Ch 1-3 Pt. Care MGMT.

Indemnity insurance
Insurance that “indemnifies” the policy holder from losses. In health insurance, this applies to providing financial coverage for health care costs, with little or no attempt to manage that cost; most important, it is not based on a contracted network of providers, unlike a service plan that may otherwise appear the same.
carve outs
refers to a set of medical services that are “carved out” of the basic arrangement.
generic term used to refer to anyone providing medical services. In fact, it may even be used to refer to anything that provides medical services, such as a hospital.
(ERISA) Employee Retirement Income Security Act
-One provision of this act allows self-funded plans to avoid paying premium taxes, avoid complying with state-mandated benefits, and generally avoid complying with state laws and regulations regarding insurance, even when insurance companies and managed care plans that stand risk for medical costs must do so.
-another provision requires that plans and insurance companies provide an explanation of benefits (EOB) statement to a member or covered insured in the event of a denial of a claim, explaining why the claim was denied and informing the individual of his or her rights of appeal.
Balanced Budget Act of 1997
-provided for the creation of PSOs to provide a vehicle that would allow providers to contract directly with Medicare to accept risk for services and costs to an enrolled group of Medicare beneficiaries
-act required the PSO to provide a substantial portion of health care directly or through affiliated groups of providers and for the providers themselves to have at least a majority ownership interest in the PSO.
(MMA) Medicare Modernization Act
-new forms of managed care-Medicare Advantage
– Managed care for Medicaid programs in the states
-More emphasis on chronic and highly expensive medical conditions with less focus on routine care
-in the area of this, the appearance of so-called specialty pharmacy, injectable drugs that are proteins manufactured through DNA replication, has led to treatments that may not be used frequently but that are hugely expensive when they are, commonly costing in excess of $10,000 per patient per year
(HIPAA) Health insurance portability and accountability act
-Enacted in 1997, this act creates a rather vaguely worded set of requirements that allow for insurance portability, guaranteed issue of all health insurance products to small groups, and mental health parity.
-also contains significant provisions regarding “administrative simplification” and standards for privacy and security
-Improved basic transactions in managed care including: claims, claims status, authorizations, eligibility checking, payment
-privacy of medical records
-security & electronic transactions
(HEDIS) Healthcare Effectiveness Data and Information Set
-developed by NCQA w/ considerable input from the employer community and the managed care community, is an ever-evolving set of data reporting standards.
(PPO) Preferred Provider Organization
A plan that contracts with independent providers at a discount for services
(POS) Point of Service
A plan in which members do not have to choose how to receive services until they need them
(IPA) Independent Practice Association
An org. that has a contract with a managed care plan to deliver services in return for a single capitation rate.
(COA) Certificate of Authority
the license required by an HMO or MCO that is issued by a state after the HMO meets regulatory requirements. A form of state licensure
(EPO) Exclusive Provider Organization
-is similar to an HMO in that it often uses primary physicians as gatekeepers, often capitates providers, has a limited provider panel, uses an authorization system, and so forth.
(PMPM) Per member per month
Specifically applies to a revenue or cost for each enrolled member
(PSRO) Professional Standards Review Organization
-In 1972, Social Security Amendment authorized this
-Review appropriateness of care provided to Medicare/Medicaid beneficiaries
-Organizations effectiveness is debated
-Large corporations initiated pre certification, concurrent review for inpatient cases
-Promoted employee wellness
-Members of large corporations were sitting on hospital boards to constrain costs, negotiate payment levels directly to providers
(PSO) Provider-sponsored organization
-entity allowed under the BBA 97′ Medicare + Choice.
-risk-bearing managed care org. that contracts directly w/ CMS for Medicare enrollees
-unlike HMO, PSO is made up of the providers themselves, and the providers bear substantial risk for expenses
(CDHP) Consumer-directed health plan
-type of health plan that combines a high-deductible health insurance policy with a pretax fund such as an HSA or HRA
-they are used to pay for qualified services on a first-dollar basis but is not large enough to cover the entire deductible, so called doughnut-hole
-CDHPs also provide info such as cost data and decision support tools to consumers to promote greater involvement on the part of the consumer in making health care choices
(HSA, greater cost sharing for consumers with accountability and choice, pre-tax funds, improved info to the consumers)
(HSA) Health Savings Accounts
-created under the MMA, is a financial account of pretax dollars for current or future qualified medical expenses, retirement, or long-term care premium expenses
(RVFS) Relative Value Fee Scale
Tax Equity and Fiscal Responsibility Act (TEFRA)
-authorized the Medicare program to pay HMO’s on a captivated basis provided that they met Medicare’s participation requirements
-the intent was to control health care costs and more comprehensive benefits
-HMO’s offered lower amounts of cost sharing, prescription costs, and preventive services
Characteristics of a managed care organization:
written contract, prepaid, usually has a utilization review ??
