Module 4 - Health Insurance.pptx44444444

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1. Module 4 Health Insurance

2. Concept of Health Insurance Healthcare insurance, like any other insurance, is a contract wherein, the healthcare payer (the insurance company) promises to compensate the member (the insured) for the medical expenses as defined in the agreement, against a consideration called premium. Coverage is the benefit offered to the member, which varies from policy to policy. The contract, or policy, specifies how much the insurance company will pay and how much will be borne by the insured.

3. Important terminologies of Health Insurance Deductibles Co-payment Co-Insurance Coverage Limits Out of pocket maxima

4. Important terminologies of Health Insurance Deductible: Deductible is the portion of the expense paid by the insured before an insurer pays any expense. Deductibles are typically used to deter the insureds from claiming for trivial expenses, which can be easily borne by them. By restricting its coverage to events that are significant enough to incur large costs, the insurance firm saves itself from paying high frequency smaller claims, which result into cheaper insurance premiums for plans having higher deductibles. Deductible is the amount of money you have to pay out of pocket before your insurance starts covering the costs of physical therapy. For example, if you have a $1,500 deductible for physical therapy, you’ll have to pay $1,500 out of pocket before your insurance starts covering the costs Co-Payment: Co-payment or co-pay is a payment made by the insured person and must be paid before any policy benefit is payable by an insurance company. Co-payment is often a small portion of the actual cost of the medical service and is mostly meant to prevent consumers from incurring medical expense that may not be necessary. A copay is a fixed amount of money you pay out of pocket for each physical therapy session. For example, if you have a $30 copay for physical therapy, you’ll have to pay $30 for each session, regardless of the total cost of the visit

5. Important terminologies of Health Insurance Co-Insurance: Under a co-sharing agreement, the insured will cover a defined percentage of the covered costs after the deductible has been paid. For example, an 80/20-coinsurance plan with a $500 deductible means that post paying the deductible, the insured will pay 20% of the covered costs, while the insurance company will be liable to pay the remaining 80%.

6. Important terminologies of Health Insurance Coverage Limits: Some health insurance policies only pay for health care up to a certain amount. The policyholder generally pays any charge in excess of the health plan's maximum payment for a specific service. In case of plans with annual or lifetime maximum coverage, the insurer stops paying any claim towards the health insurance plan once the maximum limit is reached. Any coverage beyond the maximum limit is borne by the policyholder. Out-of-pocket maxima: It is similar to the coverage limits, except that in this case, the policyholder’s payment obligation ends when the out-of-pocket maximum is reached, and the health insurance pays for all subsequent covered costs. Pre-Existing Condition: Any illness, symptom, disease, which already existed prior to the commencement of the Health Insurance policy. An out-of-pocket maximum is the most you have to pay per year for covered healthcare services. When you have spent this amount in your plan year on deductibles, copayments, and coinsurance for in-network care and services, your health insurer will pay for 100% of your healthcare services.

7. Benefits of Health Insurance

8. Benefits of Health Insurance: 1) Medical Expense Cover: Reimbursement of basic hospitalization expenses; covers expenses related to hospitalization and the services rendered by doctor & nursing home. 2) Major Medical Expense Cover / Long-term Care Insurance: Compensations for major surgery or operations due to serious illness or disease; this coverage continues protection after basic medical expense insurance benefits are exhausted. 3) Disability Income Cover: Primarily indemnifies the income lost during the disability period / treatment period; tries to replace the income that cannot be earned due to sickness of the assured; benefit usually paid as a % of the basic sum insured. 4) Pre & Post Hospitalization Expenses: Expenses related to pre and post hospitalization borne by some companies for a permitted number of days, which vary from company to company

9. Benefits of Health Insurance: 5) Transportation charges to the hospital (Ambulance charges): Provided by few insurers. 6 ) Domiciliary Treatment Charges: Subject to proof that such treatment was required, these charges are covered for stipulated minimum number of days. 7) Cashless Hospitalization Treatment: Offered by most insurers through Third Party Administrators. 8) Donor Expenses: All hospitalization expenses incurred by the donor in a major organ transplant case are covered in certain insurance policies.

