Chapter 17

Medical Insurance

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Understanding the Role of Medical

Insurance
Medical care consists of:
Diagnosis of diseases/disorders
Care and treatment provided by health care team

Health care
Preventive services

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Understanding the Role of Medical

Insurance
Health care insurance
Contract between an individual policyholder and a third
party that reimburses the medical provider or
policyholder

Changes in health insurance

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Medical Insurance Terminology

Terminology specific to insurance policies

Beneficiary
Deductible
Coinsurance
Co-payment
Pre-existing condition

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Medical Insurance Terminology

Terminology specific to insurance policies

Exclusions
Coordination of benefits
Birthday rule
Explanation of benefits (EOB)
Remittance advice

Copyright 2010 Delmar, Cengage Learning. ALL RIGHTS RESERVED.

Medical Insurance Terminology

Terminology specific to billing insurance
carriers

Preauthorization
Claim
CMS-1500 (05-08)
Assignment of benefits
Direct payment

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Types of Medical Insurance Coverage

Traditional insurance policies
Fee-for-service basis
Types of coverage
Basic insurance
Major medical insurance

Primary care provider (PCP)

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Types of Medical Insurance Coverage

Blue Cross and Blue Shield
Organized as not-for-profit corporations or as for-profit
companies
Network of participating providers

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Types of Medical Insurance Coverage

Managed care organizations (MCOs)
Case managers
Six primary models listed

Exclusive provider organizations (EPOs)

Integrated deliver systems (IDSs)
Health maintenance organizations (HMOs)
Point-of-service (POS) plans
Preferred provider organization (PPO)
Triple option plan

Capitation

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Types of Medical Insurance Coverage

Medicare
Largest medical insurance program in the U.S.
Continuing medical coverage to senior citizens

Parts A, B, C, D
Annual deductible
Resource-Based Relative Value Scale
PARs and non-PARs
Medicare supplemental insurance

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Types of Medical Insurance Coverage

Other types of coverage
Medicaid
Funding for medical care for qualifying persons
Eligibility
Medicaid is always secondary to any supplemental insurance

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Types of Medical Insurance Coverage

Other types of coverage
TRICARE
Military personnel coverage
Three options available
Qualified subscribers must be listed with DEERS

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Types of Medical Insurance Coverage

Other types of coverage
CHAMPVA (Civilian Health and Medical Program of
the Veterans Administration)
Covers spouse and unmarried dependent children of veterans
with permanent total disability from a service-related injury
Covers surviving spouse and children of veterans who died of
service-related disability

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Types of Medical Insurance Coverage

Other types of coverage
Workers compensation or state industrial insurance
On-the-job accident or illness
Workers compensation insurance

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Types of Medical Insurance Coverage

Other types of coverage
Self-insurance
Larger companies, nonprofit organizations, state and county
governments
Contact plan administrator before scheduling appointments

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Screening for Insurance

Screen all new patients for insurance
New patients arrive 1520 minutes early to
complete patient registration form
Photocopy patients drivers license and
insurance card(s) and file in chart

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Screening for Insurance

Verify insurance information on all patients

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Screening for Insurance

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Referrals and Authorizations

Referral categories
Preauthorization and precertification
Authorization/referral number entered in
Box 23 of CMS-1500 (05/08) form

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Determining Fee Schedules

Common elements used to determine fee
schedules
Overhead or practice expenses
Cost of medical malpractice insurance
Hourly rate for the services provided by the provider

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Determining Fee Schedules

Usual, Customary, and Reasonable (UCR) fees
Fee system that defines allowable charges
Usual fee is the physicians average fee for a service or procedure
Customary fee is the average or range of fees within the
geographic area that an insurance carrier will accept
Reasonable fee is the generally accepted fee for services or
procedures that are extraordinarily difficult or complicated

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Determining Fee Schedules

Resource-Based Relative Value System
(RBRVS)
Used by Medicare
Providers services are reimbursed based on RVUs

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Determining Fee Schedules

Resource-Based Relative Value System
(RBRVS)
Each service, procedure, or medication is assigned a
code from the CPT or ICD-9-CM manuals
GPCI related to geographic area where physician is
located is issued for each RVU category

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Determining Fee Schedules

Hospital Inpatient Prospective Payment
System (IPPS)
Based on DRGs
DRGs are based on an average cost for treatment of a
patients condition

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Determining Fee Schedules

Hospital Outpatient Prospective Payment
System (OPPS)
Reimbursement system based on Ambulatory Payment
Classifications (APCs)
APCs group services according to clinical
characteristics

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Determining Fee Schedules

Capitation
Payment system used primarily by MCOs

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Legal and Ethical Issues

Medical personnel are bound by law to
maintain confidentiality of all medical
information
Must be able to recognize information that
is protected by privacy rules

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HIPAA Implications
Provide patient with a notice of privacy
practices and obtain acknowledgment of
receiving the notice
Obtain patients specific authorization to
use or disclose personal information

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HIPAA Implications
Provide patient, upon request, with an
accounting of disclosures of PHI
Give patient access to his/her PHI and
provide opportunity to amend

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Insurance Fraud and Abuse

Definition of fraud and examples
Insurance abuse and examples
Protect the practice from committing
insurance fraud and abuse

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Insurance Fraud and Abuse

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Insurance Fraud and Abuse

HIPAA regulations that apply to PHI

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