Marvel Alder
Lucy Aspera
Erica Millan
Tiffany Suh
Introduction
Managed Care health insurance offers low cost
moderate health care coverage. It’s a system
that controls the financing and delivery of
health services to members who are enrolled in
a specific type of healthcare plan.
The goals of managed health care are to ensure that...

providers deliver high-quality care in an environment
that manages or controls costs.

the care delivered is medically necessary and
appropriate for the patient’s condition.

care is rendered by the most appropriate provider.

care is rendered in the most appropriate, leastrestrictive setting.
Introduction Cont.
The basic concept
behind managed
health care is to
lower cost by means
of control, by
controlling access to
providers the costs
are controlled as
well
Costs Involved



Monthly health
insurance
premium
Co-payment
Cost depends on
whether you’re
in-network or
out-of-network.
Different types of health
coverage:
1.
2.
3.
4.
Health Maintenance Organization (HMOs)
Preferred Provider Plans (PPOs)
Medical Savings Plan (MSP)
Point of Service Plans (POSs)
HMO’s
 A Health
Maintenance Organization
(HMO) is an organized system of health
care that provides comprehensive services
to its members for a fixed, pre paid fee.
 HMOs are the least expensive form of
managed medical care.
About HMO’s
 HMO's
account for a significant share of
the group health insurance in the market,
in 2001, enrollment in HMO's accounted
for 33 percent of all employee enrollments
in health insurance plans.
How HMO’s Work
 The
member picks a provider
 A list is set up of the physicians that are
covered under the HMO plan and from
there the member picks their primary care
physician.
 The primary care physician must refer a
patient out in order to see a specialist.
Types of HMO’s
There are four types of HMO’s

Staff Model- physicians are employees of the HMO and are paid a
salary and possibly and incentive bonus to hold down costs.

Group Model -physicians are employees of another group that have
a contract with an HMO to provide medical services to its members.
The HMO pays the group of physicians a monthly or annual
capitation fee for each member. In return, the group agrees to
provide all covered services to the members during the year. The
group model typically has a closed panel of physicians that requires
members to select physicians affiliated with the HMO
Cont. Types of HMO’s


Network Model -the network contracts with two or more
independent group practices to provide medical services
to covered members. The HMO pays a fixed monthly fee
for each member to the medical group. The medical
group then decides how the fees will be distributed
among the individual physicians.
Individual Practice Association (IPA) -is an open panel
of physicians who work out of their own offices and treat
patients on a fee for service basis. However, the
individual physicians agree to treat HMO members at a
reduced fee.
Advantages of HMO’s




Most services are covered in full with relatively few maximum limits
on individual services.
Covered services typically include the full cost of hospital care,
laboratory and X-ray services, outpatient services, special-duty
nursing, and numerous other services
Office visits to HMO physicians are also covered, either in full or at
a nominal charge for each visit.
Some newer HMOs allow insured's to select any physician at higher
out-of-pocket costs.
Cont. Advantages of HMO’s




HMO members pay a fixed, prepaid fee (usually paid once a
month) for the medical services provided.
Because of this fixed pre-paid fee it is in the providers best interest
to make sure that the beneficiaries get basic health care for
problems before they become serious. This means that beneficiaries
get good preventive care through HMO plans.
High deductibles and coinsurance requirements are usually not
emphasized.
The big advantage of HMO’s is that there is a huge emphasis on
controlling costs.
Disadvantages of HMO’s

A big disappointment to many members is that the selection of
physicians is usually limited to physicians who are affiliated with the
HMO

There is a limit to the amount paid for the treatment of alcoholism
and drug addiction and there is now a coinsurance requirement
placed for these treatments by HMO’s.

When a beneficiary needs to see a specialist the primary care
physician, must refer the beneficiary out
Cont. of Disadvantages

HMOs also tend to operate in a specific geographical area and
because HMOs operate in a limited geographical area, there may be
limited coverage for treatment received outside the area. Usually
only emergencies are covered.

