healthcare 101 an introduction day ii_ust

SETTING THE NEW STANDARD INGLOBAL SOURCING AND DELIVERY

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120 Vantis, Aliso Viejo CA 92656Phone: 949.716.8757www.ust-global.com

Healthcare 101Healthcare 101

Day - 2

By

George Alexander

Topics covered on Day – 1Topics covered on Day – 1

Topic 1 Evolution of Healthcare Delivery and Finance

Topic 2 Basic concepts -- Coverage, Benefits, Insurance

Topic 3 Managed Care Benefits and Networks

Topic 4 Financing Managed Care

QuestionQuestion

When determining physician's fee reimbursements, the Blossom Managed Healthcare Group assigns a weighted value to each medical procedure or service and multiplies the weighted value by a money multiplier, as shown below:

Weighted value for service x Money Multiplier = Amount reimbursed to physician

This information indicates that Blossom determines Physician’s reimbursement using a financial arrangement called :

A Discounted Fee for ServiceB Global Capitation ArrangementC With hold ArrangementD Relative value Scale

QuestionQuestion

One way in which Managed Care Plan differs from Traditional Indemnity Plan is that Managed Care Plan typically :

A provides less extensive benefits than those provided under traditional indemnity plan

B Place a grater emphasis on preventive care than do traditional indemnity plan

C require member to pay a % of cost of medical services rendered after the claim is filed, rather than a fix copayment at the time of service as required by indemnity plan.

D Contain cost sharing requirements that result in more out of pocket spending by members than do the cost sharing requirements in traditional indemnity plans

QuestionQuestion

By definition A Managed Care plan’s Network refers to the

A Organization and individuals involved in the consumption of healthcare provided by the plan.

B Relative accessibility of the plan’s providers to the plan’s participants.

C Group of physicians, Hospitals with whom the plan has contracted to provide medical services to its members.

D Integration of Plan’s participants with plan’s Providers

Schedule for Day 2Schedule for Day 2

Topic 5 Health Maintenance Organization

Topic 6 PPO, POS and Managed indemnity plans Wellpoint Plans

• Group plans• Individual plans

Topic 7 Managed Healthcare for Specialty Services

• Dental benefits• Behavioral healthcare benefits• Pharmacy benefit

Topic 8 Provider Organizations and Provider Integration

Topic 5Topic 5 Health Maintenance Organizations - HMOHealth Maintenance Organizations - HMO


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Topic 5 : Health Maintenance Topic 5 : Health Maintenance Organizations - HMOOrganizations - HMO

Course ContentCourse Content

Day 2Topic 5 : Health Maintenance Organizations - HMO

• Health Maintenance Organization– Background HMO Act 1973– Benefits– Membership– Open enrollment period

• Financing• Closed and Open panel HMO• HMO Models• Key Terms

Topic 5

Health Maintenance Organization (HMO)Health Maintenance Organization (HMO)

Healthcare system that assumes or shares both financial risks and delivery risks associated with providing comprehensive medical services to a voluntarily enrolled population in a particular geographical area, usually in return for a fixed, prepaid fee (premium).

Historically HMOs were called as prepaid group practices, although they were formed as corporations.

Most state laws require HMO to be a corporation HMO must fulfill all statutory requirements and obtain license to operate in a

state. HMO may be sponsored by variety of organizations and can be for-profit or not-

for-profit.

Background of HMOsBackground of HMOs

HMOs have been in existence for more than 70 years Were very popular in mid 70s as a result of a federal legislation – HMO

Act 1973 Federal qualification pre-empted certain state laws To be federally qualified, an HMO could not exclude pre-existing condition

and had to offer:• Healthcare delivery in a geographic service region.• Both basic and supplemental healthcare service• Voluntary membership to an enrolled population

Act required employers to offer “Dual Choice” provision.• Provided access to employer market.

Federal grants and loans were made available from 1973 until 1981 for setting up of HMO.

