Chapter 2: Introduction to Health Insurance
Terms in this set (91)
Includes the identification of disease and the provision of care and treatment to persons who are sick, injured, or concerned about their health status.
Expand the definition of medical care to include preventative services.
Helps individuals avoid health and injury problems. Preventative examinations may result in the early detection if health problems allowing less drastic and less expensive treatment options.
Contract between a policyholder and a third-party payer or government health program to reimburse the policyholder for all or a portion of the cost of medically necessary treatment options.
A person who signs a contract between with a health insurance company and who, thus, owns the health insurance policy. The insured or enrollee.
Healthcare insurance company that provides coverage.
Health insurance coverage statistics
64%: private, 56%: employment- based plans, 31%: government plans, & 16%: medicaid
Group health insurance
Health insurance subsidized by employers and other organizations (e.g. labor unions, rural & consumer health cooperatives). These plans distribute the cost of health insurance among group members so that the cost is typically less per person and broader coverage is provided than that offered through individual health insurance plans.
Patient Protection and Affordable Care Act of 2010 (PPACA)
Includes a small business healthcare tax credit to help small business and small tax-exempt organizations afford the cost of covering their employees.
Individual health insurance
Private health insurance policy purchased by individuals or families who do not have access to group health insurance coverage. Applicants can be denied coverage, and they can also be required to pay higher premiums due to age, gender, and/ or pre-existing medical conditions.
Public health insurance
Federal and state government health programs available to eligible individuals.
Centralized healthcare system adopted by some Western nations ( e.g. Canada, Great Britain) and funded by taxes. The government pays for each resident's health care, which is considered a basic social service.
A type od single-payer system in which the government owns and operates healthcare facilities and providers (e.g. physicians) receive salaries. The VA healthcare program is a form of socialized medicine.
Universal health insurance
The goal of providing every individual with access to health coverage, regardless of the system implemented to achieve that goal.
1850: first health insurance policy
The Franklin Health Assurance Company of Massachusetts was the first commercial insurance company in the United States to provide private healthcare coverage for injuries not resulting in death.
President Theodore Roosevelt signed Federal Employer's Liability Act (FELA) legislature that protects and compensates railroad workers who are injured on the job.
The Federal Employees' Compensation Act (FECA) provides civilian employees of the federal government with medical care, survivors' benefits, and compensation for lost wages. The Office of Workers' Compensation Programs (OWCP) administers FECA as well as the Longshore and Harbor Workers' Compensation Act of 1927 and the Black Lung Benefits Reform Act of 1977.
1929: blue cross
Justin Ford Kimball, an official at Baylor University in Dallas, introduced a plan to guarantee school teachers up to 21 days of hospital care for $6 a year. Other groups of emplees in Dallas joined, and the idea attracted nationwide attention (generally considered the 1st blue cross plan)
1939: blue shield
The 1st blue shield plan was founded in California. The Blue Shield concept grew grew out of the lumber and mining camps of the Pacific Northwest at the turn of the century. Employers wanted to provide medical care for their workers, so they paid monthly fees to medical service bureaus, which were composed of groups of physicians.
1940: group health insurance
To attract wartime labor during WWII, group health insurance was offered for the first time to fulltime employees. The insurance was not subject to income or Social Security taxes, making it an attractive part of an employee benefit package. Employers usually pay part or all of the premium costs.
1946: Hill-Burton Act
The Hill-Burton Act provided federal grants for modernizing hospitals that had become obsolete because of a lack of capital investment during the Great Depression and WWII (1929-1945). In return for federal funds, facilities were required to provide services free or at reduced rates to patients unable to pay for care.
1947: Taft-Hartley Act
The Taft-Hartley Act of 1947 amended the National Labor Relations Act of 1932, restoring a more balanced relationship between labor and management. An indirect result of Taft-Hartley was the creation of third-party administrators (TPAs), which administer healthcare plans and process claims, thus serving as a system of checks and balances for labor and management.
The World Health Organization (WHO) developed the International Classification of Diseases (ICD), a classification system used to collect data for statistical purposes.
1950: major medical insurance
Insurance companies began offering major medical insurance, which provided coverage for catastrophic or prolonged illnesses and injuries. Most of these programs incorporated large deductibles and lifetime maximum amounts.
Amount for which the patient if financially responsible before an insurance policy provides payment.
