Transcript Glencoe Medical Insurance

Private Insurance
Payers and Plans
Chapter 3
1
© 2010 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Outcomes
After studying this chapter, you should
be able to:
3-1 Compare and contrast employer-based
and individual plans.
3-2 Discuss the major types of health plans.
3-3 Describe patients’ financial
responsibilities under various types of
pharmacy benefit plans.
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Learning Outcomes (Continued)
3-4 Compare and contrast the three types of
formularies.
3-5 Explain the concept of a tier.
3-6 Calculate patients’ payments due for
pharmacy benefits under tiered private plans.
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Key Terms
• Any willing provider
• Capitation
• Closed formulary
• Compounded
medications
• Consumer-driven
health plan (CDHP)
• Covered expense
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• Disease management
(DM) programs
• Drug utilization
review
• Family deductible
• Group health plan
(GHP)
• Health maintenance
organization (HMO)
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Key Terms (Continued)
• Individual
deductible
• Individual health
plan (IHP)
• Member pharmacy
• Network
• Open enrollment
period
• Open formulary
• Out-of-network
• Out-of-pocket
expenses
• Pharmacy benefit
manager (PBM)
• Preferred provider
organization (PPO)
• Prescription drug
deductible amount
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Key Terms (Continued)
• Prescription legend
drug
• Prior authorization
(preauthorization)
• Restricted formulary
• Specialty drug
• Therapeutic
interchange
• Tier
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Private Insurance
•
•
•
People not covered by entitlement
programs are usually covered by private
insurance
Many employers offer their employees the
opportunity to become covered under
employee health care benefit plans
Self-employed people may buy individual
health coverage
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Employer-Sponsored Medical
Insurance
•
Group Health Plans are bought by
employers from insurance companies
• Employers may select certain benefits
• Pharmacy Benefit Managers (PBMs) may
be hired to operate the prescription drug
benefit more inexpensively
• PBMs are third-party administrators of
prescription drug programs that
processes and pays prescription drug
claims
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Employer-Sponsored Medical
Insurance (Cont.)
•
•
•
The group health plan specifies the rules
for eligibility and the process of enrolling
and disenrolling members
During open enrollment periods, the
employee chooses a particular set of
benefits for the coming benefit period
Employees can customize the policies by
choosing to accept various levels of
premiums, deductibles, and other costs
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Federal Employees Health
Benefits Program
•
•
•
The largest employer-sponsored health
program in the United States
Covers more than 8 million federal
employees, retirees, and their families
The FEHB is administered by the federal
government’s Office of Personnel
Management (OPM)
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Self-funded Health Plans
•
Some large employers cover the costs of
employee medical benefits rather than
buying insurance from other companies
• They create self-funded (or selfinsured) health plans that do not pay
premiums to an insurance carrier or a
managed care organization
• The employer establishes the benefit
levels and the plan types offered to
employees
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Individual Health Plans
•
Health plans are available for individual
purchase
• Almost 10 percent of people with
private health insurance have
individual plans
• People often elect to enroll in individual
plans, although coverage is expensive,
in order to continue their health
insurance between jobs
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Types of Health Plans
The five major types of health insurance plans:
1. Preferred provider organization (PPO)
2. Health maintenance organization
(HMO)
3. Point-of-service (POS)
4. Indemnity plans
5. Consumer-driven health plans (CDHP)
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Types of Health Plans (Cont.)
• Preferred Provider Organization (PPO)
– Most popular type of managed care
organization (MCO)
– The MCO creates a network of physicians,
hospitals, and pharmacies for its policyholders
– Patients are encouraged to use network
services, like a member pharmacy
– Patients may also go out-of-network
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Types of Health Plans (Cont.)
• Health Maintenance Organization (HMO)
– Another MCO, in which patients enroll by
paying fixed premiums and very small (or no)
copayments when they need service
– In exchange for paying less, patients give up
the flexibility of choosing their own physicians
– For each patient visit there is a single fee; this
way of paying is called capitation
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Types of Health Plans (Cont.)
• Point-of-Service (POS)
– Some HMOs offer this plan for patients who
do not wish to accept services from only
network providers
– Patients may see physicians outside the
HMO’s network, but must pay more, such as
by making larger copayments
– More like a PPO than a standard HMO plan
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Types of Health Plans (Cont.)