How does the MCO work?
have to 1st subscribe to it, then choose PCP, PCP notifies that DR and let them know coming, then get authorization ??
During the pre-WWII era, name the 2 models that existed for prepaid health care?
-HMOs (prepaid, not covered until 1970)
-Blue Cross Blue Shield
Father of the Health Management Organization:
Dr. Paul Ellwood
What impact did the HMO act have on the growth of the managed care industry? Name the characteristics.
-made grants & loans available for the planning and start-up phases of new HMOs as well as for service area expansions for existing HMOs
-overrode state laws that restricted the development of HMOs if the HMOs met federal requirements for certification
-required employers with 25 or more ees that offered indemnity coverage also to offer up to 2 different types of federally qualified HMO options if the plans made a formal request
Why was the managed care industry so slow to grow until the late 1980s and 1990s?
opposition by federal group, state was restrictive ?
In 1972, the Social Security Amendment authorized the professional standard review organization, what was its purpose?
to review appropriateness of care provided to Medicare and Medicaid beneficiaries in hospitals
-established an organizational infrastructure and data capacity on which both the public and private sectors could rely
-replaced by the Peer Review Org. (PRO), itself replaced by the quality improvement org. (QIO)
-concurrent review (1970s) for inpatient care, why still happening today
What developments of indemnity insurance in the 1980s brought changes in the insurance industry?
-encouraging persons with conventional insurance to obtain 2nd opinions before undergoing elective surgery
-adopting “large case management” (the coordination of services for persons with conditions that require expensive medical care, such as selected accident patients, cancer patients, and very low birth weight infants)
In 1991, the National Committee on Quality Assurance (NCQA) began to accredit HMO’s, what function did it serve?
-initially focused only on HMOs, has evolved with the market
-performance measurement systems (report cards) continue to evolve, the most prominent being the Health Care Effectiveness Data and Information Set (HEDIS) which was developed by NCQA
-another form of maturation is the focus of cost management efforts, which used to be almost exclusively inpatient hospital utilization
-credential in a proper manner
In 2007, only 4 major commercial for profit insurance companies accounted for 45% of the covered individuals: Name them:
CIGNA, Aetna, United Health Care, and Wellpoint
What impact did Utilization Management have on the managed care industry?
-Shortened LOS,
-Mandating managed care systems-DRGs
-Utilization Review ?
What were the mitigating circumstances that caused the backlash of negative publicity and anti-managed care sentiment?
-lack of choice
-mistakes in paperwork or claims processing
-denial of care not medically necessary
-prior authorization from PCP to access speciality care
-denial of coverage for necessary medical care
-accusation that health plans deliberately refused to pay for necessary care to generate profits
-America’s desire for choice
What has impacted the inflation of health costs in the last decade?
-increase number of outpatient procedures
-higher admin costs
-drug therapy advances
-consumer demands
-high rate of lawsuits
-aging of pop.
-expectations of long healthy life
-cost of complying with govt mandates
-rapidly advancing medical technology
Name the advantages and disadvantages of the managed care system?
-gave us quality of care w/ emphasis by broadening quality measurements and mgmt beyond the hospital setting
-standard measurements for quality on HEDIS
-advancement from inpatient to outpatient
-contributed to policy makers & large employers being comfy with contracting with MCOs/HMOs
-public distress led to standard measures such as HEDIS

-MCO focused on cost vs. care
-did not make sufficient efforts to self regulate
-did not respond to backlash, viewed it as a public relations problem
-opposed sensible regulation
-vast amounts of wealth

Name the 3 broad types of risk agencies
-govt programs
-self funded programs
What are the components of the risk agencies: govt program?
-Medicare (elderly & disabled, CMS), Medicaid (poor), Military programs, Tricare (under the Civilian Health and Medical Program of the Uniformed Services), Veterans Administration, Indian affairs
What are the components of the risk agencies: Insurance?
Group Health Benefits, Wraparound or Supplemental health insurance, individual health insurance
What are the components of the risk agencies: self funded health benefits plan?
-regulated by ERISA
-Employer assumes the risk of medical costs
-attractive to large companies
-Advantages: no premium tax, no mandated benefits, costs alone determine costs, and less regulated
-Use of third party administrator (TPA)
-Use of reinsurance to protect against catastrophic loss
Define an entitlement program
certain individuals to receive benefits from the government. Risks for medical expenses are borne by the state/federal agencies and tax payers
Medicare program
Centers for Medicare and Medicaid Services (CMS) a branch of the U.S. Dept. of Health and Human Services
-services for the elderly
-individuals w/ end stage renal disease
Medicaid program
Managed by the state which receive state and federal funds
-provide health insurance to the poor, disabled, and institutionalized individuals
What is the Federal Employees Health Benefit Program? (FEHBP)
-Acts as an employer
-Makes health insurance plans (MCOs) available to federal employees
-Federal government is acting like any other employer
-Known as an employer-based Health group benefits plan
Characteristics of a basic insurance plan:
bears the risk for medical expenses, risk for medical expenses belongs to the insurer (copayments, coinsurance), regulation of this industry is the responsibility of the state govts except for HIPAA (insure themselves against catastrophic costs)
What is a group health benefit plan and how does it function?
