Cash was the primary means of paying for healthcare treatment in the early days. Sometimes, in lieu of cash, the practitioner was paid using a barter system. During the Great Depression companies offered health insurance to help attract qualified workers since there was a freeze on wages.
Today, insurance remains the dominant means of reimbursing a practitioner, provider, clinic or hospital for healthcare services. Insurance has evolved over the decades and comes in many different packages and functions in many ways. Insurance is broken up into two categories. The first being commercial insurance, which consists of the HMO, PPO, POS, and EPO options. The second category is known as the entitlements (Government Health Insurance system), Medicare, Medicaid and Veterans Benefits.
The Health Maintenance Organization (HMO) is an insurance plan that utilizes a Primary Care Provider (PCP) who functions much like a gatekeeper and helps manage the overall care of an individual member. The HMO utilizes providers (medical practitioners) who are affiliated with medical groups that agree to contracted rates to keep control of cost. HMOs tend to be the least expensive option for the member. By accepting the HMO, the individual agrees to the managing of his or her care by the PCP. If the member needs to be seen by a specialist, a referral is made by the PCP. This system has advantages for the member. For example, no time would be wasted on the part of the member by seeking out their own referrals to specialists that might not be needed in the first place. The gatekeeper tends to be a practitioner trained in either family or internal medicine. An HMO’s primary function is to keep the patient healthy, focus on preventative care, manage the care of the patient and keep down costs.
Most patients live relatively close to their chosen medical group. When a person chooses a health plan they are normally faced with choosing e a PPO, EPO or HMO. If the member selects the HMO option then they are given a choice of Medical Groups that are near where they reside. In some cases, patients move from the area of which the Medical Group has its facility.
HMO Referral Process
The referral process was designed to save money, time, cut-down on unnecessary overuse of medical resources and help better manage care without jeopardizing the patients’ health and well-being. The referral process starts from a request by the PCP (Primary Care Provider). The referral for service, test or treatment is matched against a set of health plan guidelines. Each health plan (insurance) has a set of guidelines to help providers know what steps to take prior to a referral being authorized. Look at the following example: you go to your PCP with a complaint of chronic knee pain. Your PCP determines that you are suffering from osteoarthritis. The standard guideline calls for the first line of treatment to involve the use of over the counter medications such as Tylenol, Advil, Motrin or Naproxen. The second line of treatment would consist of injections of cortisone to the knee. The third line of treatment would include injection of a synthetic viscous solution such as Synvisc ™. The last option would be surgery.
The guidelines were designed to save the most expensive option for last, plus the fact that most patients usually get sufficient relief from the first three steps. This chronological progression of the treatment stages makes complete financial sense and it does not keep a patient from proper treatment.
The benefit of the HMO can be summarized by the following example. A patient has had a five-day complaint of chest pain and decides to see a cardiologist thinking that this might be related to the heart. During the office visit, the cardiologist concludes that it is not from a heart condition and suggests that this might be a problem related to the gastrointestinal system. The cardiologist then suggests that the patient see a gastroenterologist. The patient makes an appointment to see a gastroenterologist and finds that the problem is related to the gallbladder and a surgical consult is advised. The patient in this scenario would end up paying his or her usual premium plus three co-pays (one to each physician). If the patient had the HMO the gatekeeper could have ascertained whether the patient should see cardiology, gastroenterology or surgery saving the patient time and money. Keep in mind this was a very simple example but, hopefully, you get the point.
PPO stands for Preferred Provider Organization. These plans tend to use a panel of contracted providers that have been selected for their history of quality and cost-efficient delivery of health care service. The member has the freedom to pick a provider from a list of physicians in the network. The patient does not necessarily have to pick an internal medicine provider. In fact, an individual can see any specialty if it is provided in the network and this can be done without a referral. Individuals who pick the PPO plan tend to pay a higher individual premium and slightly higher co-pay for the privilege of seeing any provider in the network. The managing of the care becomes the burden of the individual member.
