Understanding the Insurance Industry

1
Understanding the Insurance Industry

• The Big Bad Insurance Company

2
Purposes of Insurance

• Cost-Containment

• Revenue Generation

3
History of Insurance

• German Program (1883)
• Administered by Workers Sickness Societies
• Funded Deductions from wages and mandatory
  contributions by employers
• 10 of Population

4
American Model

• The Blue Cross Concept (1929)
• Rating Systems
• Community Rating
• Experience Rating
• Role of Insurance Carrier
• Collect Premiums
• Process Invoices for Payment
• Increase Profits by Increasing Subscribers
• No Cost Control Measures

5
Kaiser Influence

• Prepaid Health Care / Managed Care
• Grand Coulee Dam
• Company Based Physicians
• Opposed by the AMA
• MDs losing autonomy in treatment
• Ability of all MDs to set their fees

6
Hospital Influence

• Religious Orders, Community Boards or
  Philanthropists
• Anesthesia and Surgery
• Site for Treatment

7
Influence of Federal Government

• WW II Wage Freezes
• Exempt to Pension Plans and Health Insurance
• Employer Purchased Health Insurance became norm
• 1950s more than ½ US population insured by a 3rd
  party. (Similar increase in 1990s)

8
Federal Government Influences

• 1946 Hospital Survey and Construction Act
• Purpose Stimulate Hospitals in Rural Areas
• 4.5 beds per 1000 citizens (Filling beds was
  physician responsibility)
• Physicians encouraged to order test and
  procedures (Unrestricted fee-for-service)

9
Medicare and Medicaid Acts (1965)

• Entrenched Governments as Payers for Health Care
• 1994 Health care 16 of budget
• 1997 Health care cost 13.9 of GNP
• Idemmnity Plans
• 1991 62
• 1997 27
• 2003 8

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Insurance for Cost-Containment

• Secondary / Excess Programs

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Roles of Companies Involved in Insurance Program

• Agent / Broker
• TPA
• Carrier
• Re-insurer

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Terminology

• Disappearing Deductible
• Flat Deductible
• Aggregate Deductible
• Loss Runs
• Out-of-Pocket Expense
• Notification of Injury Form
• In-Network / Out-of-Network Benefits
• Insurance

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What is Insurance?

• Bill Paying Service
• Paying for Negotiated Fees

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Benefit Options

• HMO / PPO Denial Clause
• Heart and Circulatory Benefits
• Guest / Recruit Benefit
• Pre-existing Conditions

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Division I-A (Premium / Deductible)
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Division I-A Premium / Deductible
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Division I-A Claims History
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Division I-A Premium / Claims Comparison
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Division I-AA Premium / Deductible
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Division I-AA Premium / Deductible
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Division I-AA Claims History
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Division I-AA Premium / Claims Comparison
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Division I-AAA Premium / Deductible History
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Division I-AAA Premium History
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Division I-AAA Claims History
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Division I-AAA Premium / Claims Comparison
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Division II Premium / Deductible History
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Division II Premium History
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Division II Claims History
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Division II Premium / Claims Comparison
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Division III Premium / Deductible History
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Division III Premium History
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Division III Claims History
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Division III Premium / Claims Comparison
35
High Deductible Options to Control Cost

• Greater than 3,000

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High Deductible
37
High Deductible
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High DeductibleOut-of Pocket Expenses

• Example A
• Div. I-A (350 SA)
• Previous
• Premium 91,885
• Deductible 2500
• Out-of-Pocket Expenses 147,000
• Current
• Premium 180,000
• Deductible 0
• Out-of-Pocket Expenses 0
• Net Gain 58,885

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Which is the Best?
40
Strategies to Control Out of Pocket Expenses

• Utilize Student Athlete Primary Insurance
  (Family)
• HMOs / PPOs
• PCPs
• Purchase / Mandate Primary Insurance
• Minimum Walk-ons
• Scholarship
• NSF
• SOF
• Contract with Providers

41
Self Insured Model

• University HMO
• Potential for High Risk
• Forced or Chosen Self Insurance
• Potential
• Institutions attempting to obtain traditional
  insurance programs
• NCAA Implications

42
Aggregate Deductible Model

• Example
• 25,000 50,000 100,000
• Whole vs. Individual

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Claims Administration

• Notification of Injury Form
• Disclosure of Other Applicable Insurance
• HCFA / CMS 1500
• Explanation of Benefits (EOB)
• Filing Limitations
• HIPAA / FERPA Implications

44
Review of Strategies to Reduce Claims Exposure

• Contracting with Providers
• Primary Insurance Utilization
• PCP Adjustment
• Mandates
• Purchasing
• Proper Claims Processing
• Insurance Coordinator

45
FAU Medical Cost Payment Distribution 2003-04
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Future

• NCAA Increase in Catastrophic Deductible
• 65,000 - 75,000
• Increase Medical Cost
• Claims Processing
• Permissible to Pay for Medical Expenses
• Student-Athlete Primary Insurance

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Methods to Improve Secondary Insurance Premiums

• Claims Processing
• Increase Percentage of Student-Athletes with
  Primary Insurance
• Adjustment of Primary Care Physicians
• Needy Student Assistance Fund
• Special Opportunities Fund (Div. I)
• Student Primary with Athletic Coverage
• Contracting with Providers

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Insurance for Revenue