HMO are required to get license – “Certificate of Authority” - COA

Benefits provided by HMOBenefits provided by HMO

Most HMOs provide comprehensive care to their members Basic menu of comprehensive services

• Federally qualified HMOs – established set of services• State mandated list of services

Special medical services Dental care , Vision care, Pharmacy benefits, behavioral healthcare

Extensive preventive care programs and wellness programs• Prenatal, well baby, Immunizations, 24 hr. telephone line etc.• Smoking cessation, weight watcher’s program etc.• By coordinating care across all these benefits, HMO ensures that

members receive quality, cost-effective, appropriate medical care Unlike financing – national or regional basis Delivery of healthcare – primarily local Providing convenient local access to providers is critical for HMO

MembershipMembership

Members include both subscribers who are eligible to enroll in to HMO directly and their dependents.

Individuals may contract directly with HMO and receive benefits on an individual basis.

Usually a person becomes member of an HMO through a group plan made available by their employer. Under a group plan, HMO member has no contractual relationship with

HMO. Contractual relationship is between HMO and employer. HMO offers employer an annual open enrollment period, usually 30 days,

during which employees select their healthcare coverage During open enrollment period, HMO automatically accepts those employees

who wish to obtain coverage or switch from other plan to HMO. Federally qualified HMO must accept risk for pre-existing condition for all

eligible employees and dependents.

NetworksNetworks

HMOs enter into negotiated contracts with providers to form a network. HMO can own its own facilities or employ physicians in its network. Provider network which consist of participating physicians, hospitals and

ancillary service providers, delivers medical care to HMO members in exchange of negotiated compensation.

Important parameters while building network Access – number and type of providers needed in a geo. area Credentialing – what credentials to verify, conduct

re-credentialing and peer reviews Contractual relationship

• whether to own facility or contract for their use• employ providers or contract their services• how providers are compensated

– Salary– Capitation– discounted-fee-for-service.

Closed / Open panel HMOClosed / Open panel HMO

Panel of providers for rendering healthcare services Closed panel or closed access

• HMO employees• Group of physicians that contract with HMO• Panel is closed to other physicians

Open panel or open access• Any physician who meets HMO’s standard of care may be eligible to contract with

HMO as a provider.• Physicians operate out of their own facility• See other patients as well as HMO patients.• Panel is open to any qualified provider selected by HMO.

Closed / open panel HMOs differentiatedClosed / open panel HMOs differentiated

Provider must be HMO employee or contracted by HMO to join HMO network

Operate out of HMO facility Generally see only HMO

patients Member selects a PCP from

HMO network Members obtain referral from

PCP because services are covered only if specialist are also in HMO network

Providers contract independently and may be selected to join HMO network as long as they meet HMO’s standard

Operate out of their own facility Providers see both HMO

members and Non-members Members select PCP from HMO

network Member in few cases may self

refer to specialist inside or outside network without going through the PCP first. OON services at reduced benefits

HMO ModelsHMO Models

IPA Model Separate physician office Open or closed panel PCPs

• Independent• Discounted FFS

Specialist • Independent• Discounted FFS

Advantages: Provider choice, independence, low set up cost. Disadvantages: Limited UM/QM, Limited economies of scale


Staff Model Ambulatory care facilities (Medical Clinic or Medical Center) Closed panel PCPs

• Employees• Salaries

Specialist • Employees or Independent• Discounted FFS

Advantages: Utilization, quality control, economies of scale Disadvantages: Provider restrictions, Capital investment


Group Model Separate group practices Open or closed panel Group practice

• Capitation PCPs

• Independent• Salaries, incentives

Specialist • Independent• Discounted FFS, varied

Advantages: Utilization & quality control, low set up cost. Disadvantages: Provider restriction, limited geographical access


Network Model Separate group practices Open or closed panel Group practice

• Capitation PCPs

• Independent• Salaries, incentives

Specialist • Independent• Discounted FFS, varied

Advantages: Broad range of services, Multiple locations Disadvantages: Varied utilization, Quality Control.