POS (Point of Service)
This type of plan offers the flexibility of using the PPO or HMO option. If you are admitted to the hospital or see a practitioner as an outpatient you must decide which option to use at the time of service. Some insurance companies have been known to change PPO plans to Point of Service. If you are a PPO option member it is always a good idea to periodically check with your insurance carrier to see if you plan has been changed to a POS.
The Exclusive Provider Organization plan can be placed between the HMO and PPO in terms of price and service. The EPO is considered an in-network health plan and services must be provided by a provider who falls within an approved list of the network. No benefit exists outside the network. The medical providers are reimbursed on a fee for service basis rather than through capitation. The providers provide care at a set rate which is normally lower than the standard rates. This in turn makes the plan more affordable for the patient.
Narrow Networks were designed to be a low-cost high-quality way of delivering healthcare. Health plans scrutinize providers and hospitals that can be used in the narrow network. The providers and hospitals provide care for its members at contracted rates. The upside to the narrow network is that a member can get quality care at affordable price. The downside, members must see providers and be admitted to hospitals which are accepted only in the network. A patient with an extensive medical history or is a high consumer of medical care should consider joining a different plan.
Medicare was enacted in 1964 under the Social Security act and was designed to help cover medical expenses of a person age 65 and older who have worked for wages in the United States for at least 10 years. Medicare also covers individuals who have a diagnosis of end-stage renal disease or Amyotrophic Lateral Sclerosis (ALS) and qualify for social security disability. This program is administered by the Centers for Medicare and Medicaid services (CMS). The CMS falls under the jurisdiction of the Social Security administration. Individuals who turn 65 years of age have a limited time frame to sign up on their own. In some cases, however, individuals can be signed up automatically if they meet all the requirements. Medicare is divided into four parts known as A, B, C, and D.
Part (A) is also known as inpatient hospital insurance. It is responsible for the reimbursement of services rendered in the hospital, skilled nursing facilities, acute rehabilitation facilities, home health and hospice care. Part (A) is premium free for qualifying individuals who have worked for wages in the United States or territories for many years or have been diagnosed with end stage renal disease (ESRD). For the inpatient stay, part (A) pays for, day one through sixty, minus the standard deductible (see table). 2020 Medicare deductible is 1,408.00 dollars. Days, sixty-one through ninety, an additional $335.00 per day is the responsibility of the beneficiary. From day 91 and on, $670.00 per day will be the responsibility of the beneficiary.
Benefit Time Period Part A coverage Patient cost
Inpatient care 1 to 60 days 100% 1,408.00 deductible
61 to 90 days Minus Patient share 352.00/day
91 to 150 Minus Patient share 704.00/day
150 + Not covered 100%
**subject to change yearly adjustments
Skilled Nursing Facility payment
Part (A) pays full cost of the Skilled Nursing Facility from days one through twenty. Days twenty-one through one hundred part (A) pays 80% of the daily rate. The remaining 20% is paid either by the individual or a supplemental insurance.
Part (B) is also known as medical insurance and covers medical services. Included in this coverage is: physician services, durable medical equipment, labs, diagnostic studies, outpatient surgery services, and outpatient medical services. Ambulance transportation is covered by part (B) if it meets the Medicare guidelines for medical necessity. Blood transfusions are covered after the first 3 pint's. The first 3 pints can be covered by supplemental insurance such as Medigap. Part (B) pays 80% for physician services, 80% for durable medical equipment and 50% for mental health services.
