Private Payers/Blue Cross and Blue Shield

1. 9 Private Payers/Blue Cross and Blue Shield

2. 9-2 Learning Outcomes When you finish this chapter, you will be able to: 9.1 Compare employer-sponsored and self-funded health plans. 9.2 Describe the major features of group health plans regarding eligibility, portability, and required coverage. 9.3 Discuss provider payment under preferred provider organizations, health maintenance organizations, point-of-service plans, and indemnity plans. 9.4 Compare and contrast health reimbursement accounts, health savings accounts, and flexible savings (spending) accounts.

3. 9-3 Learning Outcomes (Continued) When you finish this chapter, you will be able to: 9.5 List and discuss the major private payers. 9.6 List the five main parts of participation contracts and describe their purpose. 9.7 Describe the information needed to collect copayments and bill for surgical procedures under contracted plans. 9.8 Discuss the use of plan summary grids. 9.9 Describe the steps in the medical billing cycle that ensure correct preparation of private payer claims. 9.10 Discuss the key points in managing billing for capitated services.

4. 9-4 Key Terms • administrative services only (ASO) • BlueCard • Blue Cross and Blue Shield Association (BCBS) • carve out • Consolidated Omnibus Budget Reconciliation Act (COBRA) • credentialing • creditable coverage • discounted fee-for-service • elective surgery • Employee Retirement Income Security Act (ERISA) of 1974 • episode of care (EOC) option • family deductible • Federal Employees Health Benefits (FEHB) program

5. 9-5 Key Terms (Continued) • Flexible Blue • flexible savings (spending) account (FSA) • formulary • group health plan (GHP) • health reimbursement account (HRA) • health savings account (HSA) • high-deductible health plan (HDHP) • home plan • host plan • independent (or individual) practice association (IPA) • individual deductible • individual health plan (IHP) • late enrollee • maximum benefit limit • medical home model • monthly enrollment list

6. 9-6 Key Terms (Continued) • open enrollment period • parity • pay-for-performance (P4P) • plan summary grid • precertification • repricer • rider • Section 125 cafeteria plan • silent PPOs • stop-loss provision • subcapitation • Summary Plan Description (SPD) • third-party claims administrator (TPAs) • tiered network • utilization review • utilization review organization (URO) • waiting period

7. 9-7 9.1 Private Insurance • People not covered by entitlement programs are usually covered by private insurance • Employer-sponsored medical insurance • Group health plan (GHP)—plan of an employer or employee organization to provide health care to employees, former employees, or their families • Rider—document modifying an insurance contract • Carve out—part of a standard health plan changed under an employer-sponsored plan • Open enrollment period—time when a policyholder selects from offered benefits

8. 9-8 9.1 Private Insurance (Continued) • Federal Employees Health Benefits (FEHBP) Program—covers employees of the federal program • Self-funded health plans • Employee Retirement Income Security Act of 1974 (ERISA)—law providing incentives and protection for companies with employee health and pension plans • Summary Plan Description (SPD)—required document for self-funded plans stating beneficiaries’ benefits and legal rights

9. 9-9 9.1 Private Insurance (Continued) • Self-funded health plans (continued) • Third-party claims administrator (TPAs)—business associates of health plans • Administrative services only (ASO)—contract where a third-party administrator or insurer provides administrative services to an employer for a fixed fee per employee • Individual health plan (IHP)—medical insurance plan purchased by an individual

10. 9-10 9.2 Features of Group Health Plans • Section 125 cafeteria plan—employers’ health plans structured to permit funding of premiums with pretax payroll deductions • Eligibility for benefits: • GHP specifies the rules for eligibility and the process of enrolling and disenrolling members • Waiting period—amount of time that must pass before an employee/dependent may enroll in a health plan • Late enrollee—category of enrollment that may have different eligibility requirements

11. 9-11 9.2 Features of Group Health Plans (Continued) • Eligibility for benefits (continued): • Individual deductible—fixed amount that must be met periodically by each individual of an insured/dependent group • Family deductible—fixed, periodic amount that must be met by the combined payments of an insured/dependent group before benefits begin • Maximum benefit limit—amount an insurer agrees to pay for lifetime covered expenses • Tiered network—network system that reimburses more for quality, cost-effective providers

12. 9-12 9.2 Features of Group Health Plans (Continued) • Portability and required coverage: • Consolidated Omnibus Budget Reconciliation Act (COBRA)—law requiring employers with over twenty employees to allow terminated employees to pay for coverage for eighteen months • Creditable coverage—history of coverage for calculation of COBRA benefits • Parity—equality with medical/surgical benefits

13. 9-13 9.3 Types of Private Payers • Under preferred provider organizations (PPOs), providers are paid under a discounted fee-for-service structure • Discounted fee-for-service—payment schedule for services based on a reduced percentage of usual charges • In health maintenance organizations (HMOs) and point-of-service (POS) plans, payment may be a salary or capitated rate • Indemnity plans basically pay from the physician’s fee schedule

14. 9-14 9.3 Types of Private Payers (Continued) • Subcapitation—arrangement where a capitated provider prepays an ancillary provider • Episode-of-care (EOC) option—flat payment by a health plan to a provider for a defined set of services • Independent practice association (IPA)—HMO in which physicians are self-employed and provide services to members and nonmembers • Medical home model—plan that seeks to improve patient care by rewarding primary care physicians for coordinating patients’ treatments