• Indemnity (or fee-for-service) Plans
– Traditionally the payments physicians receive
are based on their regular charges for
services, and patients owe coinsurance based
on those fees
– Currently many plans allow the payer to
negotiate physician discounts for members
– Generally a higher-cost option
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Types of Health Plans (Cont.)
• Consumer-driven Health Plans
– Combine two elements:
1. A health plan with a high deductible and
low premiums
2. A special “savings account” is used to pay
medical bills before the deductible is met
– The patient is paying for health care services
directly, thus limiting expenses
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Pharmacy Plan Benefits
•
•
Vary according to the type of health plan
Covered Expenses
• Prescription legend drugs, and
compound medication containing them
• Various other drugs accompanied by a
doctor’s written prescription
• Noncovered Expenses
• Those the policy does not cover that
must be paid by the insured
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Pharmacy Benefit Management
Techniques
•
Employers have a number of techniques to
control costs, including:
• Pharmacy network management
• Formulary management
• Drug utilization management
• Mail service
• Disease management programs
• Cost-containment efforts are balanced
with employee satisfaction
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Formulary
•
A list of the plan’s preferred drugs within
each therapeutic class
• Open formulary – least restrictive, may
cover unlisted drugs
• Closed formulary – most restrictive,
unlisted drugs usually not available
• Restricted formulary - limits the drugs
listed in the formulary to only generics,
or limited medications within a drug
class
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Tiers
•
A tier is a specific list of drugs
• Plans may have several tiers; a drug’s
tier determines its copayment cost
• Example of tier system:
• Level 1 – Generic drugs (lowest cost)
• Level 2 – Preferred brand medications
• Level 3 – Nonpreferred brand
medications (most expensive option)
• Compound medications are Tier 3 level
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Specialty Drugs
•
Separate category of medications,
including biotech and other drugs that are
designed to treat:
• Serious diseases, such as cancer
• Multiple sclerosis
• Rheumatoid arthritis and other
inflammatory maladies
• Demand is growing for these drugs and
cost-containment practices are being
considered by health plans and PBMs
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Drug Utilization Review
•
A tool for controlling costs used to:
• Ensure safety
• Improve care quality
• Promote compliance with the
formulary
• For example, prior authorization
programs target specific drugs and require
special authorization at the pharmacy for
coverage by the plan
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Generic Substitution and Drug
Interchange
•
•
•
Substitution of generic drugs for their
brand name equivalents is a common costsaving measure
Therapeutic interchange is the substitution
of one drug for another in the same
therapeutic class
Physician permission and compliance with
state pharmacy law to interchange drugs is
required
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Other PBM Techniques
•
Internet and Mail-order Services
• Dispensing medications by the Internet
and mail order is cost-effective
• Some PBMs own and operate their own
mail order pharmacies
• Disease Management
• Provided for common and potentially
high-cost conditions, such as asthma,
diabetes, heart disease, and depression
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Patient Charges
Aside from periodic premium payments, there
are five other types of payments (known as
out-of-pocket expenses) patients may pay:
1. Deductibles
2. Copayments
3. Coinsurance
4. Noncovered (excluded) and over-limit
services
5. Balance Billing
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Patient Charges (Cont.)
• Deductibles
– Most payers require policyholders to pay their
deductibles before insurance benefits begin
– Individual deductibles – for each individual
– Family deductibles – combined payments
– For prescription benefit plans, the deductible
is referred to as the prescription drug
deductible amount
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Patient Charges (Cont.)
• Copayments
– Required by many health care plans
– Always due and collected at the time of service
– Usually stated as a dollar amount, such as $15
for an office visit or $10 for a prescription
– Practices may inform patients of their copay
ahead of time to prepare them for payment
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Patient Charges (Cont.)
• Coinsurance
– Required by many health care plans
– Noncapitated health care plans such as PPOs
usually require patients to pay a greater
percentage of the charges of out-of-network
providers than of plan providers
– Patients pay a percentage of a charge
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Patient Charges (Cont.)
• Noncovered (Excluded) and Over-Limit
Services
– All payers require patients to pay for
noncovered (excluded) services
– Providers generally can charge their usual
fees for these services
– Patients are sometimes responsible for usage
beyond the allowed number of covered
services
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Patient Charges (Cont.)
• Balance Billing
– Pharmacy technician insurance specialists
need to know when to charge patients for
their medications, and how to determine the
appropriate charges based on their insurance
– Examining and extrapolating necessary
information from medical insurance ID cards
is critical
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