The premium cost for part (B) is $144.60 a month. The yearly deductible is 198.00 for 2020. For HIGH income Part B enrollees the cost for the premiums will be between 202.40 to 491.60 a month. More information regarding parts (A) and (B) can be found at the Centers for Medicare and Medicaid Services website is: www.Medicare.gov
Part B additional coverage:
Preventive Services and Screenings
•Abdominal Aortic Aneurysm Screening
•Alcohol Misuse Screening and Behavioral Counseling Intervention in Primary Care
•Annual Wellness Visit
•Bone Mass Measurements
•Cancer Screenings (Breast Cancer)
Cervical and Vaginal Cancer
Colorectal Cancer (Fecal Occult Blood Test)
•Cardiovascular Disease Screening
•Depression Screening in Adults
•Diabetes Self-Management Training
•Human Immunodeficiency Virus (HIV) Screening
•Initial Preventive Physical
•Intensive Behavioral Therapy for Cardiovascular Disease
•Intensive Behavioral Therapy for Obesity
•Medical Nutrition Therapy
•Sexually Transmitted Infections (STIs) Screening and Behavioral Counseling
•Tobacco-Use Cessation Counseling
Source: Center for Medicare and Medicaid Serves
Part (C) is also known as the Medicare Advantage Plan (MAP). There are a few choices with MAP these include the HMO, PPO, Special Needs Plans (SNP) and HMO point of service plans. If a member who chooses the HMO option he or she will receive care through a managed care group. Medicare pays a fixed monthly rate to the health plan. The member must have care provided through a selected network and utilize a primary care provider. Inpatient care is provided within a network of hospitals of which have contracts with the selected health plans. The advantage of using this type of plan is the addition of preventative and wellness programs along with a special limited formulary for pharmaceutical drugs. To qualify for part (C), an individual must be eligible for part (A) and (B) and be paying part (B) monthly premiums.
Part (D) helps pay for the prescription drugs. It is also known as the Medicare Prescription Drug Benefit. This option is administered through private insurance. Normally a premium is required monthly. Not all drugs are covered and it is advisable for each member to check with Medicare first before filling any prescriptions. Part (D) is divided into four phases within a calendar year:
Phase one includes the annual deductible. You as the beneficiary must pay full price for prescription drugs until the annual deductible are met. Once the deductible has been met then phase two begins.
Phase two is also known as the initial coverage period. During this phase you, as the member are only responsible for any co-pays for the drugs. This end when a certain dollar amount limit is reached. At that time phase three begins.
Phase three is officially known as the coverage gap, but most people know it as the “doughnut hole”. During this phase the member is responsible for 100% of the cost of the drug until the set dollar limit is reached for the calendar year. The Affordable Care Act (ACA) helps shrink the gap by giving full credit of cost of the drugs even if you pay at a discount.
This is also known as the catastrophic coverage phase. The member is responsible for no more than 5% of the cost of prescription drugs. Up until the calendar year ends in which the phases begin all over again starting with phase one.
Source: Centers for Medicare and Medicaid Service
As of 2020 Medigap plans C thru F are no longer available for purchase. Those that have these Medigap plans are allowed to keep them active.
Signing up for Medicare benefits can happen one of two ways. Some recipients can be automatically enrolled if they are 65 years of age and are receiving either Social Security benefits or Railroad Retirement benefits. Those who are not receiving social security or railroad benefits must apply on their own. Enrolling can be done either of two ways. In person at the local Social Security office or online at: www.medicare.gov. It is advised by the Centers of Medicare and Medicaid that members enroll as soon as 3 months prior to their birthday month. Coverage begins on the 1st of the birthday month.
The lions’ share of funding for the Medicaid program comes from the federal government. However, each individual state determines eligibility requirements and shares in the costs as well. Medicaid is an insurance program that covers health care related costs and was designed to be a part of the social safety net system. It covers many of the services that Medicare covers such as, inpatient stays, outpatient services, durable medical equipment, labs and diagnostic studies. Medicaid also pays for; physician services, dental services, custodial care and home health. Medicaid can also provide co-pay assistance of Skilled Nursing Facilities. Eligibility is based on a variety of factors which include an assessment of assets, income, resident status and availability of quality medical care. Medicaid applications can be obtained from the Medicare and Medicaid website (www.CMS.org). Help with enrolling in Medicaid can be acquired while a member is currently admitted to a hospital through the financial advocate’s office or equivalent.