In an HMO plan beneficiaries often have to wait longer for an
appointment than they would with a fee-for-service plan.
X Poor
XX
Fair
XXX Good
XXXX
Excellent
Name of HMO
Care (Staying
Healthy)
Care for Getting
Better
Care for Living
with Illness
Member Rating
of Health Plan
Aetna Health of Ca.
XX
XXX
XXX
XX
XX
XXX
XXX
XX
XX
XX
XX
XXX
XXX
X
X
XXX
XXX
XXX
XXXX
XXX
XXX
XXX
XXX
XXX
XXX
XXX
XX
XXX
XXX
Not willing to report
Not willing to report
Not willing to report
XXX
XX
XXX
XXX
XXX
XXX
XX
XXX
Inc.
Blue Cross HMO Ca.
Care
Blue Shield of
California HMO
CIGNA HMO
Health Net
Kaiser Permanente North
Kaiser Permanente South
PacifiCare of
California
Universal Care
Western Health
Advantage
Dental & Vision coverage under HMO’s

Dental and Vision Coverage under an
HMO plan is usually not through the same
provider of the HMO. There is different
dental and vision providers that sometimes
work with HMO’s but operate separately.
PPO
Preferred Provider Organization (PPO)
is a plan that contracts with health care
providers to provide certain medical services
to its members at a discount fee. A health
benefit plan with contracts between the
sponsor and health care providers to treat
plan members.
A PPO can also be a group of health care
providers who contract with an insurer to
treat policyholders according to a
predetermined fee schedule.
PPO
PPOs can range from one hospital and its
practicing physicians that contract with a large
employer to a national network of physicians,
hospitals and labs that contract with insurers
or employer groups. PPO contracts typically
provide discounts from standard fees,
incentives for plan enrollees to use the
contracting providers, and other managed care
cost containment methods.
PPO


PPOs can range from one hospital and its
practicing physicians that contract with a large
employer to a national network of physicians,
hospitals and labs that contract with insurers
or employer groups.
PPO contracts typically provide discounts
from standard fees, incentives for plan
enrollees to use the contracting providers, and
other managed care cost containment
methods.
History of PPO
1. PPO highlights
PPO insurance is a relatively new type of
managed care plan. It was developed to
combine the lower cost of managed care with
the great degree of choice found in traditional
health care.
According to the American Association of
Preferred Provider Organization, 54 percent of
all Americans with health insurance now
receive their health care through a preferred
provider organization
History of PPO

Currently, nearly 112 million individuals are enrolled
in a PPO program. This growth has been primarily
the result of the fact that PPOs have delivered
exactly what the public has called for zero choice,
flexibility and a balance between the delivery of
appropriate care and cost control.
Latest Study
Over the past few years, PPOs have
steadily risen in popularity among
employers and have experienced an
increase in overall enrollment. According
to the American Association of Preferred
Provider Organizations, PPO enrollment in
eligible employees rose from 98.3 million
in 1998 to 106.8 million in 1999. The
number of PPO plans operating in the U.S.
in 2000 was 1,050, covering over 133
million lives.
Average Employee Costs For Health Care
2000-2003*
2000
2003
Employee Portion of Annual Premium
Single Coverage
$334
$508
Family Coverage
$1,619
$2,412
PPO Deductibles
Preferred Provider
$175
$275
Non-Preferred Provider
$340
$561
Prescription Drug Co-Payments
Preferred Drugs
$13
$19
Non-Preferred Drugs
$17
$29
% Increase
52%
49%
57%
65%
46%
71%
Consumers Assessment
of Health Plans Survey
(CAHPS) for PPO plans
Percentiles
N
Mean
10th
25th
50th
(Media
n)
Getting Needed Care - % not a problem
24
88.36
83.08
85.36
89.84
91.78
92.60
Getting Care Quickly - % usually or
always
25
83.79
79.37
81.36
84.80
86.63
88.40
Doctor Communicates Well - % usually
or always
27
93.19
90.92
92.53
93.36
94.39
94.80
Claims Processing - % usually or
always
27
88.27
81.79
86.28
89.01
92.41
94.79
Customer Service - % not a problem
26
69.02
59.09
63.65
68.50
75.17
79.59
Office Staff Helpful and Courteous - %
usually or always
27
94.82
93.03
93.47
94.82
95.94
97.06
Composites
75th
90th
Advantages of PPO
 Patients are not required to use a preferred
provider but have freedom of choice every
time they need care
 Costs are lower if you stay within the
network of providers
 The level of benefits is higher for services
from participating providers
Advantages of PPO
 The freedom to seek medical care outside
the network
• Payment at 100 percent for most covered
services once you’ve met your out-of-pocket
maximum
• No referrals needed or pre authorization for
specialists
Disadvantages of PPO
• Co-payments are higher compared to
HMOs however, some employers and
consumers are willing to sacrifice the
higher level of cost savings of more
structured managed-care plans for the
increased flexibility.
• PPO is generally the most expensive
type of managed care plan
Disadvantages of PPO
•
If patients go outside the network, they will
have to pay co-payments based on higher
charges and they will need to meet the
deductible
•
Members can expect paying co-insurance
(co-insurance is usually waived and can be
replaced with a low co-payment.)
Dental coverage under PPO