Advantages: insurance paid pretax, more favorable pricing than individual, combine with other benefits employer administers
-Defined contribution-employer provides employees a fixed amount of money (disadvantages for employees)
What are the advantages of a group benefit plan?
-cost of insurance is paid on a pretax basis
-employers obtain favorable pricing and coverage than individuals
-employer manages administrative needs such as payroll, payment of premiums
-health insurance cane be combined with other benefits (life insurance, dental)
What is a wrap around/ Supplemental insurance?
-an insurance policy that covers what another insurance policy or Medicare does not cover
-a wraparound would provide the missing coverage, subject to the limitations
-most common are sold to Medicare beneficiaries
Explain Self Funded Health Benefit Plans:
-regulated by ERISA
-employer assumes the risk of medical costs
-attractive to large companies
-Advantages: no premium tax, no mandated benefits, costs alone determine costs, and less regulated
-use of third party administrator (TPA)
-use of reinsurance to protect against catastrophic loss
Define Traditional Indemnity Health Insurance
-Indemnity-protects the patient against financial losses from medical expenses
-no restrictions on providers for medical care
-precertification for elective admissions
-2nd opinions may be mandated
-subscriber must pay a deductible before insurance pays
-very expensive compared to managed care plans
-case mgmt for catastrophic cases
-any charges by provider that insurance company does not pay are responsibility of patient
What is a consumer directed health plan?
-combine a HDHP (high deductible) with a pretax fund such as an HSA or HRA
-the HSA or HRA are used to pay for qualified services on a first dollar basis, but are not large enough to cover the entire deductible (donut hole)
-CDHP also provides info such as cost data and decision support tools to consumers to promote greater involvement on the part of the consumer in making health care decisions
-HSA’s were created by the MMA
-Both HSA’s and HRA’s are regulated by the U.S. Treasury Dept.
-CDHPs are not considered managed health care plans, but similar to indemnity insurance plans of the past
-Most are associated with a PPO
-Consumers do not know the real health care costs so this adds extra padding for the bill
Explain the 2 basic forms of CDHP?
-Employer based using a health payment account (HRA)-Health risk appraisal, an instrument to compile data
-Individual based using health savings account (HSA)-financial account of pretax dollars
(PPO) Preferred Provider Organization
-are organizations that provide discounted provider services to insurance carriers and employers
-discounts are greater
-pre certification
-if the subscriber wishes to seek care from a non-participating provider, the responsibility falls on the subscriber, and at risk for charges (80% vs. 60%)
-less expensive than regular insurance
(POS) Point of Service
-a plan in which members do not have to choose how to receive services until they need them
-most common use of the term applies to a plan that enrolls each member in both an HMO system and a PPO or an indemnity plan
-these plans provide a difference in benefits depending on whether the member chooses to use the plan or go outside the plan for services
-Primary care physician acts as the gatekeeper for referrals
Open Access HMO
-a term that refers to an HMO that does not use a primary care physician gatekeeper model for access to specialty physicians
-a member may self-refer to a specialty physician rather than seeking authorization from the PCP
-more like traditional PPO’s than traditional HMO’s
-members may access any provider in the HMO w/o going through PCP
Open Panel
-a managed care plan that contracts w/ private physicians to deliver care in their own offices
-private physicians and other professional providers
-independent contractors who see HMO members in their own offices
-may contract w/ more than 1 health plan and see fee-for-service patients
-number of pts in the open plan in larger than the closed plan
-member must choose a PCP to authorize services
Closed Panel
-a managed care plan that contracts with physicians on an exclusive basis for services and does not allow those physicians to see patients for another managed care organization.
-Examples include staff and group model HMOs.
-It could apply to a large private medical group that contracts with an HMO
Group Model
-HMO contracts with a group of physicians to provide services to HMO members
-physicians are employed by the practice
-the group pays the individual physicians through a combination of salary and risk/reward incentives
-the group is at risk if the cost exceeds the captivated amount, the reimbursement is less
-also serve non-HMO patients
-best example: Kaiser Permanente
Staff Model
-an HMO that employs providers directly, and those providers see members in the HMO’s own facilities
– a form of closed panel HMO
-physicians are working for a large corp., and the legal issues are reduced
-physicians are paid a salary
Balance Billing
the practice of a provider billing a patient for all charges not paid for by the insurance plan, even if those charges are about the plan’s UCR or are considered medically unnecessary
Service Plans
-a health insurance plan that has direct contracts with providers but is not necessarily a managed care plan
(IPA) Independent Practice Association
an organization that has a contract with a managed care plan to deliver services in return for a single capitation rate
-the IPA in turn contracts with individual providers to provide the serves either on a capitation basis or on a fee-for-service basis
-typical IPA encompasses all specialties, but an IPA can be solely for primary care or may be single specialty
(PHO) Physician-Hospital Organization
-legal (informal) organizations that bond hospitals and the attending medical staff and were developed for the purpose of contracting with managed care plans
-may be open to any members of the staff who apply, or they may be closed to staff members who fail to qualify
(MSO) Managed Service Organization
-form of integrated health delivery system
-often actually purchases certain hard assets of a physician’s practice and then provides services to that physician at fair market rates
-are usually formed as a means to contract more effectively with managed care organizations, although their simple creation does not guarantee success
(PSO) Provider-Sponsored Organization
Cooperative venture of a group of providers who control financial arrangements and health service delivery and activity that is focused on the Medicare community
(PPMC) Physician practice mgmt company
-are for physicians only not hospitals
-manages all support functions, but not the clinical aspects of the physician’s practices
-usually takes a % of the practice revenue
-takes a long term commitment and agrees not to compete with other physicians if he leaves the company
-has had many failures
(EPO) Exclusive Provider Organization
-is similar to an HMO in that is often uses primary physicians as gatekeepers, often capitates providers, has a limited provider panel, uses an authorization system,
-referred to as exclusive because the member must remain within the network to receive benefits
-are generally regulated under insurance statutes rather than HMO regulations
(GPWW) Group practice without walls
-a group practice in which the members of the group come together legally but continue to practice in private offices scattered throughout the service area
-independent of hospitals
-physician’s productivity is the most important factor in determining his or her income while part of a medical group
Foundation Model
IDS model:
-formed when a hospital creates a not for profit foundation and purchases physicians’ practice, then places them in the foundation
-formed when a legal reason prevents a hospital from employing physicians directly or using hospital funds to purchase physician practices
-governed by boards not dominated by either the hospital or physicians and can include lay members
Donut Hole
-term applied to the difference b/t when first dollar coverage stops and insurance then begins
-may be applied in a CDHP plan to the gap b/t the HRA or HSA, and when the high-deductible plan starts to cover costs
-also exists in the basic Medicare Part D drug benefit passed under the MMA, at least at the time of publication
Gag clause
a provision that may be incorporated in a physician’s contract with MCO, which prevents him from being open with his patients about the terms of the patient’s coverage and therapeutic options
Hold Harmless Clause
a contract provision in which one party to the contract promises to be responsible for liability incurred by the other party
Case Mix
-the mix of cases in an inpatient setting, accounting for differences in potential or real cost and outcomes
-refers to a methodology of using case mix to evaluate performance of a provider or project potential costs
insurance purchased by a health plan to protect it against extremely high cost cases (also see stop loss)
Global Capitation
the term used when an organization receives capitation for all medical services, including institutional and professional
Discuss 5 standard contracting provisions
-Required qualifications & Credentials
-Required compliance w/ the MCO’s Utilization and Quality Mgmt Programs
-“Hold Harmless” and “No Balance Billing” Clauses
-Payment or Reimbursement terms
-Term and Termination
-Other party liability: Subrogation and Coordination of benefits
Name reasons that a MCO would cancel a contract
-inadequate quality of care
-failure to meet re credentialing requirements (every 10 years, may have lost license restricted)
-business reasons (providers practice behavior unsuitable for a managed care environment)
What are 4 types of specialty hospital-based physicians (HBP)?
-radiology, anethesiology, pathology, hospitalist (surgialist, ER medicine)
-PCP, specialty care physicians, carve-out and specialty care services, HBP
5 basic elements for credentialing:
-demographic information
-office info
-training (copy of certificates)
-specialty care board eligibility or certification (copy of certificate)
-current state medical license (copy)
-NPI as required under HIPAA
What is the National Provider Identifier (NPI)?
-mandated under HIPAA and replaced almost all other types of provider identifiers regardless of customer (commercial health plan, Medicare, Medicaid, TRICARE, etc)
-is a 10 digit number and contains no embedded intelligence
-contains no info about the health care provider
-does not replace the DEA number or the tax ID number of a provider, however
Name 3 types of reimbursement to physicians:
-Fee-for-service (most common) PPOs service plans, indemnity
-Salary: closed panel
-Stop-loss protection: the amount of costs generated is no longer used to measure the performance or determine the reimbursement of a physician
Discuss the reimbursement methods MCOs use for hospitals and institutions:
-straight charges
-discounts on charges
-sliding scale discount charges
-per diem charges
-straight per diem charges
-sliding scale per diem
-straight DRGs
-package pricing
-capitation or % of Revenue
Discuss the various charges used by the Emergency Departments for payment of services:
-straight discounts
-sliding scale
-bundled charges
principal procedure code used by the facility, 2nd procedure is discounted b/c patient is already in facility and using services, outpatient cannot add several categories together for single patient encounter, rates covers all services, only one category at a time
What are the reimbursement methods for Ambulatory Services?
-APGs (ambulatory patient groups)
-APCs (ambulatory pt. classification)
-both in public domain
-based on procedure rather than diagnosis
-adjusted by complexity and severity
What is P4P?
-Pay for performance
-providing financial incentives to providers
-improve compliance w/ standards of care
-improve outcomes & pt. safety
-focus is on clinical performance
-evidence based clinical practice
-Measures quality: structure, process, and outcome
-depends on a number of data collection sources
In Medicare, what type of P4P is used?
-Physician Quality Reporting System (PQRS)
-has 240 measures that eligible physicians would be assessed on based on their claims submissions as well as claims submitted by other providers, facilities, and ancillary services
-physicians can also submit data from their EMR
What are the types of payment methods for Diagnostic and Therapeutic testing and Ancillary Services?
-no significantly unique types of payment systems applicable only to ancillary services, some are less suitable than others
-Flat Rate-fixed single payment
What is the usual method of reimbursement for the PBM, Pharmacy Benefits Mgmt company?
-Fill fee: amount that the PBM pays for filling the prescription
-Ingredient cost: cost of the drug itself
How is a specialty pharmacy different from a traditional pharmacy?
-Traditional: new research has led to an increase in use of drug therapy, new drugs are under patent and monopolized which leads to higher cost
-Specialty: anything that is not standard formulary, requires physician intervention/ distribution, Biopharmaceutical, drugs used for uncommon conditions, cost is very expensive
-obtaining and reviewing the documentation of professional providers
-includes licensure, certification, insurance, evidence of malpractice insurance, malpractice history
(NPI) National Provider Identifier
mandated under HIPAA and replaced almost all other types of provider identifiers regardless of customer
Stop Loss Protection
form of reinsurance provides protection for medical expenses above a certain limit generally on a year by year basis
(MS-DRGs) Medicare Severity- Diagnosis Related Groups
implemented by Medicare to replace traditional DRGs
Never Events
medical error occurs in a facility (hospital or ambulatory surgical center) that should never happen
Bundled charges/ Packaged Pricing
all inclusive rates paid for both institutional and professional services
-hospital and institution reimbursement method
(NPDB) National Practitioner Data Bank
established under federal health care improvement and quality act of 1986, electronically stores info about physician malpractice suits successfully litigated or settled, and disciplinary actions on physicians
(P4P) Pay for Performance
-term applied to providing financial incentives to providers (hospitals and physicians) to improve compliance with standards of care, and improve outcomes and patient safety
(APGs) Ambulatory Patient Groups
provide for a fixed reimbursement to an institution for outpatient procedures or visits and incorporate data regarding the reason for the visit and patient data
-prevent unbundling of ancillary services
(APCs) Ambulatory Patient Classification
-method that CMS settled on for implementing PPS reimbursement for ambulatory procedures
-like the other methods, this is a way of clustering many different ambulatory procedure codes into groups for purposes of payment
Case Rates
single payment encompasses all professional services delivered in an episode
-i.e. obstetrics: prenatal visits, delivery, post natal, surgical procedure
(PQRS) Physician Quality Reporting System
-it has 240 measures that eligible physicians would be assessed on based on their claims, submissions as well as claims submitted by other providers, facilities, and ancillary services
-physicians can also submit data from their EMR
(AQA) Ambulatory care Quality Alliance
P4P: sources of evidence based clinical process measures
(CAHPS) Consumer Assessment of Healthcare Providers and Systems
-begun by federal govt for use in medicare and medicaid managed care plans, now also used by commercial health plans
-maintained by AHRQ and required as part of NCQA accreditation process
-initial focus was on managed health care plans, but is being expanded to ambulatory providers, hospitals, and the Medicare prescription drug program
(PBM) Pharmacy Benefit Manager
-could be owned by the MCO or uses the services of a free standing facility
-processes the claims for drugs submitted by the participating pharmacies
-manages the formulary
-monitors utilization
(EMR) Electronic Medical Record
an electronic version of the type of health record that a physician or a hospital keeps on a single patient
(MMA) Medicare Modernization Act
-federal act originally titled medicare prescription drug improvement and modernization act of 2003
-is the basis for both medicare part D drug benefit and for the variety of MA plans described elsewhere including MA local, MA regional, and MA PFFS
Generic drugs
drug that is equivalent to a brand name drug but usually less expensive
listing of drugs that a health plan provides coverage for, but almost always at differing levels
(HBP) Hospital-Based Physician
specialty physician who practices primarily w/ in a hospital or ambulatory surgical center in 1 of 3 clinical areas: radiology, pathology or who is a hospitalist
Data Transparency
refers to an MCO or governmental agency making data about health care cost and quality available to consumers usually via the internet
Define utilization review and the purpose
managing/overseeing, control costs & medical services ?
Name and explain the 3 components of UM
-prospective (before): HRA, demand and referral mgmt, pre certification of institutional services
-concurrent (during)
-retrospective (after): case review, pattern analysis
Explain the types of measurements when evaluating utilization for healthcare
-PMPM: per member per month
-PMPY: per member per year
-Per thousand (units of service)
Compare case manage with disease management (List 5 components of each):
case mgmt:
-emphasis on single patient
-early identification of ppl with acute catastrophic conditions
-applies to 0.5-1% of commercial membership
-value relies heavily on price negotiations & benefit flexing
-requires plan design manipulation
-episode 60-90 day

disease mgmt:
-emphasis on population w/ chronic illness
-early identification of all ppl w/ targeted chronic diseases (20-40) whether mild, moderate, severe
-acuity level is moderate
-applies to 15-25% of commercial membership
-value due to member & provider behavior change that results in improved health status
-requires no need to change plan design

What are ancillary services?
-medical services not personally provided by physicians and are not hospital or institutional services
-two common types are diagnostic & therapeutic services
-ex: labs, radiology, CT scans
(CM) Case Management
-method of managing the provision of health care to members with high-cost medical conditions
-goal: coordinate the care so as to both improve continuity and quality of care and lower costs
-dedicated function in UM department
(LOS) Length Of Stay
length of stay
(DM) Disease Management
-process of intensively managing a particular disease
-encompasses all settings of care and places a heavy emphasis on prevention and maintenance
-similar to case mgmt but more focused on a defined set of diseases
Preventive Services
healthcare that is aimed at preventing complications of existing diseases or preventing the occurrence of a disease
Wellness Programs
are directed at helping members to change their lifestyles and develop healthy habits
(HRA) Health Risk Appraisals
instrument designed to elicit or compile information about the health risk of any given individual
-now have become quite specialized and targeted toward particular populations with distinctive risk profiles
(DUR) Drug Utilization Review
consists of activities and strategies for managing the volume and pattern of prescriptions
-most common DUR strategy is to create prescribing profiles and provide the profile info to the physicians so they can compare their prescribing patterns w/ those of their peers
-another common strategy is to require special authorization for certain drugs
(URAC) Utilization Review Accreditation Organization
a not-for-profit organization that performs reviews on external utilization review agencies
-primary focus is MCOs, though expanded accreditation activities
-states often require certification by this or another accreditation organization to operate
Step therapy
management of specialty pharmacy
-MCOs use a combination of strict pre certification to ensure proper indicated use, DUR and step therapy using less costly drugs first, and negotiating with manufacturers to try to contain costs in this area
Name the 5 internal operations departments in the internal operation of a MCO:
-marketing and sales
-enrollment and billing
-claims administration
-member services
-finance and underwriting
-information technology (IT)
Explain the functions of a sales representative in an MCO
-sales is the actual activity of selling to those in a position to buy
-sales personnel are responsible for contacting the employers and meeting with the benefits manager
-they find out employer’s priorities when it comes to purchasing health care benefits for employees and to describe what the MCO offers that would be of value to the employer
-relationships w/ brokers
-all the activities that involve face-to-face dealing with customers are the domain of the sales staff
What are the channels of distribution of the MCO to market services and products?
-MCO’s own sales personnel: employed by MCO to represent them in marketplace
-Benefits consultants: independent consulting firms work directly for an employer
-Agents: independent licensed to sell
-Brokers: independent
-Direct self-service via the web: MCO’s products and services to individual consumers
When an MCO markets their services, what must be observed in the components of commercial and government markets?
-they have wholesale and retail components
-wholesale: employers & govt agencies
-retail: individual consumers
-sales, growth, profitability, and incentive payments
Identify market size segmentation and the characteristics:
-small employer groups: (2-50), represents largest number of employer firms
-Midsized employer groups: (50-2,000), “middle market”
-large employer groups: (2,000 +), many worksites in multiple states and needs many different options
Describe the functions of enrollment and billing:
-ensures that new members are entered into the MCO’s administrative IT systems, ID cards are generated and issued and so forth
-ongoing maintenance of membership eligibility files is also a critical function for a variety of reasons
Name the basic elements of claims processing:
-receive the claim, adjudicate the claim using automated tools (process), correct errors then run again, adjudicate manually those claims that cannot be processed automatically, write a check, inform the member and provider what was paid and what was not and finally archive all the information
-determines if the person has coverage
Describe the claims function:
-claims capture (usually electronic & directly from providers)
-basic benefits administration
-determining level of coverage
-pricing claims payment
-application of medical policies
-routine medical policies
-medical policies for exceptions
-management of pended or appealed claims and adjustments
-other party liability
-management of claims inventory
-payment and evidence of benefit statements
-productivity and quality management
-Responsible for ensuring that the providers are paid for their services and that members receive reimbursements
What are medical policies?