THE AFFORDABLE CARE ACT
The Patient Protection and Affordable Care act is also known as the Affordable Care act (ACA). It was signed into law on March 23, 2010. The ACA was an attempt to help increase the portability, availability and quality of health insurance in the United States and set the mandate that insurance companies cover all applicants, regardless of prior conditions. The ACA also mandates that the insurance companies provide, or cover, what is termed the Essential Health Benefits (EHB). The ten mandated EHB’s are as follows:
Includes visits to the doctor's office, community clinics, urgent care and same day surgery centers. Home health and hospice might be covered with some restrictions.
Emergency room visits are to be covered. Co-pays may apply.
The ACA mandates that room and board, nursing care, tests and medications while in the hospital, be covered. Depending on your plan, you may still be responsible for up to 20% or more co-pay on your hospital bill. (See tips section in this book for more help with hospital bills)
The ACA mandates coverage for, well woman care and visits, breast-feeding supplies and support, STD screenings and counseling, mammograms, contraception, vitamin supplements and gestational diabetes care.
This also includes substance abuse care
This includes annual physical exams, Mammograms, Pap smears, prostate exams and cancer screening.
Lab tests are covered but each health plan has a certain list of covered laboratory services.
Including: dental care, eye exams, well-child visits and vaccinations
The ACA has set a mandate that health plans cover prescriptions. It mandates that at least one drug in each category of the US pharmacopeia be covered. A list can be found with each health plan.
Having Adequate Coverage under the ACA
The ACA also mandates that each citizen of the United States obtain adequate health coverage or face a penalty which will be enforced by the IRS. However, someone may qualify for an exemption.
Some exemptions include, but are not limited to:
*Death in the family
More information regarding the affordable care act can be found online: www.Healthcare.gov
One last point the reader should keep in mind. No one insurance policy covers everything. It is highly recommended that each insurance beneficiary closely examines their policy and look for the loop holes. The insurance customer service reps can be of great assistance in the examination of the policy. There are helpful worksheets located in the back of this book which have been designed to help you identify areas that lack coverage and your share of cost.
Health Care While Traveling
Even though everyone hopes to have an enjoyable time traveling there are the occasions when a healthcare need comes into the scene. Being prepared for this is essential and what you can do to be as prepared as you can be is what this section will cover.
Travel insurance exists to cover such things as, medical expenses, luggage that gets lost, accidents and trip interruption or cancellation. Travel insurance can cover a single trip or multiple trips within a certain period. Purchasing travel insurance is relatively easy and can be obtained through a variety of entities such as insurance agencies, credit card companies, or convenient vendor kiosks in most airports or embarkation stations.
Cruise Ship Medicine
Cruise Ships; for the most part, have a physician and staff aboard to tend to emergencies and common ailments for crew and the passengers. The size of the ship can determine the size of the medical department. The medical department sees to the health and welfare of the crew as well as the passengers. Normally, physicians are carefully selected by their backgrounds. They tend to desire physicians which has a good amount of experience in; emergency medicine, internal medicine or family practice. The cruise ship medical services can be paid at the end of the cruise. Normally a claim must be made to the travel insurance company for the passenger to be reimbursed.
Healthcare in Different Countries
Normally, private health insurance will not cover any medical expenses outside the United States. This is where travel insurance can play an invaluable role in getting the care you need when you need it however, not all insurance policies are the same. In fact, some will not cover much at all leaving an individual stranded and without care. A policy should come from a reputable agency that has a good track record. Most travel professionals know which company offers the better policies. Items in the policy should include emergency and surgical services, medical evacuation, emergency transport services and hospitalization. The policy should be read as thoroughly as possible and scrutinized prior to accepting.
In Flight Healthcare Need
Each year hundreds of medical emergencies that range from air sickness to cardiac arrests happen aboard flights both domestically and abroad. Most domestic airlines have flight attendants that are trained in CPR and the use of an automatic defibrillator. A medical kit which contains a limited amount of emergency items is available to medical personnel l flying on the aircraft. If there is a medical emergency and the flight crew need more help and announcement is usually made to see if any of the passengers are medically trained. The pilot can get in touch with an FAA certified medical doctor to help with any guidance and advice if needed.
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