10. How Health Insurance Works?/ Framework of Health Insurance

11. How Health Insurance Works?/Framework of Health Insurance Health Insurance framework: There are 4 types of stakeholders in the whole framework . - Community: The people who contribute towards the health insurance fund in the form of participants of a private health insurance scheme or as employees of an organization, are the ones who are the recipients of the benefits. - Providers: They are the ones who provide the coverage; can be either public or private providers. - Organizer: Mostly there for government or community based organizations, an organizer is an institution which manages the policy / scheme. For private health insurance, the organizer is not relevant. Insurer: Insurer’s primary responsibilities include managing the fund and accepting the risk. The insurer develops the product, accepts the risk & manages the fund, so that the insured get their benefit. Every country has got regulatory bodies to govern the insurers. The National Association of Insurance Commissioners (NAIC) i s the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. Insurance Regulatory and Development Authority of India or IRDAI is an autonomous body in India that is responsible for managing the insurance industry of India, which covers both life insurance and general insurance companies

12. How Health Insurance Premiums are Calculated?

13. Health Insurance premiums are calculated on the following basis Risk – rated Premium: Here the premium calculation is based on risk covered. So, a person with a chronic illness will have a higher premium compared to a healthy adult; or an aged person will have higher premium compared to someone younger. Hence, the premium varies for same amount of insurance cover, from person to person. Community – rated Premium: Here a common premium is applicable to the entire group reflecting the average risk of illness. This brings down the premium to an affordable level, enabling everyone in the group to participate. Income –rated Premium: Here the premium is in accordance to the income levels; people with higher income levels pay higher premium so that the total premium collected is sufficient to cover the cost of the insurance policy; more prevalent in social health insurance schemes.

14. Most social health insurance schemes are mandatory; hence it is compulsory to contribute to the fund, which is why the size of such pools are high enabling a mix of all risk related categories. However, the private health insurance policies are optional and so the premiums are voluntary.

15. Health Insurance Claims Settlement Health Insurance Claims: There are basically two ways of settling insurance claims. Third party payment mechanism: Here the organizer pays directly to the provider. This form of reimbursement has the least burden on the patient. Indemnity mechanism: Here the patient pays the bills upfront and is later reimbursed by the insurer on submission of bills and documents. The burden is that the patient has to make arrangements for paying the bill initially; mostly prevalent in private health insurance schemes

16. Inherent problems in Health Insurance Markets Complex concerns in Health Insurance market are: - Moral Hazard: Consumer induced moral hazard : Policyholders mostly take decisions and actions, which maximize their own benefits and do not want to bear the full cost. Producer induced moral hazard: Producers sometimes asks for more or unnecessary tests and treatments, which might be medically not required. Adverse Selection: Persons belonging to high –risk groups tend to seek more coverage than low-risk people. As all the policyholders are required to pay the same premium, high-risk groups find the policy more attractive than lowrisk people who sometimes find the premium high and unattractive.

17. Healthcare ecosystem in USA

18. Healthcare ecosystem in USA Health care in the United States is provided by many separate legal entities including private and public spending (e.g. Medicaid, Medicare etc ). More is spent per person on health care in the United States than in any other nation in the world. These health insurance organizations can be categorized as follows: Public health care coverage: Medicare, State Children's Health Insurance Program (SCHIP), Medicaid, Military health benefits (TRICARE). Private health care coverage: Employer sponsored, Self purchased

19. Healthcare ecosystem in USA – Public Health Coverage Medicare Medicare  is a government national  health insurance program in the United States, begun in 1965 under the   Social Security Administration  (SSA) and now administered by the  Centers for Medicare and Medicaid Services  (CMS). Medicare is federal health insurance for people 65 or older, and some people under 65 with certain disabilities or conditions. A federal agency called the Centers for Medicare & Medicaid Services runs Medicare. Because it’s a federal program, Medicare has set standards for costs and coverage. This means a person’s Medicare coverage will be the same no matter what state they live in.