Lifetime maximum amount
Maximum benefits payable to a health plan participant.
Medicare (Title XVIII of the Social Security Amendments of 1965) provides healthcare services to Americans over the age of 65. (It was originally administered by the social Security Administration. )
Medicaid (Title XIX of the Social Security Amendments of 1965) is a cost-sharing program between the federal ans state governments to provide healthcare services to low-income Americans. ( It was originally administered by the Social and Rehabilitation Service [SRS].)
Amendments to the Dependents' Medical Care Act of 1956 created the Civilian Health and Medical Program-Uniformed Services (CHAMPUS), which designed as a benefit for dependents of personnel serving in the armed forces as well as uniformed branches of the Public Health Service and the National Oceanic and Atmospheric Administration. The program is now called TRICARE.
Current Procedural Terminology (CPT) was developed by the American Medical Association (AMA). Each year an annual publication is prepared, which includes changes that correspond to the significant updates in medical technology and practice.
1970: self-insured group health plans
Self-insured (or self-funded) employer-sponsored group health plans allow large employers to assume the financial risk for providing healthcare benefits to employees. The employer does not pay a fixed premium to a health insurance payer, but establishes a trust fund (of employer and employees contributions) out of which claims are paid.
The Occupational Safety and Health Administration Act of 1970 (OSHA) was designed to protect all employees against injuries from occupational hazards in the workplace.
The Veteran Healthcare Expansion Act of 1973 authorized Veterans Affairs (VA) to establish the Civilian Health and MEdical Program of the Department of Veteran Affairs (CHAMPVA) to provide healthcare benefits for dependents of veterans rated as 100 percent permanently or totally disabled as a result of service-connected conditions, veterans who dies as a result of service-connected conditions, and veterans who dies on duty with less than 30 days of active service.
The Health Maintenance Organization Assistance Act of 1973 authorized federal grants and loans to private organizations that wished to develop health maintenance organizations (HMOs), which are responsible for providing healthcare services to subscribers in a given geographic area for a fixed fee.
The Employee Retirement Income Security Act of 1974 (ERISA) mandated reporting and disclosure requirements for group life and health plans (including managed care plans), permitted large employers to self-insure employee healthcare benefits, and exempted large employers from taxes on health insurance premiums.
A provision in an insurance policy that requires the policyholder or patient to paya specified dollar amount to a healthcare provider for each visit or medical service received.
The percentage of costs a patient shares with the health plan. (e.g.plan pays 80% & patient pays 20%)
To combine healthcare financing and quality assurance programs into a single agency, the Health Care Financing Administration (HCFA) was formed within the Department of Health and Human Services (DHHS). The Medicare and Medicaid programs were also transferred to the newly created agency. (HCFA is now call the Centers for Medicare and Medicaid Services, or CMS.)
With the departure of the Office of Education, the Department if Health, Education and Welfare (HEW) became the Department of Health and Human Service (DHHS).
The Omnibus Budget Reconciliation Act of 1981 (OBRA) was federal legislation that expanded the Medicare and Medicaid programs.
The Tax Equity and Fiscal Responsibility Act of1982 (TEFRA) created Medicare risk programs, which allowed federally qualified HMOs and competitive medical plans that met specified Medicare requirements to provide Medicare-covered services under a risk- contract. TEFRA also enacted a prospective payment system (PPS), which issues a predetermined payment for inpatient services. Previously, reimbursement was generated on a per diem basis, which issued payment based on daily rates. The PPS implemented in 1983, called diagnosis related groups (DRG), reimburses hospitals for inpatient stays.
HCFA (now called CMS) required providers to use the HCFA-1500 (now called the CMS-1500) to submit Medicare claims. The HCFA Common Procedure Coding System (HCPCS) (now called the Health Care Procedure Coding System) was created, which included CPT, level II (national), and level III (local) codes. Commercial payers also adopted HCPCS coding and use of the HCFA-1500 claim.
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allow employees to continue healthcare coverage beyond the benefit termination date.
The CHAMPUS Reform Initiative (CRI) of1988 resulted in a new program, TRICARE, which includes options such as TRICARE Prime, TRICARE Extra, TRICARE Standard.