The costs involved in a PPO
A define plan with a higher level of coverage if
services are provided by a preferred provider.
Discounts are negotiated and passed on to plan
sponsors.
Dental coverage under PPO
 What specifics are involved
Most managed dental insurance plans
work under a Preferred Provider
Organization, which means that
policyholders must choose a primary
dentist from a list of approved dentists.
And to maintain full coverage for all
procedures, any specialist you see will
have to be approved by this primary
dentist.
Medical Savings Plan (MSP)
History of MSA
The Health Insurance Portability and
Accountability Act (HIPAA) was passed in
Congress and signed by the President in 1996.
As a result of this legislation a 4-year pilot
program was created. This project was the
Medical Savings Accounts (MSA). It began on
January 1, 1997 and was restricted to the selfemployed and small groups. The pilot project
was extended until December 31, 2003.
Introduction
The Medical Savings Account or MSA, is a
special tax-sheltered personal savings or
investment account that is maintained in
conjunction with a high-deductible health
insurance policy. The funds in the account
may be used for medical services that aren’t
covered by the participant’s high deductible
policy.
How it works
Instead of purchasing expensive insurance with a low
deductible and low co-pays, the participant buys a low
cost insurance policy with a high deductible. The
amount saved from using the low cost insurance plan is
then deposited in a MSA to cover the small bills that
aren’t covered under the policy.
The money in the MSA is 100% tax deductible. It can be
accessed by check or debit card. What ever is not used
for medical expenses will remain in the account and keep
growing on a tax-favored basis. It can be used to cover
future medical bills or supplement retirement, in this
sense it is similar to an IRA.
Advantages of MSA’s

Tax deductible
 Balance can be rolled
over
 No minimum
contribution
 Works with other
health care coverage
Disadvantages of MSA’s

Coverage changes

Coverage limitations

Restricted MSA plan
Other Coverage

Vision Care and MSA

Dental Care and MSA
Employee costs associated with MSA plan
TYPE OF
COVERAGE
DEDUCTIBLE*
MAXIMUM MSA
DEPOSIT**
SINGLE
$1700
$1105
FAMILY
$2500
$1625
HUSBAND / WIFE
$3350
$2512.50
PARENT +
CHILDREN
$5050
$3787.50
There are no income limits at this time that prevent wealthy
people from making tax-deductible contributions to the MSA
and using it as a way to accumulate tax-free earnings on
investments. Therefore, the higher the individual’s tax
bracket, the greater the tax benefit an MSA provides.
Although, there is no income limit there is an annual limit to
the amount that can be invested.
Breaking News
President Bush signed the new Health Savings
Account legislation on December 8, 2003. The new
HSA have been referred to as the "next generation"
of MSA plans. Many aspects of the program remain
the same, however there are some important
changes. One of the most significantly and
arguably the most important is that ALMOST
EVERYONE qualifies for the new HSA plans!
Key Changes in the new HSA
1. Lower deductibles are available
(1,000 single/2,000 family)
2. Up to 100% of the deductible amount can be
contributed to the HAS
**MSA IS NOW HSA**
Point of Service, POS
Definition
Offers a full range of health services through a
combination of HMO and PPO features. Members
can elect to receive services under the defined
managed care program or can go outside the
network for care. If patients see a preferred
provider, they pay little or nothing. Outside
provider care is covered, but at a substantially
higher deductible and co-payments.
Introduction to POS

