Chapter 03 Basics of Health Insurance

1. Insurance Handbook for the Medical Office 13th edition Chapter 03 Basics of Health Insurance

2. Introduction to Health Insurance Describe the history of insurance in the United States. Explain the reasons for the rising cost of health care. Discuss how the Patient Protection and Affordable Care Act will reform health care. Lesson 3.1

3. Introduction to Health Insurance (cont’d) State four concepts of a valid insurance contract. Explain the difference between an implied and an expressed physician-patient contract. Define common insurance terms. Lesson 3.1

4. History Insurance is one of the world’s largest businesses Health insurance offsets the costs of illness and/or injury Escalating medical costs have limited insurance coverage options Patients may have more than one insurance policy to defray health care costs

5. Health Care Reform Patient Protection and Affordable Care Act Health Care and Education Reconciliation Act of 2010

6. Health Benefit Exchanges • State-based American Health Benefit Exchanges and Small Business Health Options (SHOP) • Clearinghouses will allow individuals to compare coverage and prices • Individuals can purchase through clearinghouses to take advantage of federal subsidies

7. Insurance Contracts • Four considerations in valid insurance contracts: • The person must be a mentally competent adult and not under the influence of drugs or alcohol • The insurance company must make an offer (the signed application), and the person must accept the offer (issuance of the policy) without concealment or misrepresentation of facts on the application

8. Insurance Contracts • Four considerations in valid insurance contracts (cont’d): • An exchange of value (the first premium payment) submitted with the application, known as a consideration, must be present • A legal purpose must exist, which is an insurable interest in the case of a health insurance policy

9. Implied or Expressed Contracts • Implied contract: not manifested by direct words, but implied or deduced from the circumstance, the general language, or the conduct of the patient • Most physician contracts are implied • Expressed contract: can be a verbal or written contract

10. The Insurance Policy • Major medical: extended benefits contract to offset large medical expenses caused by prolonged illness or serious injury • Insured: individual or organization protected in case of loss under terms of the insurance policy • Also known as: • subscriber • member • policyholder • recipient

11. Policy Renewal Provisions • Five classifications: • Cancelable • Optionally renewable • Conditionally renewable • Guaranteed renewable • Noncancelable policy

12. Policy Terms Premium: monthly, quarterly, or annual fee to keep insurance active Deductible: specific amount of money paid each year before policy benefits begin Coinsurance/copayment: cost-sharing requirement in which the insured assumes a percentage of the fee or pays a specific amount for covered services

13. Policy Terms • Insurance billing specialist abstracts information from the patient record to: • code diagnoses and services rendered • complete insurance claim form • post entries to patient’s financial accounting record (ledger) • follow up on unpaid claims

14. Coordination of Benefits • When patient has more than one insurance policy, this statement requires insurance companies to coordinate the reimbursement of benefits to determine the primary and secondary carriers • Prevents duplication or overlapping of payment for the same expense

15. General Policy Limitations • Exclusion: injury or illness that is not covered by the insurance policy • Examples: • Attempted suicide • Military service • On-the-job injuries • Fertility coverage • Pregnancy • Preexisting conditions

16. Preapproval • Requirements for preapproval: • Eligibility • Precertification • Preauthorization • Predetermination

17. Types of Health Insurance Coverage and Insurance Claims Submission List the ways a person can obtain health insurance. State the types of health insurance coverage. Describe in general terms the important federal, state, and private health insurance plans. Relate the entire billing process to simple and complex medical cases. Explain the administrative life cycle of a physician-based insurance claim from completion to third-party payer processing and payment. Determine the appropriate questions to ask a patient for a complete patient registration form. Lesson 3.2

18. Types of Health Insurance Coverage and Insurance Claims Submission (Cont’d) List the types of computerized signatures for documents and insurance claims. Demonstrate how to track submitted insurance claims. List the functions of an aging accounts receivable report in a computerized practice management system or a “tickler” file in a paper environment. Explain how insurance billing and coding information can be kept up to date. Describe the proper information to post to the patient’s financial account after claims submission and payment received. Lesson 3.2

19. Choices of Health Insurance • Group Contract • Conversion Privilege • Income Continuation Benefits • Medical Savings Accounts • Health Savings Accounts • Health Reimbursement Account • Healthcare Flexible Spending Account • High-Deductible Health Plans • Individual Contract

20. Types of Health Insurance Coverage The Civilian Health and Medical Program of the Department of Veteran Affairs (CHAMPVA) Competitive Medical Plan (CMP) Disability Income Insurance Exclusive Provider Organization (EPO) Foundation of Medical Care (FMC) Health Maintenance Organization (HMO) Independent or Individual Practice Association (IPA) Maternal and Child Health Program (MCHP)

21. Types of Health Insurance Coverage Medicaid (MCD) Medicare (M) Medicare/Medicaid Point-of-Service Plan (POS) Preferred Provider Organization (PPO) TRICARE Unemployment Compensation Disability (UCD) Veterans Affairs Outpatient Clinic (VA) Workers’ Compensation Insurance (WC)

22. Handling and Processing Insurance Claims Manually preparing claims for submission In-office electronic filing by fax or computer Contracting with an outside service bureau Use of a telecommunications networking system

23. Lifecycle of an Insurance Claim

24. Lifecycle of an Insurance Claim

25. Lifecycle of an Insurance Claim • Patient Registration Form • Patient’s name (first, middle initial, last) • Street address and telephone number • Business address, telephone number, occupation • Date of birth • Person responsible for account or insured’s name • Social Security number • Spouse’s name and occupation • Referral source (i.e., physician’s name) • Driver’s license number • Emergency contact information • Insurance billing information

26. Lifecycle of an Insurance Claim Insurance Card

27. Lifecycle of an Insurance Claim Patient Signature Release

28. Lifecycle of an Insurance Claim • Encounter Form • Attached to the patient’s medical record during an office visit • Combines a bill, insurance form, and routing document • Can also be a computerized multipurpose billing form to input charges and diagnoses into a patient’s account

29. Lifecycle of an Insurance Claim • Provider’s signature - acceptable formats: • Handwritten • Signature stamp/Facsimile • Computerized • Digitized signature • Button, PIN, biometric, or token • Electronic signature

30. Lifecycle of an Insurance Claim • Insurance claim follow-up • Electronic systems should generate a log of claims • Put the necessary information in the patient’s financial record

31. Lifecycle of an Insurance Claim • Aging Report • Used to obtain total A/R amount • Shows a snapshot of how much money is due from each patient • Also known as a “tickler file” • Deposit payments when received

32. Lifecycle of an Insurance Claim Financial Statement (Ledger Card)

33. Questions?