NONE!!

• Avoids paperwork of short-timers• Minimizes pre-existing date fudging

– Late Enrollees• More stringent rules apply if you don’t enroll ASAP.

– May require a physical

OT 232 Ch 9, #1 8

Features of Group Health Plans (cont’d.)

– Premiums and Deductibles• Paid by employer and employee

– Employers pay an average of 80%

• Individual vs. Family• Non-covered services don’t count towards deductible

– Benefit Limits• Benefits end after a monetary amount is reached

– Lifetime– Annual– Condition

OT 232 Ch 9, #1 9

Features of Group Health Plans (cont’d.)

– Tiered Networks• Steers patients to providers that perform best under

plan’s measures– Don’t order unnecessary tests– PCP vs. walk-in clinic

• Higher reimbursement for ‘cost effective’ providers• Common for prescription drug coverage

– Formulary vs. nonformulary drugs

OT 232 Ch 9, #1 10

Features of Group Health Plans (cont’d.)

• Portability and Required Coverage– COBRA• Consolidated Omnibus Budget Reconciliation Act• Right to continue coverage under employer’s plan for a

limited time at own expense• Usually less than individual health coverage

– But still expensive; many opt for individual catastrophic plan

• Important for pre-existing conditions; don’t want gap period

OT 232 Ch 9, #1 11

Features of Group Health Plans (cont’d.)

• HIPAA– ‘Look back’ period• Plans can exclude conditions that an employee has

been seen for in the last 6 months, but not beyond that– This limitation cannot last longer than 12 months.

– ‘Creditable coverage’• If recently covered, that must be taken into account

when new plan is determining any limitations– If break is 62 days or less, all good

OT 232 Ch 9, #1 12

Features of Group Health Plans (cont’d.)

• Other Federally Guaranteed Insurance Provisions– Newborns’ & Mothers’ Health Protection Act• Not less than 48 hour hospital stay after birth

– Women’s Health and Cancer Rights Act• Covers breast reconstruction after mastectomy

– Mental Health Parity Act• Mental health benefits must equal medical benefits

OT 232 Ch 9, #1 13

Types of Private Payer Plans

• Figure 9-1, page 292 • Preferred Provider Organizations– Still most common– Generally pay participating providers based on a

discount from their physician fee schedules– Annual premiums, deductibles and copayments

are required

OT 232 Ch 9, #1 14

Types of Private Payer Plans (cont’d.)

• Health Maintenance Organizations– Fewest providers, most stringent guidelines– PCP’s are assigned– Staff Model

• Physicians are employed by the HMO

– Group (Network) Model• Capitation method of payment used

– Independent Practice Association Model (IPA)• Independent physicians who contract together to provide

services• HMO pays IPA, who pays the physicians

OT 232 Ch 9, #1 15

Types of Private Payer Plans (cont’d.)

• Point-of-Service Plans (POS)– Hybrid of HMO and PPO– Members choose from a primary or secondary

network• Primary is HMO-like, secondary is usually a PPO

– May be structured as a tiered plan• Different rates for different providers

– Charge a premium and copayment

OT 232 Ch 9, #1 16

Types of Private Payer Plans (cont’d.)

• Indemnity Plans– Require premium, deductible and coinsurance– Payers compete for employers’ contracts to try to

control costs

OT 232 Ch 9, #2 17

Consumer-Driven Health Plans

• Two components– High deductible health plan

• For catastrophes

– One or more tax-preferred savings accounts• For out-of-pocket or noncovered expenses

• Goal – people will research more and be more aware/conscious/careful of how their money is spent

• High-Deductible Health Plan (HDHP)– $1000+, BUT…

• Many covered services are not subject to deductible– Often preventive care, dental, vision, etc.

OT 232 Ch 9, #2 18

Consumer-Driven Health Plans (cont’d.)

• Funding Options (Table 9.2, page 300)– Health Reimbursement Account (HRA)• Set up and funded by employer• Used by employees with high deductibles to reimburse

for out-of-pocket expense

– Health Saving Account (HSA)• Set up by individual

– Flexible Savings Accounts• Use it or lose it

OT 232 Ch 9, #2 19

Consumer-Driven Health Plans (cont’d.)

• Billing Under CDHPs1. The GHP establishes a funding option2. Patient uses the money to pay for allowed

services3. Total deductible must be met4. Then the HDHP covers a portion of benefits

• Example, page 303

OT 232 Ch 9, #2 20

Major Private Payers & the Blue Cross & Blue Shield Association

• Private payers/Insurance organizations provide these services– Contract with employers and individuals to provide

insurance benefits– Setting up provider networks– Establishing fees– Processing claims– Managing the insurance risk– Provide customer support to both providers and

participant

OT 232 Ch 9, #2 21

Major Private Payers & BCBS (cont’d)

• Major Payers & Accrediting Groups– Really just 8-10 major payers that have many

smaller/regional affiliates– The smaller subsidiaries within the major payers

are designed to meet different markets, companies, state laws, etc.

– Huge variety in terms of customization

OT 232 Ch 9, #2 22

Major Private Payers & BCBS (cont’d)

• Blue Cross and Blue Shield Association– Is not a payer!• Is an association of more than 40 independent payers

nation-wide– Independent payers under BCBS are called Member Plans

• The ‘association’ is good for advertising, networking

– Subscriber ID card• Since BCBS isn’t a payer, important to determine type

of plan

OT 232 Ch 9, #2 23

Major Private Payers & BCBS (cont’d)– Types of Plans

• HMO – patient must choose PCP from within network• POS – use providers in network, or out of network (but

for a higher fee)• PPO – patients can see providers in directory for reduced

fees

– BlueCard program• Benefit of BCBS• Allows patients to receive treatment outside their local

area– Is a nationwide network with a single electronic claim processing

& reimbursement system

– Flexible Blue Plan• BCBS’s version of a CDHP

OT 232 Ch 9, #2 24

Participation Contracts• From the providers point of view• Contract Provisions

– How much money are they getting paid?• Look at most frequent CPT codes• Is scale too low to be worthwhile

– How many patients is it bringing in?• Are more needed?• Does the incoming number justify the lower fees?• Are there enough to make the lower fee profitable?

– Administrative rules involved• Will complying compromise medical judgement?• Limit decision-making too much?

– How are they paid and how much support do they get?• Does complying take too much billing time and additional employee

expense?

OT 232 Ch 9, #2 25

Participation Contracts (cont’d.)

• Introductory Section– Names the contracting parties and how they can

be used– Defines terms used

• Contract Purpose & Covered Medical Services– Types of plans– Services provided– What’s covered and what can be billed for

OT 232 Ch 9, #2 26

Participation Contracts (cont’d.)• Physician’s Responsibilities

– Services that must be offered– Acceptance of plan members

• All or percentage?

– Referral rule• Can a referral be made to a non-participating provider?

– Preauthorization• Provider’s or patient’s responsibility?

– Quality assurance/utilization review• Allow access to files for payer’s quality assurance & to determine

medical necessity• Payers process to determine the ‘appropriateness’ of services to

members

– Other provisions• Providers credentials, HIPAA privacy policies, etc.

OT 232 Ch 9, #2 27

Participation Contracts (cont’d.)• Managed Care Obligations

– Identification of enrolled patients• Usually ID card

– Payments• Defined turn-around time

– Other compensation• Incentives, bonuses, withholds, etc.

– Can withhold 20% of payment if medical expenses are too high

– Protection against loss• Stop-loss provision

• Compensation and Billing Guidelines– Formats for billing, how much to expect from patients,

coordination of benefits when more than one plan is involved, etc.