The lesser known health care plan that combines
the freedom of a PPO and offers the low cost of
an HMO.
 When you enroll in a POS you choose your
primary care physician to monitor you health.
 This physician has to be within the health care
network and is considered your “point of service”
 Is built into all managed health care plans and
allows the individual the option.
Advantages of POS

Freedom to choose physicians in network or out of
network
 Emergency care coverage is covered no matter
where you are in the US or worldwide
 If you have to relocate temporarily because of a job
assignment or a divorce, you will be covered under
the Guest Privileges Program
 Seeing a physician in network, you do not have to
fill out any paper work, co-payments are low &
there is no deductible
 Annual out-of-pocket costs are limited
Advantages of POS Cont.
Benefits of the Designated Provider Program
General services
In-Network Benefits
Out-Of-Network Benefits
Individual annual deductible
N/A
$300
Family deductible
N/A
$900
Coinsurance
N/A
70%*
Individual out-of-pocket maximum
N/A
$3,300 (including deductible)
Family out-of-pocket maximum
N/A
$9,900 (including deductible)
Lifetime maximum
Unlimited
Unlimited
$10 per visit
Specialty physician services
Office Visits
not covered
$10 per visit
70% coinsurance*
$10 per visit
Not covered
Specialist care and consultations
Well-woman exam (one per year)
Associated medical services
· Laboratory and x-ray
· Allergy testing and treatment
· Casting and dressing
No charge
70% coinsurance*
Costs of POS

Costs consists of a monthly premium and a
co-payments
 Less than a PPO because the health insurance
company regulates most of your health care



Example, if you want to see a specialist, you must get a
referral from your primary doctor
If your primary care physician chooses, they will probably
choose from a specialist that works within the network
These controls reduces the overall cost of a POS health
insurance plan
Disadvantages of POS


Seeing specialists may be difficult
Referrals to see physicians out of network may become
difficult
Hospital visits charges by the physicians are considered
out of network and charges by the hospital are covered
in network.
When seeing physician out of network







Keep track of all information
Fill out all necessary paper work
High costs
Payments of deductibles must be taken care of before coverage
can begin
Co-payments are based on usual, customary and reasonable
charges
Vision Care
In network Coverage

You can go through the VSP in-network or any
other non-network provider
 When making an appointment




You must select a VSP provider
Must make sure that it is time for an appointment, you
can only get one check up a year
If glasses picked are not covered, you pay the full
difference
No annoying forms to fill out
Vision Care Cont.
Out of Network Coverage
 VSP will reimburse you the amount allowed under
your plan
 Does not guarantee a full refund or satisfaction
 You have to mail the bill



Must include VSP ID
Personal information
Relationship to the VSP member, if not a member
Example of Vision Care Benefits
If you use an
in-network
provider, you
pay...
If you use a nonnetwork
provider, you
pay...
An eye exam,
costing $65
$0
$40
A pair of lenses,
costing $80
$0
$55
You pay
$0
$95
$145
$50
For this expense
The plan pays
Cost Savings
$95
Dental Care
Charges are based on reasonable
and customary charges, according
to the Employee Books of Benefits,
“based on the usual fees charged in your geographic areas
by dentist with similar training and experience and the
insurance company takes into account any unusual
circumstances or complications that require special skills,
experience or additional time.”
Dental Care Cont.
Types of dental services
1.
2.
3.
4.
Type A: Preventative and diagnostic services, covers
100% expenses and include oral examination
Type B: Oral Surgery and restorative services, covers
80% of expenses and includes root canal therapy and
extractions and oral surgery.
Type C: Prosthodontic services. Covers 50% of
expenses and includes dentures and gold fillings.
Type D: Orthodontic services covers children through
age 23 and covers braces and surgical extractions.
Questions to ask about POS health
insurance
• How many doctors are there to choose from?
• Are doctors in the network private or group practice physicians?
• Where are the offices and hospitals in the POS network
located?
• How are referrals to specialists handled?
• What hospitals are available through the plan?
• What arrangements does the plan have for emergency care?
• What health care services are covered?
• What preventive services are covered?
• Are there limits on medical treatments or other services?
• How much is the health insurance premium?
• What, if any, are the co-payments for specific services?
• How much more will it cost to use non-network physicians?
• What is the deductible and coinsurance for non-network care?
• Is there a out of pocket maximum?
Problems
&
Solutions/Suggestions
Problems with HMO
the primary care
physician are a
"gatekeeper" so
you need to get
refers to see a
specialist this
takes a long time
so people have to
wait so long to
see a specialist.
A recommendation
could be that members
need not go to the
primary care physician
but have a group of
specific specialist that
are also affiliated with
the Plan their in to
choose from.
Problem with MSA






