Chapter 13 Blue Cross Blue Shield
Introduction • Blue Cross and Blue Shield • Perhaps the best known plans of medical insurance in the United States
Origin of Blue Cross Blue Shield • Blue Cross,1929 • Baylor University hospital in Dallas, Texas • Offered teachers in the Dallas school district a plan of 21 days of hospitalization every year for the holder and their dependents in exchange for $6 annual premium (prepaid health plan)
Origin of Blue Shield • Began as a resolution passed by the House of Delegates at an American Medical Association meeting in 1938 • Resolution supported the concept of voluntary health insurance that would encourage physicians to cooperate with prepaid health care plans.
Origin of Blue Shield • First known plan was formed in Palo Alto, California, in 1939. • Stipulated that physicians’ fees for covered medical services would be paid in full by the plan if subscriber earned less than $3,000 a year
Origin of Blue Shield • When subscriber earned more than $3,000 a year, a small percentage of physicians’ fee would be paid by the patient. • Forerunner of today’s industry-wide required patient coinsurance or co-pay.
Joint Ventures • Blue Cross originally covered only hospital bills. • Blue Shield only covered fees for physician services. • Over the years Blue Cross and Blue Shield have increased their coverage to include almost all health care services.
BCBS Association • Located in Chicago, Illinois, and performs the following functions: • Establishes standards for new plans and programs. • Assists local plans with enrollment activities, national advertising, public education, professional relations, and statistical and research activities.
BCBS Association • Serves as the primary contractor for processing Medicare hospital, hospice, and home health care claims. • Coordinates nationwide BCBS plans
Changing Business Structure • Mergers occurred among BCBS regional corporations (within a state or with neighboring states) and names no longer had regional designations. • BlueCross BlueShield Association no longer required plans to be nonprofit (as of 1994).
Changing Business Structure • Regional corporations needed additional capital to compete with commercial for-profit insurance carriers and petitioned their respective state legislatures to allow conversion from their nonprofit status to for-profit corporations.
Changing Business Structure • Nonprofit corporations • Charitable, educational, civic, or humanitarian organizations whose profits are returned to the program of corporation rather than distributed to shareholders and officers of the corporation
Changing Business Structure • For-profit corporations • Pay taxes on profits generated by corporations’ for-profit enterprises and pay dividends to shareholders on after-tax profits.
BCBS Distinctive Features • Maintain negotiated contracts with providers of care.
BCBS Distinctive Features • In exchange, BCBS agrees to perform the following services: • Make prompt, direct payment of claims. • Maintain regional professional representatives to assist participating providers with claim problems.
BCBS Distinctive Features • Provide educational seminars, workshops, billing manuals, and newsletters to keep participating providers up-to-date on BCBS insurance procedures.
BCBS Distinctive Features BCBS plans, in exchange for tax relief for their nonprofit status, are forbidden by state law from canceling coverage for an individual because he or she is in poor health or BCBS payments to providers have far exceeded the average.
BCBS Distinctive Features • Individuals can only be dis-enrolled for the following reasons: • When premiums are not paid. • If the plan can prove that fraudulent statements were made on the application for coverage
BCBS Distinctive Features • BCBS plans must obtain approval from their respective state insurance commissioners for any rate increases and/or benefit changes that affect BCBS members within the state.
BCBS Distinctive Features • BCBS plans must allow conversion from group to individual coverage and guarantee the transferability of membership from one local plan to another when a change in residency moves a policyholder into an area served by a different BCBS corporation.
BCBS Participating Providers • Submit insurance claims for all BCBS subscribers. • Provide access to the Provider Relations Department, which assists the PAR provider in resolving claims or payment problems
BCBS Corporation • Write off the difference or balance between the amount charged by the provider and approved fee established by the insurer. • Bill patients for only the deductible and co-pay/coinsurance amounts that are based on BCBS-allowed fees.
BCBS Corporation • In return, BCBS corporations agree to • Make direct payments to PARs. • Conduct regular training sessions for PAR billing staff. • Provide free billing manuals and PAR newsletters.
