1.3 Health Care Plans (Continued) 1-14
• Managed care offers a more restricted choice of providers and treatments in exchange for lower premiums, deductibles, and other charges
• Managed care organizations (MCOs) establish links between provider, patient, and payer– How many MCOs may a doctor choose to
participate in?• Thinking it Through, page 10
1.4 Health Maintenance Organizations 1-15
• A health maintenance organization (HMO) combines coverage of medical costs and delivery of health care for a prepaid premium
• Participation means that a provider has contracted with a health plan to provide services to the plan’s beneficiaries
• Capitation is a fixed prepayment to a provider for all necessary contracted services provided to each plan member– Per member per month (PMPM) is the capitated rate– Figure 1.3, page 11
1.4 Health Maintenance Organizations(Continued)
1-16
• A network is a group of providers having participation agreements with a health plan– Visits to out of-network providers are not covered
• HMOs…– Health Maintenance Organization…
• often require preauthorization before the patient receives many types of services
• When HMO members see a provider, they pay a specified charge called a copayment
• HMO members choose a primary care physician (PCP), who directs all aspects of their care
1.4 Health Maintenance Organizations(Continued)
1-17
• Open-access plans are those HMOs…– Health Maintenance Organization…
• that allow visits to specialists in the plan’s network without a referral
• A point-of-service (POS) plan permits patients to receive medical services from non-network providers for a greater charge
• Thinking it Through, page 14
1.5 Preferred Provider Organizations 1-18
• A preferred provider organization (PPO) is an MCO…– Managed Care Organization…
• where a network of providers supply discounted treatment for plan members– Most popular type of health plan– Creates a network of physicians, hospitals, and other
providers with negotiated discounts– Requires payment of a premium and often of a copayment
for visits– Does NOT require referrals or PCPs…
• Primary Care Physicians
• Thinking it Through, page 16
1.6 Consumer-Driven Health Plans 1-19
• A consumer-driven health plan (CDHP) combines a high-deductible health plan with a medical savings plan– The health plan is usually a PPO…• Preferred Provider Organization…
– with a high deductible and low premiums– The savings account is used to pay medical bills
before the deductible has been met
1.7 Medical Insurance Payers 1-20
• Three major types of medical insurance payers:1. Private payers—dominated by large insurance
companies2. Self-funded (self-insured) health plans—
organizations that pay for health insurance directly and set up a fund from which to pay
3. Government-sponsored health care programs—includes Medicare, Medicaid, TRICARE, and CHAMPVA
• The Patient Protection and Affordable Care Act (PPACA) is health system reform legislation that introduced significant benefits for patients
1.8 The Medical Billing Cycle 1-21
• A medical insurance specialist is a staff member who handles billing, checks insurance, and processes payments
• To complete their duties, medical insurance specialists follow a 10-step medical billing cycle– This cycle is a series of steps that leads to
maximum, appropriate, timely payment
1.8 The Medical Billing Cycle (Continued)1-22
• Step 1 – Preregister patients• Step 2 – Establish financial responsibility for
visits– Who is primary payer?
• Step 3 – Check in patients• Step 4 – Check out patients– A medical coder is a staff member with specialized
training who handles diagnostic and procedural coding
– The patient’s primary illness is assigned a diagnosis code
1.8 The Medical Billing Cycle (Continued)1-23
• Step 4 – Check out patients (continued)– Each procedure the physician performs is assigned a
procedure code– Transactions are entered in a patient ledger—a
record of a patient’s financial transactions• Step 5 – Review coding compliance– Compliance means actions that satisfy official
requirements• Step 6 – Check billing compliance• Step 7 – Prepare and transmit claims
1.8 The Medical Billing Cycle (Continued)1-24
• Step 8 – Monitor payer adjudication– Accounts receivable (A/R) is the monies owed to a
medical practice– Adjudication is the process of examining claims and
determining benefits• Step 9 – Generate patient statements• Step 10 – Follow up patient payments and
handle collections• A practice management program (PMP) is
business software that organizes and stores a medical practice’s financial information
1.9 Working Successfully 1-25
• Professionalism is acting for the good of the public and the medical practice
• Medical ethics are standards of behavior requiring truthfulness, honesty, and integrity– Thinking it Through, page 29
• Etiquette is comprised of the standards of professional behavior