Clinical Laboratory Improvement Act (CLIA) legislation established quality standards for all laboratory testing to ensure the accuracy, reliability, and timeliness of patient test results regardless of where the test was performed. The Medicare Catastrophic Coverage Act mandated the reporting of ICD-9-CM diagnosis codes on Medicare claims; in subsequent year, private third-party payers adopted similar requirements for claims submission. Eff. 10/1/13 ICD-10-CM (diagnosis) codes will be reported.
1991: CPT E/M codes
The American Medical Association (AMA) and HCFA (now CMS) implemented major revisions of CPT, creating a new section called Evaluation and Management (E/M), which describes patient encounters with providers for the purpose of evaluation and management of general health status.
A new fee schedule for Medicare services was implemented as part of the Omnibus Reconciliation Acts (OBRA) of 1989 & 1990, which replaced the regional "usual and reasonable" payment basis with a fixed fee schedule calculated according to the Resource-Based Relative Value Scale (RBRVS) system. The RBRVS payment system reimburses physicians practice expenses based on relative values for three components of each physician's service: physician work, practice expense, and malpractice insurance expense.
Usual and Reasonable Payments
Based on fees typically charged by providers according to specialty within a particular region of the country.
List of predetermined payments for healthcare services provided to patients. The patient pays a copayment or coinsurance amount for services rendered, the payer reimburses the provider according to its fee schedule, and the remainder is a "write off" (or loss).
The National Correct Coding Initial (NCCI) was created to promote national correct coding methodologies and to eliminate improper coding. NCCI edits are developed based on coding conventions defined in the AMA's CPT manual, current standards of medical and surgical coding practice, input from specialty societies, and analysis of current coding practice.
The HealthInsurance Portability and Accountability Act of 1996 (HIPAA) mandates regulations that govern privacy, security, and electronic transactions standards for healthcare information. The primary intent of HIPAA is to provide better access to health insurance, limit fraud and abuse, and reduce administrative costs.
The Balanced Budget Act of 1997 (BBA) addresses healthcare fraud and abuse issues. The DHHS Office of the Inspector General (OIG) provides investigative and audit services in healthcare fraud cases. The State Children's Health Insurance Program (SCHIP) was also established to provide health assistance to uninsured, low-income children, either through separate programs or through expanded eligibility under state Medicaid programs.
1998: SNF PPS
Skilled Nursing Facility Prospective Payment System (SNF PPS) is implemented (as a result of the BBA of 1997) to cover all costs (routine, ancillary, and capital) related to services furnished to Medicare Part A beneficiaries. The SNF PPS generates per diem payments for each admission; these payments are case-mix adjusted using a resident classification system called Resource Utilization Groups (RUGs), which is based on data collected from resident assessments (using data elements called the Minimum Data Set, or MDS) and relative weights developed from staff time data.
1999: HH PPS
The Omnibus Consolidated and Emergency Supplemental Appropriations Act (OCE-SAA) of 1999 amended the BBA of 1997 to require the development and implementation of a Home Health Prospective Payment System (HH PPS), which reimburses home health agencies at a predetermined rate for healthcare services provided to patients. The HH PPS was implemented October 1, 2000, and uses the Outcomes and Assessment Information Set (OASIS), a group of data elements that represent core items of a comprehensive assessment for an adult home care patient and form the basis for measuring patient outcomes for purposes of outcome-based quality improvement.
The Financial Services Modernization Act (FSMA) (or Gramm-Leach-Bliley Act) prohibits sharing of medical information among health insurers and other financial institutions for use in making credit decisions.
The Outpatient Prospective Payment System (OPPS), which uses Ambulatory Payment Classifications (APCs) to calculate reimbursement, is implemented for billing for hospital-based Medicare outpatient claims.
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) requires implementation of a $400 billion prescription drug benefit, improved Medicare Advantage (formerly called Medicare+Choice) benefits, faster Medicare appeals decisions, and more.
Consumer-driven health plans (CDHPs) are introduced as a way to encourage individuals to locate the best health care at the lowest possible price with the goal of holding down healthcare costs.
These plans are organized into three categories:
1. Employer-paid high-deductible insurance plans with special health spending accounts to be used by employees to cover deductibles and other medical costs when covered amounts are exceeded.
2. Defined contribution plans, which provide a selection of insurance options; employees pay the difference between what the employer pays and the actual cost of the plan they select.
3.After-tax savings accounts, which combine a traditional health insurance plan for major medical expenses with a savings account that the employee uses to pay for routine care.
