The Health Care Industry Part 2 - Medical Insurance

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The Health Care IndustryPart 2 - Medical
Insurance

• Karen F. Nichols, MSA
• School of Allied Health Professions
• University of Nebraska Medical Center

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Coverage is the scope of the financial protection
provided under a contract of insurance for
payment of health care services. Benefits are
those amounts payable by the insurance company to
a member based upon the specific allowances for
coverage in a health insurance plan.A claim is
a demand to the insurance company for the payment
of benefits under the insurance contract.
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An Explanation of Benefits (EOB) is a summary of
benefits provided to subscribers of the policy by
the insurance company in response to a claim.
Covered Benefits are the medically necessary
services that are specifically provided for under
the provisions of Evidence of Coverage. A
covered benefit must always be medically
necessary, but not every medically necessary
service is a covered benefit. Allowed Amount
is the maximum dollar amount assigned for a
procedure based on various pricing mechanisms.
Also known as a maximum allowable.
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The deductible is a specified amount of money a
member must pay before insurance benefits begin.
Usually expressed in terms of an "annual"
amount.A Co-payment or cost-sharing is an
arrangement in which a member of a health
maintenance organization (HMO) pays a specified
flat amount for a specific service (such as
10.00 for an office visit or 3.00 for each
prescription drug). Co-Insurance is a policy
provision frequently found in major medical
insurance policies under which the insured
individual and the insurer share hospital and
medical expenses according to a specified ratio
or fixed percentage (e.g., 20 coinsurance and
80 insurance payment).
Often co-insurance and co-payments apply after
first meeting a deductible requirement. Out-of
-pocket expenses are costs borne by the member
that are not covered by an insurance or health
care plan.
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Capitation is a prepayment system within an HMO
whereby the physician is paid monthly for each
member who has chosen him/her as their physician
for a specific set of services regardless of
whether or not the member is seen. Capitation
rates are based on average annual services a
physician is expected to provide to his/her
patients.Cost Shifting is the term used for
charging one group of patients more in order to
make up for underpayment by others. Most
commonly, charging some privately insured
patients more in order to make up for
underpayment by Medicaid or Medicare.
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Third-Party Payment is payment by a financial
agent such as an HMO, insurance company, or
government rather than direct payment by the
patient for medical care services.
Fee-For-Service is a method of reimbursement
based on payment of specific amounts for specific
services received, in contrast to the advance
payment of an insurance premium or membership fee
for coverage, through which the payment to the
supplier is provided.
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Group Insurance is any insurance policy or health
services contract by which groups of employees
(and often their dependents) are covered under a
single policy or contract, issued by their
employer or other group entity.
Private insurance or Individual Plans are a type
of insurance plan for individuals and their
dependents who are not eligible for coverage
through an employer group (group coverage).
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Major Medical Expense Insurance is designed to
help offset the heavy medical expenses resulting
from catastrophic or prolonged illness or injury.
Policies generally provide benefits payments
for 75 to 80 percent of most types of medical
expenses above a deductible paid by the insured.
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Medicare (Title XVIII) is a nationwide, federally
administered health insurance program for people
65 years of age and older, some people with
disabilities under age 65, and people with
End-Stage Renal Disease (permanent kidney failure
requiring dialysis or a transplant). Medicare
has Two Parts Part A and Part B.
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Medicare Part A is
Hospital insurance- It helps pay for care in
hospitals as an inpatient, critical access
hospitals (small facilities that give limited
outpatient and inpatient services to people in
rural areas), skilled nursing facilities, hospice
care, and some home health care. Most people
get Part A automatically when they turn age 65.
They do not have to pay a monthly payment called
a premium for Part A because they or a spouse
paid Medicare taxes while they were working. If
the person (or spouse) did not pay Medicare taxes
when they worked and are age 65 or older, they
may still be able to buy Part A.
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Medicare Part B is
Medical insurance- It helps pay for doctors,
services, outpatient hospital care, and some
other medical services that Part A does not
cover, such as the services of physical and
occupational therapists, and some home health
care. Part B helps pay for these covered services
and supplies when they are medically necessary.
Recipients pay the Medicare Part B premium of
50.00 per month and in some cases more if the
person did not choose Part B when they first
became eligible at age 65. Enrolling in part B
is a choice. Part B services are financed by a
combination of enrollee premiums and general tax
revenues.
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Medicare Supplementary Medical Insurance (SMI)
under Part B of Title XVII of the Social Security
Act covers Medicare beneficiaries for physician
services, medical supplies, and other outpatient
treatment. Beneficiaries are responsible for
monthly premiums, co-payments, deductibles, and
balance billing.
Medigap or Medicare Supplement Policies are
private health insurance plans that cover some
costs not paid for by Medicare such as
co-insurance and deductibles.
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Prescription Drugs for Medicare recipients-
Medicare pays for pharmaceuticals provided in
hospitals, but not for those provided in
outpatient setting.
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Medicaid (Title XIX) of the Social Security Act
became law in 1965. It is a government health
insurance program for certain low-income and
needy people. It covers approximately 36 million
Americans including children, the aged, blind,
and/or disabled, and people who are eligible to
receive federally assisted income maintenance
payments. The program's costs are shared by the
federal and state governments, and paid for by
general tax revenue to assist States in the
provision of adequate medical care. Medicaid is
the largest program providing medical and
health-related services to America's poorest
people. Within broad national guidelines that
the Federal government provides, each of the
States establishes its own eligibility
standards determines the type, amount, duration,
and scope of services sets the rate of payment
for services and administers its own program.
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This is The End of The Health Care Industry,
Part 2. Please proceed with Part 3, Managed
Care.