BCBS Corporation • Maintain a provider representative department to assist with billing/payment problems. • Publish the name, address, and specialty of all PARs in a directory distributed to BCBS subscribers and PARs.
Preferred Providers • Required to adhere to managed care provisions • Agrees to accept the PPN allowed rate, which is generally 10 percent lower than the PAR allowed rate • Further agrees to abide by all cost-containment, utilization, and quality assurance provisions of the program
Preferred Providers • The “Blues” agree to notify PPN providers in writing of new employer groups and hospitals that have entered into PPN contracts and to maintain a PPN directory.
Non Participating Providers • Have not signed participating provider contracts, and they expect to be paid the full fee charged for services rendered
Non Participating Providers • Patient may be asked to pay the provider in full and then be reimbursed by BCBS the allowed fee for each service minus the patient’s deductible and co-payment obligations.
Non Participating Providers • Even when the provider agrees to file the claim for the patient, insurance company sends payment for claim directly to the patient and not to provider.
Plans • Cross Blue Shield coverage includes the following programs: • Fee-for-service • Indemnity
Plans • Managed care plans • Coordinated home health and hospice care • Exclusive provider organization • Health maintenance organization • Outpatient pretreatment authorization plan • Point-of-services plan • Preferred provider opinion • Second surgical opinion
Plans • Federal Employee Program • Medicare supplemental plans • Healthcare Anywhere
Fee-for-Service • Fee-for-service is selected by two different kinds of people: • Individuals who do not have access to a group plan • Small business employers
Fee-for-Service • Those two contracts have two types of different coverage within one policy: • Basic coverage • Major medical benefits
Fee-for-Service – Assistant surgeon fees – Obstetric care – Intensive care – Newborn care – Chemotherapy for cancer
Fee-for-Service • BCBS major medical coverage includes the following in addition to the basic: • Office visits • Outpatient nonsurgical treatment • Physical and occupational therapy
Fee-for-Service – Purchase of durable medical equipment – Mental health visits – Allergy testing and injections – Prescription drugs – Private duty nursing – Dental care required as a result of a covered accidental injury
Special Accidental Injury Rider • Covers 100 percent of nonsurgical care sought and rendered within 24 to 72 hours of the accidental injury
Medical Emergency Care Rider • Covers immediate treatment sought and received for sudden, severe, and unexpected conditions that if not treated would place patient’s health in permanent jeopardy or cause permanent impairment or dysfunction of an organ or body part
Medical Emergency Care Rider • Chronic or subacute conditions do not qualify for treatment under the medical emergency rider unless the symptoms suddenly become acute and require immediate medical attention.
Indemnity Coverage • Choice and flexibility to receive full range of benefits • Freedom to use any licensed provider • Coverage includes hospital-only or comprehensive hospital and medical coverage.
Indemnity Coverage • Outpatient code editor (OCE) software is used in conjunction with the APC grouper to identify Medicare claims edits and assign APC groups to reported codes
Managed Care Plans • Health care delivery system that provides health care and controls costs through a network of physicians, hospitals, and other health care providers
Managed Care Plans • Coordinated home health and hospice care program allow patients with this option to elect an alternative to the acute care setting. • Patients’ physician must file a treatment plan with the case manager assigned to review and coordinate the case.
Managed Care Plans • All authorized services must be rendered by personnel from a licensed home health agency or approved hospice facility.
Managed Care Plans • An EPO (exclusive provider organization) organization that provides health care services through a network of doctors, hospitals, and other health care providers • Members are not required to select a primary care provider (PCP).
Managed Care Plans • Members do not need a referral to see a specialist. • All services must be obtained from EPO providers only. • If care received from providers not part of the EPO, patient must pay charges in full
Managed Care Plans • Health maintenance organization (HMO) • Plan that assumes or shares the financial and health care delivery risks associated with providing comprehensive medical services to subscribers in return for a fixed, prepaid fee.
Managed Care Plans • Outpatient pretreatment authorization plan (OPAP) • Requires preauthorization of outpatient physical, occupational, and speech therapy services • Requires periodic treatment/progress plans to be filed
Managed Care Plans • Requirement for the delivery of certain health care services and is issued prior to the provision of services