-rules to make payment decisions
-regarding routine care and exceptions, rules used for using clinical info to make commonplace claims payment decisions
What are the advantages of electronic funds transfer?
paid faster, less chance of getting lost
Name the responsibilities of member services and why are they so important?
-direct contact with members: general info and outreach
-routine communication
-continual surveillance
In the finance department of an MCO, what are their duties and why are they so important?
-make money $$$$
-per member per month
-responsible for managing the money
How does the treasury department operate in an MCO?
-responsible for actually managing the cash and investments of the MCO
-must maintain adequate financial reserves to cover the cost of the claims using “risk-based capital” formula
Explain the functions of the budgeting department and define the 2 necessary components of the operating budget categories:
-the need to create a budget for medical expenses and a separate one for operational expenses
Discuss the various forms of rating the underwriters use to calculate the actual premium rates charged to customers:
-rating for self insured employers: “premium equivalent” rates
-standard community rating: same charge for everyone
-adjusted community rating & community rating by class: adjusted based on variables
-Experience: medical experience of the employer group
an informal term used to describe the various ways that an MCO sells its products- for example, brokers, consultants, employed sales force, electronic sales portals, and so forth.
-the first critical operational activities an MCO must undertake are to market its services and sell its products
-involves creating a strategy for entering a market and building the infrastructure needed to sell the MCO’s services
Benefits consultants
-are independent consulting firms that work directly for an employer
-focus almost exclusively on large employers and receive a consulting fee from the employer that is not related to the premium cost of insurance and is paid on a one-time basis
-evaluate proposals from various MCOs against many criteria to help large employers make the best choices for employee benefits
-also negotiate with an MCO on behalf of their clients
the management and processing of claims by an MCO or health insurance company
Claims capture
-first function performed by the claims department is to capture the claim which means entering a received claim into the claims processing system
-claims come in from a variety of sources, most common are electronic submissions using nationally standardized electronic claims forms, U.S. mail, less common sources are faxes, secure email, self entry via web
-claims usually come directly from providers
-submitted claims must contain certain pieces of info or they will be rejected by any MCO
-final step in the process (claims & benefits admin.) is storing all the info used to adjudicate the claim, as well as info about how it was finalized
-records extremely important, esp. in cases of appeals & grievances or in the event of a lawsuit
-extremely sensitive, so great care is taken to protect privacy
-is electronic
-done both on-site at the MCO for ease of retrieval, and off-site as a secure location so that in the event of a disaster, the MCO can still recover necessary info
(EOC) Evidence Of Coverage
-also known as a certificate of benefits
-document that describes the health care benefits covered by the health plan
-provides the member with some form of documentation that he or she in fact does have health insurance, and it describes what that insurance covers and how it works
(OPL) Other-Party Liability
an agreement that uses language developed by the National Association of Insurance Commissioners and prevents double payment for services when a subscriber has coverage from two or more insurance companies or MCOs
(FSA) Flexible Spending Accounts
-financial account that is part of a Section 125 plan, funded with pretax dollars via payroll deduction by an employer
-funds may be used to reimburse the employee for
(IBNR) Incurred but not reported
the amount of money that the plan had better accrue for medical expenses that it knows nothing about yet
-these are medical expenses that the authorization system has not captured and for which claims have not yet hit the door
(EFT) Electronic Funds Transfer
getting paid by electronic transfer of funds directly to one;s bank instead of receiving a paper check
(RBRVS) Resource-Based Relative Value Scale
this is a relative value scaled developed for the CMS for use by Medicare
-assigns relative values to each CPT code for services on the basis of the resources related to the procedure rather than simply on the basis of historical trends
-practical effect has been to lower reimbursement for procedural services (surgery) and to raise reimbursement for cognitive services (office visits)
-refers to bearing the risk for something (a policy is underwritten by an insurance company)
-in another definition, this refers to the analysis of a group to determine rates and benefits or to determine whether the group should be offered coverage at all
-a related definition refers to health screening of each individual applicant for insurance and refusing to provide coverage for preexisting conditions
What is Medicare?
health care benefits for the elderly, for persons with end-stage renal disease and for some disabled persons
Describe Parts A and B of Medicare:
-A: benefits for hospital services
-B: benefits for medical services
What is Medicaid?
-health insurance for low income individuals
-also provides major subsidies to safety net hospitals to provide uncompensated care to millions of uninsured people
-administered by the state
Who is eligible for Medicaid?
-policies, rule, and regulations pertaining to eligibility, coverage, and payment and services vary from state to state
-low income individuals, mostly healthy women and children, who make up 70% of the enrollees
-aged and younger persons who have chronic illnesses and are disabled (2nd largest group)
-institutionalized individuals
Explain the Balanced Budget Act of 1997 (BBA):
-expanded the benefits options and the plans available under Medicare to include Medicare HMOs, PPOs, POS, PFFS (private fee for service), PSO and MSAs
-ultimately led to Medicare+ Choice program
Define the Medicare Prescription & Drug Improvement and Modernization Act:
AKA Medicare Modernization Act (Medicare Part B)
-added drug coverage to Medicare
How did MMA impact health plans?
