chapter 11 the blue plans, private insurance, and managed care plans elsevier items and derived...

Chapter 11Chapter 11

The Blue Plans, Private Insurance, The Blue Plans, Private Insurance, and Managed Care Plans and Managed Care Plans

Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 22

Learning ObjectivesLearning Objectives State the difference between a traditional indemnity State the difference between a traditional indemnity

insurance plan and a managed care plan.insurance plan and a managed care plan. Explain health maintenance organization (HMO) Explain health maintenance organization (HMO)

benefits and eligibility requirements.benefits and eligibility requirements. State the provisions of the Health Maintenance State the provisions of the Health Maintenance

Organization Act of 1973.Organization Act of 1973. List two types and two different functions of List two types and two different functions of

foundations.foundations. List features of an exclusive provider organization List features of an exclusive provider organization

(EPO).(EPO). Define independent practice associations.Define independent practice associations.


Learning Objectives (cont’d.)Learning Objectives (cont’d.)

Name the features of preferred provider Name the features of preferred provider organizationsorganizations (PPOs) (PPOs)..

Explain the features of a point-of-service plan.Explain the features of a point-of-service plan. State reasons for State reasons for a quality improvement a quality improvement

organization (QIO).organization (QIO). Explain how the Employee Retirement Income Explain how the Employee Retirement Income

Security Act (ERISA) affects managed care Security Act (ERISA) affects managed care insurance.insurance.

Identify four types of referrals for medical Identify four types of referrals for medical services, tests, and procedures.services, tests, and procedures.


Learning Objectives (cont’d.)Learning Objectives (cont’d.)

State the purpose of creating a managed State the purpose of creating a managed care plan reference guide.care plan reference guide.

Describe types of payment mechanisms used Describe types of payment mechanisms used for managed care plans.for managed care plans.



Lesson 11.1


Private InsurancePrivate Insurance

Blue Cross/Blue ShieldBlue Cross/Blue Shield Pioneers in private insurancePioneers in private insurance Largest insurance company in the U.S.Largest insurance company in the U.S.


Prepaid Group Practice Prepaid Group Practice Health PlansHealth Plans

PioneersPioneers Ross-Loos Medical Group became CIGNARoss-Loos Medical Group became CIGNA Kaiser PermanenteKaiser Permanente

Direct contactDirect contact Individual practice modelIndividual practice model


Health Maintenance Organization Health Maintenance Organization Act of 1973Act of 1973

Created authority for federal government to Created authority for federal government to assist HMO development by:assist HMO development by: providing grants, loans, and loan guarantees to providing grants, loans, and loan guarantees to

offset initial operating deficits of new HMOs that offset initial operating deficits of new HMOs that meet federal standards.meet federal standards.

requiring most employers to offer an HMO requiring most employers to offer an HMO to employees as an alternative to traditional to employees as an alternative to traditional insurance plans.insurance plans.


Healthcare ReformHealthcare Reform

growing number of uninsuredgrowing number of uninsured costs to employerscosts to employers government deficitsgovernment deficits rising costs of high-tech medicinerising costs of high-tech medicine patient costspatient costs fraudfraud


Managed Care SystemsManaged Care Systems

Health Maintenance OrganizationsHealth Maintenance Organizations Prepaid group practice modelPrepaid group practice model Staff modelStaff model Network HMONetwork HMO Direct contactDirect contact Individual practice modelIndividual practice model


Managed Care Systems (cont’d.)Managed Care Systems (cont’d.)

MCOMCO HMOHMO EPOEPO FMCFMC

IPAIPA PPOPPO PPGPPG POS planPOS plan



Lesson 11.2 Lesson 11.2


Exclusive Provider Organization Exclusive Provider Organization (EPO) features similar to HMO:(EPO) features similar to HMO:

Members must choose care from network Members must choose care from network providers (emergency exceptions)providers (emergency exceptions)

Generally, no reimbursement for out-of-network Generally, no reimbursement for out-of-network carecare

Regulated under insurance statutesRegulated under insurance statutes


Exclusive Provider Organization Exclusive Provider Organization (EPO)(EPO)

features similar to PPO:features similar to PPO: Enrolled populationEnrolled population Limited provider panelLimited provider panel GatekeepersGatekeepers Utilization managementUtilization management Capitated provider reimbursementCapitated provider reimbursement Authorization systemAuthorization system


Exclusive Provider Organization Exclusive Provider Organization (EPO) features:(EPO) features:

Flexible benefit designFlexible benefit design Negotiated feesNegotiated fees Fee-for-service paymentsFee-for-service payments


Foundations for Medical Care Foundations for Medical Care (FMC)(FMC)

First established in 1954, in Stockton, CAFirst established in 1954, in Stockton, CA

FMC OperationsFMC Operations Comprehensive type of foundationComprehensive type of foundation Claims-review type of foundationClaims-review type of foundation


Independent (or Individual) Independent (or Individual) Practice Association (IPA)Practice Association (IPA)

Physicians are not employees, and do not Physicians are not employees, and do not receive salariesreceive salaries

Capitation or fee-for-service programCapitation or fee-for-service program


Preferred Provider Organization Preferred Provider Organization (PPO)(PPO)

Freedom to use any physician or hospitalFreedom to use any physician or hospital Members receive highest level of benefits Members receive highest level of benefits

when using preferred providerswhen using preferred providers Coinsurance and deductiblesCoinsurance and deductibles


Silent PPOsSilent PPOs

Also called blind or phantom PPOs, Also called blind or phantom PPOs, discounted indemnity plans, nondirected discounted indemnity plans, nondirected PPOs, or wraparound PPOsPPOs, or wraparound PPOs

Provider income reducedProvider income reduced Complicates the appeal processComplicates the appeal process


Physician Provider Group Physician Provider Group (PPG)(PPG)

Physician owned (unlike IPA)Physician owned (unlike IPA) Joint ventures with hospitals, labs, etc.Joint ventures with hospitals, labs, etc. Can combine services for member Can combine services for member

physicians, cutting business costsphysicians, cutting business costs


Point-of-Service (POS) PlanPoint-of-Service (POS) Plan

HMO cost managementHMO cost management PPO freedom of choicePPO freedom of choice Members choose services from participating Members choose services from participating

and nonparticipating providers, with different and nonparticipating providers, with different benefit levelsbenefit levels


Triple-Option Health PlansTriple-Option Health Plans

Members choose from HMOs, PPOs, or Members choose from HMOs, PPOs, or “traditional” indemnity insurance“traditional” indemnity insurance

Members can change plansMembers can change plans Cost-containment measuresCost-containment measures


Other PlansOther Plans

Provider-Sponsored Organization (PSO)Provider-Sponsored Organization (PSO) Owned and maintained by a hospital or provider Owned and maintained by a hospital or provider

groupgroup Religious Fraternal Benefit Society (RFBS)Religious Fraternal Benefit Society (RFBS)

Managed care plan associated with a church, Managed care plan associated with a church, group of churches, or conventiongroup of churches, or convention


Regulatory ConsiderationsRegulatory Considerations

Individual or employer paid?Individual or employer paid? Employee Retirement Income Security Act Employee Retirement Income Security Act

(ERISA)(ERISA) liability issuesliability issues disability issuesdisability issues state versus federal jurisdictionstate versus federal jurisdiction



Lesson 11.3 Lesson 11.3


Quality Improvement Quality Improvement OrganizationsOrganizations

peer reviewpeer review utilization reviewutilization review

ChurningChurning Turfing Turfing buffingbuffing

concurrent reviewconcurrent review discuss pre-admission certificationdiscuss pre-admission certification what do you do about insurance when what do you do about insurance when

planning patient’s discharge?planning patient’s discharge?


Plan AdministrationPlan Administration

patient information letterpatient information letter medical recordsmedical records scheduling appointmentsscheduling appointments encounter formencounter form


Preauthorization/Prior ApprovalPreauthorization/Prior Approval

formal referralformal referral direct referraldirect referral verbal referralverbal referral self-referralself-referral


Managed Care PlanManaged Care PlanReference GuideReference Guide


Financial Management Financial Management (Payment)(Payment)

DeductiblesDeductibles CopaymentsCopayments payment mechanismspayment mechanisms contract payment time limitscontract payment time limits scheduling appointmentsscheduling appointments monitoring payment monitoring payment fee schedulesfee schedules


Financial ManagementFinancial Management

statement of remittancestatement of remittance accountingaccounting fee-for-servicefee-for-service year-end evaluation year-end evaluation explanation and coordination of benefitsexplanation and coordination of benefits


Fee-for-ServiceFee-for-Service

handling accounts similarly to fee-for-servicehandling accounts similarly to fee-for-service CopaymentCopayment AdjustmentAdjustment overpaymentoverpayment

capitation versus fee-for-servicecapitation versus fee-for-service

chapter 11 the blue plans, private insurance, and managed care plans elsevier items and derived...

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