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Reimbursement.pptxReimbursement
Health Insurance in the US
Health insurance:
You pay a company a monthly fee
When you get sick, the hospital/physician/etc sends a bill to your insurance company and they pay for the services provided
If there is any portion of the bill left you pay for the remainder out of pocket or the physician/hospital waives the remainder
Typically, regular services (i.e. physician visit) have a “co-pay” which is a set fee ($10, $20, etc) that you pay for each visit
Health Insurance in the US
MOST US citizens fall into one of the following categories:
Employer plan
Your employer pays a portion of your monthly fee for you, to ensure they have healthy employees who can work
Typically these plans offer good coverage and you only pay $50 to $100 per month, which is taken right out of your pay check
COBRA: if you leave your job/are fired, your employer is legally obligated to offer you the ability to keep your health insurance at full price (you pay your share AND your employers share, typically upwards of $500 per month)
Private plan
VERY EXPENSIVE for the patient
Either you don’t have an employer or your employer does not offer insurance, you have to find your own plan which can run upwards of $500 per month
Government plan
Medicare: covers people 65 and older
Medicaid: covers people with disabilities and in certain low-income groups
History of Health Insurance in the US
So how did we end up with our current health insurance system?
1800s: Most workers were tradesmen, working in extremely dangerous industrial environments (i.e. steel mills)
By 1907, death and dismemberment were causing a 10% loss in the workforce
The industry recognized that people were risking their lives and livelihood without any safety net– employers and unions began offering “accident insurance” that offered disability, death, and burial benefits
Modern group insurance can be traced to about 1910
History of Health Insurance in the US
About the 1920s, doctors and hospitals started charging more than the average American could realistically pay (this gap widen as the depression grew worse)
During WWII (1940s), the government actually froze wages
Employers could not offer higher wages to attract and keep employees, so instead they tried to offer the most enticing ‘benefit package’
During their rise from 1940s to 1990s, healthcare packages continued to cover more and more expense shifting the cost of healthcare out of the patient’s pocket
1965: the government created Medicare and Medicaid to help those who were not likely to be working and therefore didn’t have access to insurance (elderly and disabled)
By 1995, approximately ½ of healthcare costs were covered by private insurance and ½ were covered by the government through Medicare/Medicaid services
Types of Insurance Plans
HMO
Health Maintenance Organization
All medical services must be provided by doctors and hospitals who have a contract with the HMO
Any care provided outside the HMO is not covered
PPO
Preferred Provider Organization
Medical services are provided at a discounted rate by doctors and hospitals with a contract
Other care provided is at higher cost but still covered
POS
Point of Service
Blend of the other 2 plans
The Social Security Act of 1965
Prior to 1965, insurance was primarily tied to the employer (no job = no insurance)
The Social Security Act created Medicare and Medicaid
Medicare for the elderly (65 years +)
Medicaid for the poor and disabled
Currently, these 2 programs are the largest payors for healthcare in the US
Medicare Parts A, B, C, D
A: covers hospital services
B: physician services
C: aka Medicare Advantage, a network plan where the federal government essentially pays for private health coverage (only about 26% of enrollees are under this plan)
D: covers outpatient prescription drugs exclusively through private prescription drug plans (added in 2006)
CMS (Centers for Medicare and Medicaid) oversees the administration of these programs
Understanding Billing and Coding
In order for physicians and hospitals to send a bill, the insurance company needs to know what they are paying for
To expedite this, codes have been implemented so each treatment and disease fits nicely into a category
Basics
DRG = Diagnosis Related Group
Developed by Medicare, lumps patients in groups based on diagnosis, procedure, and demographic data
These groups have similar length of stay and consumption of hospital resources
Helps estimate the cost of each hospital admission
ICD-9 and ICD-10 = International Classification of Diseases
Universal numerical code assigned to diagnosis
Ensures that insurance company knows what diagnosis the patient had for that particular treatment
CPT or CPT-4 = Current Procedural Terminology
Universal numerical code assigned to procedures
Each procedure will have an attached ICD code
Diagnosis can change the amount of money covered or even exempt coverage
Reimbursement Models for Hospital Stays
DRGs:
Payment is per admission based on established estimates
Length of stay and individual charges do not matter, the hospital will ONLY receive the lump sum associated with that DRG
Overages are eaten by the hospital
Used by Medicare and some private insurance plans
Per-stay Model:
Payment is per admission based on established estimates
Typically assigned to categories such as: obstetrical, neonatal, medical, and surgical
Length of stay and individual charges do not matter, the hospital will receive the lump sum associated with that category
Per Diem Model:
Payment is per day based on established estimates
Very similar to above, only the sum is based on 1 day
Length of stay will effect sum, charges do not
Percent of Charges:
Payment is calculated based on a percentage of total charges
Insurance agrees to pay up to a certain percentage of the billed charges
Both length of stay and charges effect sum
Reimbursement for Outpatient Services
APC/HCPCS Codes
Uses APC (Ambulatory Patient Classification) and HCPCS (Healthcare Common Procedure Coding System) codes to determine payment rate for similar clinical characteristics and costs
Specific values are placed on procedures linked with similar diagnostic codes, and CMS will only pay that value (similar to the DRG model of inpatient care)
Many private insurance companies follow this model and prices set by CMS
RVUs (Relative Value Units):
Used by many private insurance companies and sometimes CMS
Sets a value in “units” tied to specific CPT codes (specific procedures)
The number of RVUs assigned to the procedure is determined by:
The physician’s time and level of skill required (52%)
Practice expense or overhead cost: made up of costs of maintaining a practice, including rent, equipment, supplies and non-physician staff costs (44%)
Malpractice expense or professional liability (4%)
The number of RVUs assigned then determines how much they can charge (higher the RVUs, higher the cost of the procedure)
Laws and Regulations
Stark Law:
Prohibits physicians from referring Medicare/Medicaid patients to an outside entity in which the physician or their immediate family has a financial relationship (i.e.: physician also owns an oxygen company, they can’t refer their COPD patients to that company to get all their oxygen)
Anti-Kickback Statute:
Physicians cannot receive gifts or cash in exchange for patient referrals
False Claims Act:
Cannot file a ‘claim’ that is fabricated (i.e.: physician charges CMS for a procedure that a patient never received)
EMTALA (Emergency Treatment and Labor Act):
Hospitals MUST examine and stabilize patients experiencing an emergency without consideration of insurance or ability to pay
