Private Payers/ Blue Cross & Blue Shield

1. Private Payers/Blue Cross & Blue Shield OT 232 Ch 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, #1

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 CDHPs • The GHP establishes a funding option • Patient uses the money to pay for allowed services • Total deductible must be met • 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. OT 232 Ch 9, #2