Key TermsKey Terms

HMO - Health Maintenance Organization

Certificate of authority

Ancillary Services

Prepaid care

Closed-Panel HMO; Closed access

Open-panel HMO; Open access

Ambulatory care facility

HMO models IPA Staff Group Network

QuestionQuestion

An HMO that combines characteristics of two or more HMOs

A Network Model HMO

B Staff model HMO

C Group Model HMO

D Mixed Model HMO

QuestionQuestion

One distinguishing characteristics of HMO is that typically, an HMO

A arranges for deliver of medical care and provides, or shares in providing, the financing of that care

B must be organized as not-for-profit organization

C may be organized as a corporation, partnership or any other legal entity

D must be federally qualified in order to conduct business in any state

QuestionQuestion

HMOs use many techniques to control Member Utilization and Provider Utilization of Healthcare Services. One technique that HMO uses to control Member Utilization is

A the use of Physician Practice Guidelines

B the requirements of co-payments for office visit

C capitation

D risk pools

Topic 6Topic 6 PPO, POS, Managed Care Indemnity PPO, POS, Managed Care Indemnity


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Topic 6Topic 6


Day 2Topic 6 : PPO, POS, Managed Care Indemnity

• PPO– Benefits– Networks– Financing– Utilization management– Quality management

• EPO• POS• Managed Indemnity Plans• Empire BCBS Plans• Key Terms

Topic 6

PPO, POS, EPO defined…PPO, POS, EPO defined…

Preferred Provider Organization (PPO) Healthcare benefit arrangement designed to supply services at a discounted

cost by providing incentives for members to use designated healthcare providers; also provides coverage for services rendered outside network.

Financial incentives for members• Lower Copay, Coinsurance• Maximum limits on OOP costs for in-network use.

Wide variety of comprehensive services Providers do not assume any financial risk.


Exclusive Provider Organization (EPO) Another variation of PPO Similar to PPO in administration and structure OON care is generally not covered.

• An aspect which makes it very much like an HMO. May PPOs developed EPO to compete directly with HMO.


Point of Service (POS) Hybrid product; combines features of Traditional indemnity, some aspects of

HMO, PPO When member need medical service, they choose, at the point of service,

whether to go to a provider within the plan’s network or seek medical care outside of network.

Offers greater amount of coverage INN, have to pay deductible and Coinsurance for OON services.

Managed IndemnityManaged Indemnity

Traditional indemnity health plans that have integrated managed care techniques.

Organized and administered as traditional indemnity plans but include managed care “overlays” Pre certification Utilization review

Managed care techniques as cost control devices.

Plan does not utilize network of preferred providers.

Members can use providers of their choice.

QuestionQuestion

What is PPO ?

What is the difference between PPO and EPO ?

What is POS ?

Topic 7Topic 7 Managed Healthcare for Specialty ServicesManaged Healthcare for Specialty Services


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Topic 7 : Managed healthcare for Topic 7 : Managed healthcare for Specialty ServicesSpecialty Services


Day 2Topic 7 : Managed healthcare for Specialty Services

• Specialty services• Carve out• Dental• Behavioral healthcare• Pharmacy benefit plans

Key Terms

Topic 7

Specialty ServicesSpecialty Services

In past, managed healthcare focused on delivering, basic physician services and hospital services.

Consumer wants other services also to be part of expanded benefit package Dental, Pharmacy benefits.

Specialty services are generally considered outside standard medical services because of specialized knowledge required for service delivery and management.

Requires different providers and delivery system. Prescription Drugs Mental health/Substance abuse Dental; Vision Longterm care; Rehabilitation services Worker’s compensation Chiropractic

Carve outCarve out

Options for providing specialty services for plans Develop and maintain their own programs Carve out delivery and management of these services.

Carve out refers to separation of medical services from basic set of benefits in some way

Basis for separation Different compensation method Use of separate network or delivery system

e.g. HIV/AIDS disease management program can be carved out to another company that specializes in development and management of programs.

MCO still retains accountability Carve outs as a means of delivering specialty services.