On June 14, 2001, the Centers for Medicare and Medicaid Services (CMS) became the new name for the Health Care Financing Administration (HCFA).
2002: IRF PPS
The Inpatient Rehabilitation Facility Prospective Payment System (IRF PPS) is implemented (as a result of the BBA of 1997), which utilizes information from a patient assessment instrument to classify patients into distinct groups based on clinical characteristics and expected resource needs. Separate payments are calculated for each group. including the application of case- and facility-level adjustments.
CMS announced that quality improvement organizations (QIOs) will perform utilization and quality control review of health care furnished, or to be furnished, to Medicare beneficiaries. QIOs replaced peer review organizations (PROs), which previously performed this function.
The employer identification number (EIN), assigned by the Internal Revenue Service (IRS) is adopted by DHHS as the National Employer Identification Standard for use in healthcare transactions.
The Medicare Prescription Drug, Improvement and Modernization Act (MMA) adds new prescription drug and preventive benefits, provides extra assistance to people with low incomes, and calls for implementation of a Medicare contracting reform (MCR) initiative to improve and modernize the Medicare fee-for-servce system and to establish a competitive bidding process to appoint MACs. The Recovery Audit Contractor (RAC) program was also created to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service Medicare plans.
2005: IPF PPS
The Inpatient Psychiatric Facility Prospective Payment System (IPF PPS) is implemented as a requirement of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA). The IPF PPS includes a patient classification system that reflects differences in patient resource use and costs; the new system replaces the cost-based payment system with a per diem IPF PPS. About 1,800 inpatient psychiatric facilities, including freestanding psychiatric hospitals and certified psychiatric units in general acute care hospitals, are impacted.
The Standard Unique Health Identifier for Health Care Providers, or National Provider Identifier (NPI), is implemented.
The American Recover and Reinvestment Act of 2009 (ARRA) authorized an expenditure of $1.5 billion for grants for construction, renovation, and equipment, and for the health information technology systems. Effective 2011, Medicare provides annual incentive to physicians and group practices for being a "meaningful EHR user"; in addition, effective in 2015, Medicare will decrease Medicare Part B payments to physicians who are eligible to be, but fail to become, "meaningful EHR users."
2009: HITECH Act
The Health Information Technology for Economic and Clinical Health Act (HITECH Act) (included in American Recovery and Reinvestment Act of 2009) amended the Public Health Service Act to establish an Office of National Coordinator for Health Information Technology within HHS to improve healthcare quality, safety, and efficiency.
The Patient Protection and Affordable Care Act (PPACA) focuses on private health insurance reform to provide better coverage for individuals with pre-existing conditions, improve prescription drug coverage under Medicare, and extend the life of the Medicare Trust fund by at least 12 years. Its goal is to provide quality affordable health care for Americans, improve the role of public programs, improve the quality and efficiency of health care, and improve public health. PPACA also amended the time period for filing Medicare fee-for-service (FFS) claims to one calendar year after the date of service.
The Health Care and Education Reconciliation Act (HCERA) amended the PPAC to implement healthcare reform initiatives, such as increasing tax credits to buy healthcare insurance, eliminating special deals provided to senators, closing the Medicare "donut hole", delaying taxes on "Cadillac-healthcare plans" until 2018, implementing revenue changes (e.g., 10 percent tax on indoor tanning services effective 2010), and so on. HCERA also modified higher education assistance provisions, such as implementing student reform.
2011: i2 Initiative
The Investing in Innovations (i2) Initiative is designed to spur innovations in health information technology (health IT) by promoting research and development to enhance competitiveness in the United States.
Examples of health IT competition topics include applications that:
- Allow an individual to securely and effectively share health information with members if his or her social network.
- Generate results for patients, caregivers, and/or clinicians by providing them with access to rigorous and relevent information that can support real needs and immediate decisions.
- Allow individuals to connect during natural and other periods of emergency.
- Facilitate the exchange if health information while allowing individuals to customize the privacy allowances for their personal health records.
Patient record (medical record)
Documents healthcare services provided to a patient and includes patient demographic (identification) data, documentation to support diagnoses and justify treatment provided, and the results of treatment provided. Purpose of the record is to provide the continuity of care. The record serves as a communication tool for physicians and other patient care professionals, and assists in planning individual patient care and documenting a patient's illness and treatment.