20. Healthcare ecosystem in USA – Public Health Coverage Medicaid In the United States, Medicaid is a government program that provides health insurance for adults and children with limited income and resources. The program is partially funded and primarily managed by state governments, which also have wide latitude in determining eligibility and benefits, but the federal government sets baseline standards for state Medicaid programs and provides a significant portion of their funding. Medicaid was established in 1965 and was significantly expanded by the  Affordable Care Act  (ACA), which was passed in 2010.

21. Healthcare ecosystem in USA – Public Health Coverage The State Children's Health Insurance Program (SCHIP) It is designed to provide insurance coverage for children whose families earn too much to qualify for Medicaid, but who cannot afford private coverage. States may have varying eligibility rules, but in most states, uninsured children under the age of 19 whose families earn up to $36,200 a year (for a family of four) are eligible. SCHIP provides coverage for: doctor visits immunizations hospitalizations emergency room visits

22. Healthcare ecosystem in USA – Public Health Coverage TRICARE Tricare (styled TRICARE) is a health care program of the United States Department of Defense Military Health System. Tricare provides civilian health benefits for U.S Armed Forces military personnel, military retirees, and their dependents, including some members of the Reserve Component. The Tricare provides comprehensive coverage to all beneficiaries, including: Health plans Special programs Prescriptions Dental plans

23. Healthcare regulations & standards

24. Healthcare regulations & standards Health Insurance Portability and Accountability Act (HIPPA) Purpose of HIPAA To prevent inappropriate use and disclosure of individuals' health information. To involve organizations handling health information to protect that information and also the systems which store, transmit, and process it. Health Information Technology for Economic and Clinical Health Act (HITECH) enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA): Under the HITECH Act, the United States Department of Health and Human Services is spending billions of dollars to promote and expand the adoption of health information technology like creation of a nationwide network of electronic health records Patient Protection and Affordable Care Act of 2010 (ACA): The ACA was enacted to increase the quality and affordability of health insurance by expanding public and private insurance coverage and reducing the costs of healthcare for individuals and the government.

25. Healthcare regulations & standards American Medical Association  (AMA) Advocates for Administrative Simplification: The objective behind this administrative simplification of the physician practice is to encourage: • Real-time health plan transactions through automation • Reduction of manual processes i n the physician’s claims revenue cycle • Increased transparency in the health insurer claim payment process Privacy Standards: The HIPAA Privacy Rule talks about providing federal protection towards personal health information held by the physicians and also talks about the patients’ rights towards that information . It also permits personal health information to be disclosed for patient care and other important purposes. Security Standards: The Health Insurance Portability and Accountability Act (HIPAA) Security Rule ensures confidentiality, integrity and security of by safeguarding the electronic health information.

26. Medicare

27. Medicare Medicare: Medicare is the federal health insurance program that covers most people aged 65 and above as well as cover younger people who have certain disabilities or people who have End-Stage Renal Disease (permanent kidney failure). Eligibility Criteria: - People aged 65 and above - People with certain disabilities and are under age 65 - People of all ages with End – Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant)

28. Medicare Generally, you only need to sign up for Part A and Part B once. Each year, you can choose which way you get your health coverage (and add or switch drug coverage). Original Medicare covers most, but not all of the costs for approved health care services and supplies. After you meet your deductible, you pay your share of costs for services and supplies as you get them. Services covered by Medicare must be medically necessary. Medicare also covers many preventive services, like shots and screenings. If you go to a doctor or other health care provider that accepts the Medicare-approved amount, your share of costs may be less.

