Financial Counseling: Insurance Requirements Lesson 1: Insurance Basics

1. Financial Counseling: Insurance RequirementsLesson 1: Insurance Basics Instructor: Laurie Amdur, CPAR, CFC, PAS

2. Learning Outcomes • Explain various insurance terms to your patients to accurately convey estimated patient liability at time of service • Interpret your facilities’ insurance contracts to calculate expected patient liability • Describe the role the Prompt Payment Law plays in the payment of insurance claims • Discuss when and how Health Savings Accounts are used

3. Insurance Terms to know • Maximum out of Pocket • Yearly Maximum • Deductibles • Copayment • Coinsurance

4. Deductibles • Amount of money that must be paid by patient prior to insurance payment • Usually a yearly amount; however, some insurance plans will have deductibles at various times of the year • Example: Medicare has an Inpatient deductible of $1100 (2010 data) for every 60 days of hospitalization during a spell of illness

5. Copayment • Specified dollar amount due at the time of service • Based on service type • Does not vary with the cost of the service • Example: $30.00 PCP visit $40.00 Specialist Visit $50.00 ER Copay

6. Coinsurance • Cost sharing requirement under a health plan that provides that the insured will be responsible for a portion or percentage of the costs of covered services • Examples: 80/20, 90/10

7. Maximum Out of Pocket • Maximum Amount Patient will be required to pay by the insurance before the insurance covers services at 100% • Copayments are not applied towards the out of pocket

8. Yearly Maximum • Maximum amount insurance will pay in a year • Once met, patient is responsible for all charges

9. Medicare Inpatient Coverage • Days 1-60 Full Coverage Days • Days 61-90Coinsurance Days (patient owes ¼ of IP deductible per day) • Days 91-150Lifetime Reserve Days (patient owes ½ of IP deductible per day)

10. Lifetime Reserve Days • Non renewable • Patient has to be advised they are in lifetime reserve period and select to use lifetime reserve days • 60 days

11. What to do if Medicare days exhausted? • File Part B claim to Medicare • Secondary coverage? • If yes, will be able to bill inpatient charges to secondary.

12. How are Inpatient claims paid? • DRG • Per Diem • Case Rate

13. DRG • DRG—Diagnosis Related Grouper—system for classifying hospital stays according to the diagnosis of the medical problem being treated for the purpose of payment • Methodology adopted by Medicare, Medicaid, managed Medicaid, Medicare Replacement Plans, Tricare, ChampVA, VA, Workers Comp, and some commercial plans • Payment based on Diagnosis, not length of stay

14. Per Diem • Commercial Plans pay set amount per day based on type of service (medical, surgical, ICU)

15. Case Rates • An established amount that compensates a hospital for all the care rendered and provided to a patient for a particular diagnosis or procedure • Used by commercial payers • Similar to DRG • Maternity benefits

16. How are outpatient claims paid? • Fee schedules • APCs • Percentage of Charges • Case Rates

17. Fee Schedules • Fee schedules—insurance sets rates based on procedure code being billed • Typically used for radiology and lab services

18. APCs • Ambulatory Payment Classification—system similar to DRGs to be used for outpatient • Also known as ASC (Ambulatory Surgery Classification) • Insurance groups procedures into surgical groupers

19. Percentage of Charges • Some procedures are paid based on percentage of charges • Contracts may be written to pay all charges based on percentage or may specify only certain charges are paid by percentage of charges

20. Case Rates • Same concept as with Inpatient • Insurance may pay certain Outpatient procedures based on case rates • Typically used for ED claims

21. Summary • Depending on the payer and the patient type, claims will be reimbursed under different payment methodologies. • Having a basic understanding of insurance terms and requirements will make you better able to communicate patient responsibility.

22. CONTACT Linda Fausett lcbraswell@yahoo.com