Continuity of care
Involves documenting patient care services so that others who treat the patient have a source of information to assist with additional care and treatment.
Secondary purposes for medical records:
- evaluating the quality of patient care
- providing data for use in clinical research, epidemiology studies, education , public policy making, facilities planning, and healthcare statistics.
- providing information to third-party payers for reimbursement.
- serving the medico-legal interests of the patient, facility, and providers of care.
The patient's diagnosis must also justify diagnostic and/or therapeutic procedures or services provided. Requires providers to document services or supplies that are:
- proper and needed for the diagnosis or treatment of a medical condition
- provided for the diagnosis, direct care, and treatment of a medical condition
- consistent with standards of good medical practice in the local area
- not mainly for the convenience of the physician or healthcare facility
If it wasn't documented, it wasn't done.
Problem-Oriented Plan (POR)
A systematic method of documentation that consists of four components: database, problem list, initial plan, & progress notes.
The POR database contains the following
- chief complaint
- present conditions and diagnosis
- social data
- past, personal, medical, and social history
- review of systems
- physical examination
- baseline laboratory data
The POR problem list
Serves as a table of contents for the patient record because it is filed at the beginning of the record and contains a numbered list of the patient's problems, which helps to index documentation throughout the record.
The POR initial plan
Contains the strategy for maintaining patient care, as well as any actions taken to investigate the patient's condition and to treat ad educate him or her.
The POR initial plan consists of:
- diagnostic/ management plans (plans to learn more about the patient's condition and the management of the conditions).
- therapeutic plans (specific medications, goals, procedures, therapies, and treatments used to treat the patient.
- patient education plans (plans to educate the patient about conditions for which he or she is being treated).
The POR progress notes
Documented for each problem assigned using SOAP:
- Subjective- patient's statement about how he or she feels, including symptomatic information.
- Objective- observations about the patient, such as physical findings, or lab or x-ray results.
- Assessment- judgment, opinion, or evaluation made by the healthcare provider.
- Plan- diagnostic, therapeutic, and education plans to resolve the problems.
EHR: Electronic health record
Global concept: collection of patient information documented by a number of providers at different facilities regarding one patient.
- provides access to complete and accurate health problems, status, and treatment data.
- allows access to evidence-based decision support tools (e.g. drug interaction alerts) that assist providers with decision making.
- automates and streamlines a provider's workflow, ensuring that all clinical information is communicated.
- prevents delays in healthcare response that result in gaps in care (e.g. automated prescription renewal notices).
- supports the collection of data for uses other than clinical care (e.g., billing outcome reporting, public health disease surveillance/ reporting, and quality management).
EMR: electronic medical record
Narrow focus on a patient record by a single provider.
- includes a patient's medication lists, problem lists, clinical notes, and other documentation.
- allows providers to prescribe medications, as well as order and view results of ancillary tests (e.g. laboratory, radiology)
- alerts the provider about drug interactions, abnormal ancillary testing results, and when ancillary tests are needed.
Total Practice Management Software (TPMS)
used to generate the EMR, automating the following practice functions:
- registering patients
- scheduling appointments
- generating insurance claims and patient statements
- processing payments from patient and third-party payers
- producing administrative and clinical reports
Meaningful EHR User
- physicians who demonstrate that certified EHR technology is used for the purposes of electronic prescribing, electronic exchange of health information in accordance with law and health information technology (HIT) standard , and submission of information on clinical quality measures.
- hospitals that demonstrate that certified EHR technology is connected in a manner that provides for the electronic exchange of health information to improve the quality of health care (e.g. promoting care coordination) and that certified EHR technology is used to submit information on clinical quality measures.
Physician payment reductions for non-EHR use
Physicians will receive decreased Medicare Part B payments beginning in 2015 if they were eligible to be "meaningful EHR users" by 2015 but did not implement an EHR.
After 2017 EHR use
Medicare Part B payments may be reduced an additional 1% each year in which less than 75 percent of physicians eligible to be "meaningful EHR users" are using EHR. The maximum decrease is 5%, and the DHHS may exempt physicians for whom becoming a "meaningful EHR user" would be a "significant hardship". (such an exemption will end after 5 years)
PHR: Personal Health Record
Web-based application that allows individuals to maintain and manage their health information in a private, secure, and confidential environment.