29. Medicare Medicare Part A (Hospital Insurance): If an individual or his /her spouse pay Medicare taxes during working years, the premium for Medicare Part A does not need to be paid. Part A provides coverage like inpatient care in hospitals, nursing homes, skilled nursing facilities but does not include long-term or custodial care. What does Part A Cover? - Hospital Stays - Blood Transfusions - Nursing Home or Skilled Nursing Facility - Home health services

30. Medicare Part B (Medical Insurance): The coverage provided by Medicare Part B includes medically necessary doctor's services, outpatient care and most other services that Part A does not cover , like some physical or occupational therapies and some home health care services as well as preventive services. Most people have to pay a premium for Part B which can be issued from a Social Security, Railroad Retirement or Civil Service Retirement check. The Premium can be paid by using either the electronic payment option or Medicare Easy Pay. The state may pay for premiums or deductibles for those qualified to receive help. Medicare Part B covers some of the services like lab services for blood tests, urine analysis, etc. It covers Glaucoma tests once a year if done by an authorized eye examiner, it covers Diabetic screenings in case of high blood pressure, obesity, high blood sugar, etc. It also covers Emergency room services for bad injuries, severe illness, etc.

31. What Medicare Part A and Part B do not cover: - Dental care and dentures - Routine vision and hearing care - Most eyeglasses and hearing aids - Custodial or long-term care - Routine physical exams (except for an entry-year examination) - Some shots, tests and lab tests - Some diabetic supplies - Routine foot care-Acupuncture and certain chiropractic services-Cosmetic surgery

32. Medicare Part C (Medicare Advantage) Medicare Part C combines Part A and Part B options and covers all medically needed services. The private insurance companies that are approved by Medicare provide this type of coverage. Part C is a lower-cost alternative to the Original Medicare Plan and providers usually offer extra benefits and include Prescription Drug Coverage (Part D). There are several plans available for Medicare Advantage. The Part C plans include the following: Medicare Preferred Provider Organization (PPO) Medicare Health Maintenance Organization (HMO) Medicare Private Fee-for-Service (PFFS) Medicare Special Needs Medicare Medical Savings Account (MSA)

33. Medicare Preferred Provider Organization (PPO): The insured can choose to visit any doctor or specialist. If they are not in their PPO network, the cost increases. They usually can see a specialist without a referral. Medicare Health Maintenance Organization (HMO): The insured can visit doctors in the HMO network only. Generally, they are required to have a referral to visit a specialist. Medicare Private Fee-for-Service (PFFS): The insured can visit any doctor or specialist, but the doctor must be willing to accept the PFFS's fees, terms, and conditions. They do not need to have a referral to see a specialist. However, with PFFS plans, you usually don't need referrals or prior authorization for treatment. Medicare Advantage plans are offered by private insurance companies and must provide all the coverage included in government-sponsored Medicare Part A and Part B. But they often offer additional benefits beyond those provided by Original Medicare, like some vision, dental, and hearing coverage, for instance.

34. Medicare Special Needs: These plans are designed for people with certain chronic diseases or other special health needs. These plans must include Part A, Part B, and Part D coverage. Medicare Medical Savings Account (MSA): There are two parts to this plan: - A high-deductible plan with which coverage will not begin until the annual deductible is met. - A savings account plan where Medicare deposits money for the insured to use towards health care costs.

35. Medicare Part D (Prescription Drug Coverage): Medicare Part D covers prescription drugs provided by private companies which are approved by Medicare. There are two ways to join the Medicare prescription drug coverage plan: By adding it to the Original Medicare Plan / Medicare Cost Plans/ Private fee-for-service plans / Medical Savings account plans. By joining an HMO / PPO plan with Part D coverage the insured usually have to pay a monthly premium that will vary according to the plan chosen

36. Medicaid

37. Medicaid Medicaid is the United States health program for eligible individuals and families having low incomes and resources. It is jointly funded by the states and federal government and is managed by the states. Among the groups of people Medicaid serves eligible low-income parents, children, seniors and people with disabilities. In USA, Medicaid is the largest source of fund for medical and healthcare services for people with limited level of income.