Information on MSA plans can be hard to find
Tax rules concerning MSA are difficult to
understand
High number of Applications are rejected.
First year medical problems can be costly
IRS and insurance company have different
expense approval.
The issue of tax relief
Suggestions/Solutions





Have central website and/or publications that explain the
plan
IRS and insurance companies work together to sponsor a
hotline for MSA/HSA questions and answers. This would
also decrease the amount of rejected applications
Adding a rider to cover major expenses during the first year
or two while the account balance is low.
Each insurer should include a list of expenses the IRS
covers, so customers can compare to insurance coverage.
Proposed neutral tax policy
Major Problem
The Commerce Department’s Census Bureau
reported in October 2002
• The number of people without health insurance rose by 1.4 million, to 41.2
million
• 15% of the total population in 2003
There are more than 8 million uninsured children
in the United States
Children at risk:
 25% of all Hispanic children
 13% of all African-American children
 14% of all Asian and Pacific Islander children
 7% of all non-Hispanic white children
 20% of all children in low-income families
Problems Cont.




New reports indicate that one of every seven Americans is
going without healthcare coverage--more than 41 million
of us
Nearly 45 million Americans under the age of 65 without
health insurance
Malpractice insurance rates are soaring
Medicaid is becoming a huge burden on state
governments
 Increasing unemployment
 Baby-boom generation about to flood the Medicare
ranks
Solutions

Changing delivery of health care from a
physician-driven to an outcome-driven care
model
 Continue education and infrastructure
developments
 Offer tax credit or deductions to help offset the
cost of health insurance
 Tax provisions to the low-income
 Alternative financing for health care
 New taxes
 More taxes
The Cancer Detection Programs:
Every Woman Counts
Gives low-income women access to screening and
diagnostic services for breast and cervical cancer.
Signed on October 24, 2000





Eligibility:
Women with income at or below 200 percent of the federal poverty
level
Age 40 or over for breast cancer screening
Age 25 or over for cervical cancer screening
Not covered by Medi-Cal, Medicare, or other health insurance or
can't afford share of cost (co-payment)
Must live in California
Proposals

President Bush proposed budget includes a tax-credit
provision that would give a $1,000 credit to individuals with
incomes under $15,000. The tax credit would decrease to
zero when the individual's income reached $30,000. The
president's proposal would give families with incomes up
to $25,000 a tax credit of $1,000 per adult and $500 per
child, up to a maximum of $3,000.

The Relief, Equity, Access, and Coverage for Health
(REACH) Act of 2001 (S.590) proposes tax credits of up to
$1,000 for individuals without access to employersponsored health insurance and adjusted gross incomes
below $35,000 in 2002. Families with incomes below
$55,000 would receive tax credits of $2,500. Tax-credit
amounts would decline as income increased.
Future Programs
Expanding coverage through existing public health
coverage programs:


Some candidates propose further expansions of these programs to
a broader group of children and adults. In the case of Medicaid and
SCHIP, proposals to expand coverage to the parents of eligible
children or including poor, childless adults have been put forward by
some states and are now a part of the national debate. Some
policymakers suggest that Medicare can serve as the vehicle for
coverage expansions, especially for the near-elderly, many whom
increasingly face losing employer-based health coverage and find it
difficult or prohibitively expensive to buy health insurance in the
private market.
Could reach many low-income people
The American Association of University Women
(AAUW)
The American Association of University Women (AAUW)
supports access to quality health care for all women and their
families. Today, 75 percent of privately insured Americans are
enrolled in managed care health plans, yet many consumers
report widespread problems:

denial of access to medical specialists

refusal to pay for emergency room visits

lack of information about policies and procedures

and arbitrary limits on medical care.
The American Association of University
Women (AAUW) Cont.

AAUW believes that Congress should enact enforceable
federal standards to assure a minimum level of quality
and protections for every consumer covered by private
managed care health plans. These standards must
address the unique health care needs of women,
including reproductive health. Any managed care reform
legislation enacted into law should do the following
Improve the accountability of health
plans by:

Ensuring that when care is denied or limited, patients have
access to adequate legal recourse and a genuinely
independent external review of their claim

Allowing individuals to sue their health plan if they are
harmed by the failure of their plan to comply with an external
reviewer’s decision



Ensuring that women have direct access to ob-gyn services
from any obstetrics and gynecological specialist participating
in the health plan
Requiring that insurance companies pay for emergency
services if a reasonable person would consider the situation
an emergency
Guaranteeing access to clinical trials that
may save lives
Improve access to health care services for
women and their families by: (Cont)

Ensuring that pregnant women can continue to see the
same health care provider throughout pregnancy even
if their provider leaves their health plan or their
employer changes plans
 Requiring plans to allow doctors to disclose to patients
all available medical options and to advocate on behalf
of their patients
 Ensuring that managed care plans incorporate genderspecific and pediatric-specific medicine when they
develop written clinical review criteria
 Requiring that managed care plans provide important
information to consumers regarding their health plans’
policies, procedures, benefits, and other requirements
Make sure to consider these before
you buy insurance











Comparison shop!
Call the California Department of Insurance to verify if the agent and
the insurer are properly licensed.
Decide what you need and want before you sit down with the agent.
Do not be rushed into buying insurance.
Set the place, the beginning, and the ending time of your meeting.
Get a second opinion before you buy or replace insurance.
Do not buy anything you did not intend to purchase or do not want.
Do not replace an existing policy unless you can not afford it or the
benefits no longer meet your needs.
Do not pay cash.
Do not be intimidated.
If you feel unsure or uncomfortable DON’T DO IT!
Your Rights in a Group Plan





Once an employer health plan is issued, a carrier generally may not use the
health-related factors of any insured as a basis for canceling or refusing to renew
the plan. The health factors may still be used to determine the plan’s premium
rates, however.
A carrier may not "cherry pick" individuals within a group to offer or deny coverage
to, nor may a carrier charge different individuals within the group different rates.
When deciding whether to cover a group, the carrier must accept or reject the
group as a whole.
Large employers establish the criteria to determine employees who are eligible for
enrollment. Such criteria may not be based on health factors. A large employer
carrier must accept or reject the entire group of individuals who meet the
participation criteria established by the employer and who choose coverage.
Carriers must allow new employees to have at least 31 days from their start date
to decide to enroll in a plan. Carriers must also offer a 31-day "open enrollment
period" each year, during which any existing employees who are not yet covered
may join. There are special enrollment periods for certain employees and
dependents. For example, a dependent for which an employee must provide
medical child support under a court order may be enrolled before the next annual
enrollment period.
Carriers must provide the employer with at least 60 days advance notice before
premium increases take effect, and 90 days notice before discontinuing a plan. If
a plan is discontinued, the carrier must offer each employer the option to
purchase other employer-sponsored health
Conclusion
For further information on Health Care plans check with
the Department of Managed Health Care.
This department offers a lot of information on every
health plan that is licensed by the Department.
It can also help resolve problems that participants are
having with their health plan, including issues about
medical care, prescriptions, preventive testing and
mental health services.
In addition assistance is also for complaints and the
health care rights of the consumer.