-it provided more money for health plans in a variety of ways, also introduced a new approach to plan contracting: PPO’s, multiple benefits plan
States monitor their Medicaid programs through what measurement tool
Explain the Medicare Advantage (MA) program
able to enroll HMO’s, adjusted payments, created payment for HMOs and PPOs, bidding
Explain the special requirements for the MA plans
license in the state it operates
(PFFS-MSA) Private fee for service- medical savings account
type of medicare advantage plan in which a private insurance company accepts risk for enrolled beneficiaries but pays providers on FFS basis that does not have any risk component to the provider
(PCCM) Primary Care Case Manager
used in Medicaid managed care programs and refers to the state designating PCPs as case managers to function as gatekeepers, but reimbursing those PCPs using traditional medicaid fee for service and paying the PCP a nominal management fee, such as 2-5$ PMPM
(CCIP) Chronic Care Improvement Program
-identifies enrollees with multiple or sufficiently severe chronic conditions who meet the criteria for participation in the program, and the program must have a mechanism for monitoring enrollee’s participation
(SCHIP) State Children’s Health Insurance Program
a program created by the federal government to provide a “safety net” and preventive-care level of health coverage for children, funded through a combination of federal and state funds and administered by the states, through Medicaid in conformance with federal requirements
Dual Eligible
individuals who are entitled to both Medicare and Medicaid coverage
(DME) Durable Medical Equipment
medical equipment that is not disposable and is only related to care for a medical condition
(MA-PD) Medicare Advantage- Prescription Drug
medicare advantage prescription drug
(OIG) Office of Inspector General
federal agency responsible for conducting investigations and audits of federal contractors or any system that receives funds of reimbursement from the federal government
(SNP) Special Needs Plan
a type of MA plan
-may exclusively enroll, or enroll a disproportionate percentage of, special needs Medicare beneficiaries
(MSA) Medical Savings Account
-created under BBA 97′ and updated in the MMA
-are specialized savings accounts into which a consumer can put pretax dollars for use in paying medical expenses in lieu of purchasing a comprehensive health insurance or managed care product
(ESRD) End Stage Renal Disease
Medicare treats beneficiaries with this differently than other types for purposes of enrollment in MA plans
What are the issues with state regulation of managed care?
laws and regulations not only differ between states, but also the type of MCO being regulated
Explain how HIPAA of 1996 impacted the insurance industry:
it placed requirements and regulatory responsibilities on almost all elements of the HC system, including providers and MCOs, regardless of any other state or federal legislation
What are the 2 separate Federal laws that provide individual extended health care with an insurer if they lose group benefits?
Identify the 3 clinical conditions HIPAA adopted in the late 1990s through amendments or acts to the original act:
-newborn and mothers health protection act of 96- minimum 48 hour stay for normal vaginal deliveries, 96 hours C section
-mental health parity act- requires aggregate lifetime dollar limits and annual dollar limits for mental health benefits and medical-surgical benefits be equal
-the womens health and cancer right act- group health plans cover medical and surgical benefits for mastectomies, etc.
The HIPAA law addresses administrative simplification. Explain this component and the goals:
-most important section
-reduce admin cost and burden in HC, standardize certain data elements, and protect the privacy of individual health info

-4 basic elements: transactions & code sets, NPI, privacy of medical info, security of medical info

Define the standard code sets used by HIPAA:
-the transactions in question are electronic transfers of data between providers and payers amongst others and the code sets are the definition of data
-we want uniform national standard for electronic transactions
Briefly explain the privacy provisions on health information by HIPAA (Identify 6) :
-state provisions are allowed to be much more strict then HIPAA
-protected health info (PHI)
-consumer control over health info (patients have the right to understand and control how their health info i used)
-limits on medical record use and release
-admin requirements
ERISA must adhere to very limited regulations by state and federal law. Define these regulations:
-Exclusions for preexisting conditions
-waiting periods for coverage
-COBRA benefits extension requirements
-HIPAA requirements
-Coverage of children
-Pediatric vaccinations
-Coverage for mental health services, maternity care, mastectomies
All MCOs are required to have a formal grievance and appeals process. What are the minimum requirements under ERISA:
-Timelines of response
-Who will receive the grievance or appeal
-Limitations on how long a member has to file a grievance or appeal
-What recourse a member has
Define the 3 organizations that have developed managed care oversight programs:
NCQA-National Committee on Quality Assurance
URAC- Utilization Review Accreditation Commission
AAAHC-Accreditation Association for Ambulatory Health Care
Name the industry standard for reporting data to employers and some government agencies:
P4P: Sources of evidence based clinical process measures:

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