Introducing
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Introduction
U.S. healthcare system is made up of five types of people or organizations:
1. Individuals.
2. Providers.
3. Manufacturers.
4. Payers.
5. Regulators.
There are three interrelated core components of healthcare benefits:
Defined benefits
Cost sharing
Coverage limitations
Regardless of how much it would cost to provide coverage for that benefit, the sort of medical good or service is what is considered the benefit. Cost here means the amount it costs to offer the benefit, not the amount the provider intends to charge.
The definition of a new EHB, habilitative care, was also given to the states, which presented a dilemma because, even now, it is not standardized and was not typically defined or included as a covered benefit when the ACA took effect.
The amount a member must pay out-of-pocket for each type of insured benefit is referred to as cost sharing.
• Copayment
• Coinsurance
• Deductible
The ACA defines levels of allowable cost sharing for QHPs and insured coverage:
• Platinum
• Gold
• Silver
• Bronze
Coverage Limitations
A benefit can only be paid for if it is delivered by a provider with whom you have a contract.
Sources of Benefits Coverage and Risk
Government entitlement programs, which may or may not include all or some managed care features, include the following:
• Medicare.
• Medicaid.
• Uniformed Services through TRICARE.
Several different sources of coverage are available to individuals.
Group health benefits plans have several advantages:
• The cost of the coverage is paid on a pretax basis.
• Employers can either purchase group health insurance or self fund the benefits plan.
• Employers, especially large employers, are usually able to obtain more favorable pricing and coverage than individuals.
There are three different ways that most payer organizations are structured around ownership and governance:
The general classification of the continuum models of managed care:
- Indemnity insurance
- Service plan
- Preferred Provider Organization ( PPO )
- Child Health and Disability Prevention (CHDP)
- Point of Service plan ( POS )
- Exclusive Provider Organization (EPO)
- HMO
Indemnity health insurance protects the insured against financial losses from medical expenses. A person covered under an indemnity plan may receive coverage from any licensed provider. The insurance company may reimburse the subscriber directly for medical expenses, or it may pay the provider directly, although it has no actual obligation other than to pay the subscriber unless required under a state’s laws.
It’s a prepaid healthcare rather than insurance and may require precertification, case management and second opinion.
One of the most common types of the insurance payment, it has conditions more than others, the cost is higher, more options of services and networks, direct access to the hospitals and specialized physicians. Failure to comply with PPOs’ rules result in a financial penalty to the provider, not the member.
The PPO can be either risk bearing or non-risk bearing. The risk bearing PPO combines the insurance function with the management of the network of providers.
High Deductible Health Plans and Consumer Directed Health Plans
The maximum deductible amounts for HDHPs are the same as the maximum amount of out of pocket spending allowed under the ACA for all insured health plans, and fall within the coverage requirements for a bronze level plan.
The CDHP is an HDHP combined with a pretax savings account.
In a POS plan, members may choose which system to use at the point at which they obtain the service.
The differences between coverage for HMO in network services, PPO in network services, and out of network services are usually approximately 20% between the HMO level and the PPO level, and from 40% to 50% between the HMO and out-of-network levels.
EPOs are similar to PPOs except benefits are only covered when nonemergency services are provided by the EPO’s network providers, which is similar in that regard to HMOs.
Traditional HMOs are generally defined by how they contract with network physicians, and currently fall into two broad categories:
Open panel: in an open panel HMO, private physicians and other professional providers are independent contractors who see HMO members in their own offices or facilities.
Closed panel: unlike physicians in an open-panel plan, physicians in a closed panel plan either are members of a single large medical group or are employed by the HMO.
Understanding how coverage is obtained, what the essential elements of coverage are, and the types of health plan structures that provide and administer those benefits are prerequisites for understanding health insurance and managed care. But regardless of the type of health plan or payer involved, the sources and components remain constant regardless of any other aspects; they only vary in specific ways.