Dental CareDental Care

Managed dental care Dental HMO

• Prepayment Dental PPO

• Discounted fee for service Dental POS

• Prepayment• Discounted fee for service

Contractual agreement between Dentist and plan

Behavioral healthcareBehavioral healthcare

Mental health and chemical dependency related services

Demand for behavioral healthcare is on the rise. Acceptance of behavioral healthcare issues and awareness Increased stress on individuals and families Availability of behavioral healthcare services

How to control utilization of Behavioral services Initial cost control strategies Second generation strategies

• Alternative treatment levels– Acute care– Post acute care– Partial hospitalization– Intensive outpatient care– Outpatient care

Behavioral healthcareBehavioral healthcare

Second generation strategies

• Alternative treatment setting (Hospital, acute care, post acute care centers)• Alternative treatment methods (Drug therapy, psycho

therapy, counseling)• Crisis intervention• Directing patients to appropriate care• Centralized referral system• Employee assistance programs

Pharmacy benefit plansPharmacy benefit plans

a.k.a. Prescription benefit management plan. Pharmacy Benefit Management (PBM) plans

Offers variety services Physician profiling Drug utilization review

• Inappropriate dosage• Over/under use for early/late refills• Duplication• Side effects, drug interactions

Formulary management• Open / closed formulary• Generic substitution : generic equivalent – no approval required.• Therapeutic substitution: chemically different entity within same drug

class – require physician approval. Prior authorization

• Medical necessity review

Pharmacy benefit plansPharmacy benefit plans

Additional services Mail order pharmacy Pharmaceutical cards

• helps in electronic claim processing Two / three tier co-payment structures

PBM contractual arrangements Fee-for-service

• PBM creates a retail pharmacy network offers discounts on prescription drugs and online claim adjudication.

• PBM receives claim administration fees for each Rx it fills. Capitation

• Fixed $ amt per employee per month Risk sharing

• Target cost per employee per month, cost overrun and savings are shared by PBM

Key TermsKey Terms

Specialty services

Carve-out

Specialty health maintenance organization

Managed dental care

Managed behavioral care

Pharmacy benefit management (PBM) plan

Drug utilization review (DUR)

Open / closed formulary

Generic / Therapeutic substitution

Mail order pharmacy program

Topic 8Topic 8 Provider Organizations and Provider IntegrationProvider Organizations and Provider Integration


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Topic 8 : Topic 8 : Provider Organizations and Provider Organizations and Provider IntegrationProvider Integration

Topic 5Topic 5


Day 2Topic 8 : Provider Organizations and Provider Integration

• Provider Integration– Operational– Structural

• Provider integration models– Physician only integration model.

»IPAs»GPWW»Physician practice management companies

• Open / closed PHO• Integrated Delivery system - IDS• Medical foundation• Key Terms

Topic 8

Provider IntegrationProvider Integration

Plan/Payor organization contracts with providers for delivery of healthcare. Individual providers Organizations representing number of providers

• To combine certain operating functions in order to achieve economies of scale and thus reduce overall operating cost

• To strengthen their negotiating power with MCOs and Payors / Plans. Provider organizations are characterized by different types and level of

integration. Integration : when two or more previously separate providers combine under

common ownership or control.• Structural Integration• Operational integration

Provider IntegrationProvider Integration

Structural Integration Previously separate providers under common ownership and control. Mergers and acquisitions are examples of complete structural integration

• Merger: Two or more separate providers are legally joined.• Acquisition : one Org. buys another Org.• Consolidation: (type of merger) one provider may absorb another or providers

form a new organization with original companies being dissolved.• Joint venture (Partial Structural integration)

– Two or more Org. combines resources to achieve a stated objective.

MergerMerger

Provider A Provider B Provider C

New Provider

created from A, B, C

AcquisitionAcquisition

Provider A Provider B Provider C

Parent CompanyOwns A, B, C

Operational IntegrationOperational Integration

Consolidation of operations that were previously carried out separately by each provider into a single operation. