Transcript from patient to payment

Chapter 1
FROM PATIENT
TO PAYMENT
FROM PATIENT
TO PAYMENT

Learning Objectives





Explain the main differences between indemnity
plans and managed care plans.
Define the various types of insurance coverage.
Identify five steps in the payment process of a
patient’s insurance claim form.
Discuss four primary responsibilities of a medical
insurance specialist.
List effects of insurance claim errors on medical
office routines.
Chapter 1
2
Key Terms








Assignment of benefits
Benefits
Coinsurance
Copayment
Cost-containment
practices
Deductible
Dependent
Diagnosis (dx)








Chapter 1
Direct payment
Electronic claims
Electronic remittance
advice (ERA)
Encounter form
Explanation of benefits
(EOB)
Fee-for-service
Indemnity plans
Indirect payment
3
Key Terms (cont’d)







Insurance carrier
Insurance claim form
Insurance log
Managed care
Managed care
organization
Medical insurance
Medical insurance
specialist
Chapter 1







Patient information form
Policyholder
Preauthorization
Premium
Provider
Release of information
Schedule of benefits
4
Introduction to
Medical Insurance


Medical Insurance – is an agreement between a person,
who is called the Policyholder, and a Health Plan.
Health Plan– is also know as “Insurance Carriers or Payers”
 are organization that offer financial protection in case of
illness or injury
 People buying medical insurance pay a Premium to the health
plan.
 In Exchange for the Premium, the health plan agrees to pay
amounts, called Benefits, for Medical Services.
 Medical Services – include the care supplied by a Provider,
Hospitals, Physicians & other medical staff and facilities.
Chapter 1
5
Introduction to
Medical Insurance

Insurance Policy – may contain a “schedule of benefits,
which is a list of covered medical services. May include:
 Payment for medical necessary medical treatments received
by policyholders & dependents
 Surgery, primary care, emergency care, hospital-based
services, etc.

Preexisting Conditions–may not be a covered service.


It is an illness or disorder that existed before the effective date of the
insurance coverage.
Preexisting Conditions - are excluded from coverage under some
policies, or a specified length of time must elapse before the condition is
covered.
Chapter 1
6
Indemnity Plan


Indemnity Plan – An insurance company’s
agreement to reimburse a policyholder a
predetermined amount for covered losses.
Also known as fee-for-service plans



Providers charge a specific Fee for each service rendered.
Fee paid by Patient and/or Patient Insurance.
Allows insured individuals to choose any physician or
hospital when seeking medical services.
Chapter 1
7
Indemnity Plans

Benefits paid when treatment is received

Schedule of Benefits (list the services that are paid & the amounts
that are paid)

Patient pay a coinsurance, deductibles, and a premium
 Coinsurance – percentage of the Fee(s) that the
policyholder pays.
 Deductibles – A certain amount of money that the patient
must pay each year toward his/her medical expenses
before health insurance benefits begin.
 Premium – Periodic amount of money the insured pays to
a health plan for a health care policy
Chapter 1
8
Indemnity Plans - Formula
Charge – Deductible – Patient Coinsurance=Health Plan Payment
Case Study
An indemnity policy states that the deductible is the first $200 in
covered annual medical fees and that the coinsurance rate is 80-20.
A patient whose first medical charge of the year was $2,000 would
owe $560.
Charge
$2,000
Patient owes the deductible
$
Balance
$1,800
Patient also owes coinsurance
$ 360
Total balance due from patient
$
(20% of the balance)
Chapter 1
200
200+$360=$560
9
Indemnity Plans - Formula
Charge – Deductible – Patient Coinsurance=Health Plan Payment
Case Study
In this case, the patient must pay an out-of-pocket expense of $560
this year before benefits begin. The health plan will pay $1,440, or
80% of the balance.
Charge
$2000
Patient payment
$ -560
Health Plan Payment
$1,440
Chapter 1
10
Indemnity Plans - Formula
Charge – Deductible – Patient Coinsurance=Health Plan Payment
Case Study
If the patient has already met the annual deductible, the patient's
benefits apply to the charge.
Charge
$2000
Patient Coinsurance (20%)
$ 400
Health Plan Payment (80%)
$1,600
Chapter 1
11
Managed Care Plans

Manage Care Plan – is a plan composed of a

group of providers who share the financial risk of
the plan or who have an incentive to deliver costeffective, but quality service.
Manage Care – offers a more restricted choice of
providers and treatments in exchange for lower
premiums, deductibles, and other charges than
traditional indemnity insurance.
Chapter 1
12
Managed Care Organization

Managed Care Organizations (MCO)



Responsible for both the delivery and financing of health
care services
Establish links among provider, patient and payer.
Both Patient and Provider have agreements with the
MCO.
 The Patient agrees to the payments for the services
 The Provider agrees to accept the fees the MCO offers
for services
Chapter 1
13
Managed Care Organization

Managed Care is the leading type of health
plan.



Patients maybe required to pay fixed premiums at
regular time periods, such as monthly.
A Patient may also pay a copayment.
Copayments – A fixed fee, such as $10 that a
health plan requires a policyholder to pay at the time
of service for each health care encounter.
Chapter 1
14
Cost Containment

Cost-Containment Practices - is a method to help
control cost.




Patients may be required to choose from a specific group of
physicians and hospitals.
Visits to specialist often must be made by a Referral from the
patient’s primary care physician.
A second physician’s opinion may be required before
surgery can be reimbursed.
Many services that involved overnight hospital stays are now
covered only if done during day-time hospital visits, with
patients recuperating at home.
Chapter 1
15
Cost Containment - Preauthorization

Preauthorization – a cost-containment practice to
help control cost.




If preauthorization is required, the health plan must
approve a procedure before it is done in order for the
procedure to be covered.
Referrals my be required from patients’ primary care
physician before visits to a specialist.
Nonemergency services must be approved before a patient is
admitted to the hospital.
Shorter hospital stays are encouraged, and weekend hospital
admissions for Monday service may not be permitted.
Chapter 1
16
Managed Care Plans

Basic Type of Manage Care Plans Are :




Health Maintenance Organization (HMO)
Point-of-Service Plan (POS)
Preferred Provider Organization (PPO)
Consumer-Driven Health Plans (CDHP)
Chapter 1
17
Managed Care Plans
HMO Defined

Health Maintenance Organization (HMO)



Combine coverage of medical costs and delivery of health
care for a prepaid premium.
HMO creates a network of physicians, hospital, and other
providers by employing or negotiating contracts with
them.
HMO then enrolls members in a health plan under which
they use the services of those network providers.
Chapter 1
18
Managed Care Plans
POS Defined

Point-of-Service Plan (POS)




POS is also known as “Open HMO “
Reduces restriction by allowing members to choose out-ofnetwork providers.
Members must pay additional set fees when they use out-ofnetwork services.
The HMO pays out-of-network providers on a fee-forservice basis.
Chapter 1
19
Managed Care Plans
PPO Defined

Preferred Provider Organization (PPO)







PPO is another health care delivery system that manages care.
PPO are the most poplar type of insurance plan.
They create a network of physicians, hospitals, and other providers
with whom they have negotiated discounts from the usual fee.
Premiums & copayments are required, and maybe higher than HMO
and POS plans
PPO do not require a primary care physician to oversee patients’
care.
Referrals to specialists are also not required.
Members can use out-of-network Providers at a higher copayment &
deductibles.
Chapter 1
20
Managed Care Plans
CDHP Defined

Consumer-Driven Health Plans (CDHP)

CDHP combine two elements:




The first element is a health plan, usually a PPO, that has a high
deductible (such as $1,000) and low premiums.
The second element is a special “Saving Account” that is used
to pay medical bills before the deductible has been met.
The Saving Account, similar to an individual retirement
account (IRA), it lets people put aside untaxed wages
that they may use to cover their out-of-pocket medical
expenses.
Some employers contribute to employees’ account as a
benefit.
Chapter 1
21
Private Medical Insurance

Private Insurance


Private Insurance are health plans.
Most are Group contracts/policies that covers
people who work for the same employer or belong
to the same organization.


They include private companies such as professional
association, labor unions and schools.
Other plans are offered as individual contracts,
which are policies purchased by people who do
not qualify as members of a group
Chapter 1
22
Private Medical Insurance

Auto or liability insurance



May also provide coverage for treatment
Coverage may varies by State
Self-Funded Health Plans

Approximately 50 million employees have health
insurance through employers that have established
themselves as self-funded (self-insured) health plans.
Chapter 1
23
Private Medical Insurance


Self-Funded Health Plans – Cont.
Examples of Self-funded health plans /companies are
General Motors and, UPS (United Parcel Service)
 Rather than paying premiums to an insurance carrier, the
organization “insures itself.”
 It assumes the risk of paying directly for medical services
and sets up a fund from which it pays for claims.
 The organization establishes the benefit levels and the plan
types it will offer.
 Self-Funded Health Plans may set up their own provider
networks or, buy the use of existing networks from managed
care organizations.
Chapter 1
24
Government Programs

Military-Related
Tricare (formerly CHAMPUS)
 CHAMPVA

Medicare
 Medicaid
 Workers’ compensation

Chapter 1
25
Government Programs
Military-Related
TRICARE (formerly CHAMPUS) - is a
government health program that serves:
• dependents of active-duty service
members,
• military retirees and their families,
• some former spouses, and
• survivors of deceased military members.
Chapter 1
26
Government Programs
Military-Related
• CHAMPVA
• The Civilian Health and Medical Program of the
Veterans Administration, which shares
health care costs for families of veterans
with 1—percent service-related
disabilities and;
•
for the surviving spouses and children of
veterans who died from service-related
disabilities.
Chapter 1
27
Government Programs
Military-Related
Medicare – A federal health plan that covers
persons aged 65 and over, peoples with
disabilities, and dependent widows.
Medicaid – A federal and state assistance
program that pays for health care services
for people with incomes below the
national poverty level.
Chapter 1
28
Government Programs
Military-Related
Workers’ Compensation - A State or
Federal Plan that covers medical care
and other benefits for employees who
suffer accidental injury or become
ill as a result of employment.
Chapter 1
29
The Health Care Claim Billing
& Payment Cycle

A person covered by a health plan receives
insurance benefits by filing a Health Care
Claims.

The Claim Identifies
The Policyholder (and the patient).
 Tells health plans which medical services were
performed and why.

Chapter 1
30
The Health Care Claim Billing
& Payment Cycle
Five Steps in the Payment Process of Health Care
Claim:
Step 1
Step 2
Step 3
Step 4
Step 5
Patient information form
Doctor determines the dx
Medical insurance specialist collects data from
patient records and completes claim form
Insurer reviews claim
Medical insurance specialist checks ERA/EOB
for accuracy
Chapter 1
31
Step 1 - Patient Information
Form

Patient Information Form –includes a patient’s
personal, employment, and insurance company
information needed to complete a health care claim.
The patient information form is also known as the
“registration form”.

Chapter 1
32
Step 1 - Patient
Information Form

The Patient Information Form has space for the
patient’s & guardian’s signature, signature for release of
medical information or the phrase, “signature on file”
(SOF).

Assignment of Benefits
 Allows payment to be made directly to provider

Release of Information
 Used to assist in patient treatment or processing of claims
The patient completes (or updates) the patient
information form.

Chapter 1
33
Step 2 - Diagnosis and
Encounter Form

Completed by physician



Diagnosis(es) determined
Treatment documented
Encounter form



Also called superbill
Compiles data for each office visit
Details dx and procedure codes and charges
Chapter 1
34
Step 3 - Data Collection

Completed by medical insurance
specialist


Collects data from patient information form,
patient medical record, and encounter form
Completes and submits claim form


Paper or electronic
Insurance log

Used to track status of claims
Chapter 1
35
Step 4 - Claim Review

Completed by insurance company


Fee-for-service



Compares dx and procedures
Compares fees to schedule of benefits
Determines amount of benefit and
coinsurance/deductible
Claim is paid or denied

ERA/EOB sent to provider
Chapter 1
36
Step 5 - Follow-up

Completed by medical insurance
specialist



Checks ERA/EOB for accuracy
Payment/denial recorded in insurance log
Patient account

Payment recorded in patient ledger


Patient Ledger – is a record of all charges and
payments made on the patient’s account.
Remainder billed to patient, if balance due
Chapter 1
37
Responsibilities of
Medical Insurance Specialists
Gathering patient
information
 Obtaining signatures



Release of Information
 Assignment of Benefits


Submitting insurance
claim forms

Reviewing
insurance
payments/denials

Paper or electronic
Chapter 1
Resubmitting
corrected claims
Help patients
understand
insurance
procedures
38
Effects of Errors

Lower payments and
denied claims

Delayed payments

Disruption of other work

Patient questions and
complaints
Chapter 1
39
Quiz


1.

Indemnity plans are also known as
fee-for-service
_________________
plans.
physician
The ___________
determines the dx code.
managed care organization
The _______________________________
determines the payment for managed care
insurance claims.
medical insurance
specialist
The ___________
___________
________
completes the claims process.
Chapter 1
40
Critical Thinking

What are some benefits of keeping an
insurance log?
• The status of all claims is available at any time.
• Delays in payment can be investigated.
• Analysis of the efficiency of the practice’s and
insurer’s claims process can be made.
Chapter 1
41