15. 9-15 9.4 Consumer-Driven Health Plans • CDHPs combine two components: • A high-deductible health plan (HDHP)—health plan that combines high-deductible insurance and a funding option to pay for patients’ out-of-pocket expenses up to the deductible • One or more tax-preferred savings accounts that the patient directs

16. 9-16 9.4 Consumer-Driven Health Plans (Continued) • Three types of CDHP funding options may be combined with HDHPs: • Health reimbursement account (HRA)—consumer-driven health plan funding option where an employer sets aside an annual amount for health care costs • Health savings account (HSA)—consumer-driven health plan funding option under which funds are set aside to pay for certain health care costs • Flexible savings account (FSA)—consumer-driven health plan funding option that has employer and employee contributions

17. 9-17 9.5 Major Private Payers and the BlueCross and Blue Shield Association • The major national payers: • WellPoint, Inc. • UnitedHealth Group • Aetna • CIGNA Health Care • Kaiser Permanente • Health Net • Humana, Inc. • Coventry • Credentialing—periodic verification that a provider or facility meets professional standards

18. 9-18 9.5 Major Private Payers and the BlueCross and Blue Shield Association (Cont.) • The Blue Cross and Blue Shield Association (BCBS)—national organization of independent companies founded in 1930 to provide low-cost medical insurance • Pay-for-performance (P4P)—health plan financial incentives program based on provider performance • BlueCard—program that provides benefits for subscribers who are away from their local areas

19. 9-19 9.5 Major Private Payers and the BlueCross and Blue Shield Association (Cont.) • The Blue Cross and Blue Shield Association (BCBS) (continued) • Host plan—participating provider’s local Blue Cross and Blue Shield plan • Home plan—Blue Cross and Blue Shield plan in the subscriber’s community • Flexible Blue—Blue Cross and Blue Shield consumer-driven health plan

20. 9-20 9.6 Participation Contracts • Participation contracts have five main parts: • The introductory section provides the names of the parties to the agreement, contract definitions, and the payer • The contract purpose and covered medical services section lists the type and purpose of the plan and the medical services it covers for its enrollees • The third section covers the physician’s responsibilities as a participating provider • The fourth section covers the plan’s responsibilities toward the participating provider

21. 9-21 9.6 Participation Contracts (Continued) • Participation contracts have five main parts (continued): • The fifth section lists the compensation and billing guidelines, such as fees, billing rules, filing deadlines, patients’ financial responsibilities, and coordination of benefits • Utilization review—payer’s process for determining medical necessity • Stop-loss provision—protection against large losses or severely adverse claims experience

22. 9-22 9.7 Interpreting Compensation andBilling Guidelines • Under participation contracts, most plans require copayments to be subtracted from the usual fees that are billed to the plans • Billing for elective surgery requires precertification from the plan • Precertification—preauthorization for hospital admission or outpatient procedures • Providers must notify plans about emergency surgery within the specified timeline after the procedure

23. 9-23 9.7 Interpreting Compensation andBilling Guidelines (Continued) • Silent PPOs—MCO that purchases a list of participating providers and pays their enrollees’ claims according to the contract’s fee schedule despite the lack of a contract • Elective surgery—nonemergency surgical procedure • Utilization review organization (URO)—organization hired by a payer to evaluate medical necessity

24. 9-24 9.8 Private Payer Billing Management:Plan Summary Grids • Plan summary grids—quick-reference tables for health plans • Summarize key items from the contract • List key information about each contracted plan and provide a shortcut reference for the billing and reimbursement process • Include information about collecting payments at the time of service and completing claims

25. 9-25 9.9 Medical Billing Cycle • The steps of the medical billing cycle: • Step 1 – Preregister patients: Guidelines apply to the preregistration process for private health plan patients, when basic demographic and insurance information are collected • Step 2 – Establish financial responsibility for visit: Financial responsibility for the visit is established by verifying insurance eligibility and coverage with the payer for the plan, coordinating benefits, and meeting preauthorization requirements • Step 3 – Check in patients: Copayments are collected before the encounter

26. 9-26 9.9 Medical Billing Cycle (Continued) • Steps of the medical billing cycle (continued): • Step 4 – Check out patients: Payments after an encounter, such as a deductible, charges for noncovered services, and balances due, are collected • Step 5 – Review coding compliance: Coding is checked, verifying the use of correct codes as of the date of service that show medical necessity • Step 6 – Check billing compliance: Billing compliance with the plan’s rules is checked • Step 7 – Prepare and transmit claims: Claims are completed, checked, and transmitted in accordance with the payer’s billing and claims guidelines

27. 9-27 9.9 Medical Billing Cycle (Continued) • Repricer—vendor that processes a payer’s out-of-network claims

28. 9-28 9.10 Capitation Management • Under capitated contracts, medical insurance specialists verify patient eligibility with the plan because enrollment data are not always up-to-date • Encounter information, whether it contains complete coding or just diagnostic coding, must accurately reflect the necessity for the provider’s services • Monthly enrollment list—document of eligible members of a capitated plan for a monthly period