Private Payers/
Blue Cross & Blue Shield
OT 232
Ch 9
OT 232 Ch 9, #1
1
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
2
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
3
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
4
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
5
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
6
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
7
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
8
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
9
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
10
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
11
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
12
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
13
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
14
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
15
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
16
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
17
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
18
Consumer-Driven Health Plans
(cont’d.)
• Billing Under CDHPs
1. The GHP establishes a funding option
2. Patient uses the money to pay for allowed
services
3. Total deductible must be met
4. Then the HDHP covers a portion of benefits
• Example, page 303
OT 232 Ch 9, #2
19
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
20
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
21
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
22
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
23
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
24
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
25
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
26
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
27