Chapter 11
The Blue Plans, Private Insurance,
and Managed Care Plans
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
Private Insurance

Blue Cross/Blue Shield


Pioneers in private insurance
Largest insurance company in the U.S.
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
2
Prepaid Group Practice
Health Plans

Pioneers



Direct contract


Ross-Loos Medical Group became CIGNA
Kaiser Permanente
• Closed Panel Program *
Contracts directly with physicians in the
community
Individual practice model

Practice physicians paid on fee for service from
premiums paid
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
3
Health Maintenance Organization
Act of 1973

Created authority for federal government to
assist HMO development by:


providing grants, loans, and loan guarantees to
offset initial operating deficits of new HMOs that
meet federal standards.
requiring most employers to offer an HMO
to employees as an alternative to traditional
insurance plans. *
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
4
Healthcare Reform






growing number of uninsured
costs to employers
government deficits
rising costs of high-tech medicine
patient costs
fraud
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
5
Managed Care Systems

Health Maintenance Organizations





Prepaid group practice model
Staff model
Network HMO
Direct contract
Individual practice model
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
6
Managed Care Systems (cont’d.)




MCO
HMO
EPO
FMC




IPA
PPO
PPG
POS plan
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
7
Exclusive Provider Organization
(EPO) features similar to PPO



Members must choose care from network
providers (emergency exceptions)
Generally, no reimbursement for out-of-network
care
Regulated under insurance statutes
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
8
Exclusive Provider Organization
(EPO)
features similar to HMO:






Enrolled population
Limited provider panel
Gatekeepers – incentives for keeping
referrals at a minimum *
Utilization management
Capitated provider reimbursement *
Authorization system
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
9
Exclusive Provider Organization
(EPO) features:



Flexible benefit design
Negotiated fees
Fee-for-service payments
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
10
Foundations for Medical Care
(FMC)
First established in 1954, in Stockton, CA
FMC Operations
 Comprehensive type of foundation
 Claims-review type of foundation

Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
11
Independent (or Individual)
Practice Association (IPA)


Physicians are not employees, and do not
receive salaries
Capitation or fee-for-service program
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
12
Preferred Provider Organization
(PPO)



Freedom to use any physician or hospital
Members receive highest level of benefits
when using preferred providers
Coinsurance and deductibles
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
13
Silent PPOs



Also called blind or phantom PPOs,
discounted indemnity plans, nondirected
PPOs, or wraparound PPOs
Provider income reduced
Complicates the appeal process
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
14
Physician Provider Group
(PPG)



Physician owned (unlike IPA)
Joint ventures with hospitals, labs, etc.
Can combine services for member
physicians, cutting business costs
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
15
Point-of-Service (POS) Plan



HMO cost management
PPO freedom of choice
Members choose services from participating
and nonparticipating providers, with different
benefit levels *
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
16
Triple-Option Health Plans



Members choose from HMOs, PPOs, or
“traditional” indemnity insurance
Members can change plans
Cost-containment measures
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
17
Other Plans

Provider-Sponsored Organization (PSO)


Owned and maintained by a hospital or provider
group
Religious Fraternal Benefit Society (RFBS)

Managed care plan associated with a church,
group of churches, or convention
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
18
Regulatory Considerations





Individual or employer paid?
Employee Retirement Income Security Act
(ERISA)
liability issues
disability issues
state versus federal jurisdiction
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
19
Quality Improvement
Organizations


peer review
utilization review





Churning *
Turfing *
Buffing *
concurrent review
discuss pre-admission certification
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
20
Plan Administration




patient information letter
medical records
scheduling appointments
encounter form
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
21
Preauthorization/Prior Approval




formal referral
direct referral
verbal referral
self-referral
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
22
Managed Care Plan
Reference Guide
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
23
Financial Management
(Payment)


Deductibles *
Copayments *






Always collect up front *
payment mechanisms
contract payment time limits
scheduling appointments
monitoring payment
fee schedules
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
24
Financial Management





statement of remittance
accounting
fee-for-service
year-end evaluation
explanation and coordination of benefits
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
25
Fee-for-Service

handling accounts similarly to fee-for-service




Copayment
Adjustment
overpayment
capitation versus fee-for-service
Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.
26