38. Medicaid coverage has typically included the following groups: Low-income children and their parents Pregnant women People with disabilities Adults over the age of 65

39. Medicaid Services -Inpatient hospital services -Outpatient hospital services -Prenatal care -Vaccines for children -Physician services -Nursing facility services for persons aged 21 or older -Family planning services and supplies -Rural health clinic services -Home health care for persons eligible for skilled-nursing services -Laboratory and x-ray services -Pediatric and family nurse practitioner services -Nurse services

40. Individual Health Insurance: Individual health insurance is a health insurance coverage purchased directly on an Individual basis rather than a group, from the insurance company. What Individual Health Insurance Plans are Available? Under the individual and family health insurance product category, there are several different types of private health insurance plans available, such as Indemnity (fee-for-service) health insurance Health Maintenance Organization (HMO)plans Preferred Provider Organization (PPO)plans Point-of-Service (POS) plans Health Savings Account (HSA)plans Each plan type differs mainly on Cost and Choice.

41. Group Health Insurance: In Group health insurance, the insurance company enters into an agreement with a master policyholder, usually an employer and issues certificates for each member of that group. The group should exist for a purpose other than purchasing insurance like labor union or professional association. Over 60% of the U.S. population that has health insurance receives their health care coverage through an employer sponsored group health insurance plan. However, temporary or part-time employees are seldom eligible to participate in an employer’s health insurance benefits plan. Based on the number of enrolled employees in a group health insurance plan, most health insurance companies in the U.S. will have three classification levels: Small group, Mid-size group and Large group

42. Individual Vs. Group Insurance: Individual Insurance Group Insurance A personal policy designed to protect the individual and dependents Designed to provide protection (coverage) to a specific group of people under a single insurance contract Individual is also known as the policyholder The employer is the policyholder Policyholder must show evidence of Insurability Evidence of insurability is usually not required. The individual pays the premium The premium contribution is shared between the employer and the employees (usually the employer is the major contributor)

43. Managed Care plans: Managed-care plans are health insurance policies using which policyholders can avail healthcare facilities at reduced costs. Managed care insurance plans have the lowest costs, provided that the insured individual seeks treatment from a network hospital. Such plans also involve less paperwork and come with lower deductibles, helping to make healthcare more affordable. This is a relatively new type of insurance policy developed in the USA to deal with rising healthcare expenses. Comprehensive health services are provided to the members by the Managed Care Plans. They are offered financial incentives to avail services from providers belonging to the Managed Care plan. Examples of managed care plans include: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), Exclusive Provider Organizations (EPO) and Point of Service Plans (POS).

44. HMO Network: - Health Maintenance Organisations Health Maintenance Organizations enters into negotiated contracts with providers to form a network in order to deliver comprehensive medical care to plan members. The provider network consists of participating physicians, hospitals and ancillary service providers and it delivers medical care to HMO members in exchange for negotiated compensation. Thus, the insured person will have to pay nothing or next to nothing for services received within the network. However, one will have to pay 100% of the costs out of pocket if they see a doctor outside the network or break any rules. Except in emergencies. PPO Network: - Preferred Provider Organisation Preferred Provider Organization is a healthcare benefit arrangement, which is designed to supply services at a discounted cost by providing incentives for members to use designated healthcare providers. However, it also provides coverage for services offered by healthcare providers not part of the PPO network. PPO networks have an established payment system where those seeking care outside the network will have to meet a certain deductible. Insured people will also have a fixed percentage (for example- 20%) of the total medical expenses based on higher charges.

45. EPO Network: - Exclusive Provider Organisation Network In Exclusive Provider Organization Network, employees must use providers from the specified network of physicians and hospitals to receive coverage as care received from a non-network provider will not be entitled for coverage except in case of an emergency situation. POS Network: - Point of Service POS is a hybrid product, which is a combination of aspects of traditional group health insurance, HMOs and PPOs. The POS allows consumers to "customize" their healthcare, choosing at the point of service either medical provider from within the plan‘s network or out of network providers. If one’s primary care doctor makes a referral outside the POS network, the plan will cover all or most of the bill.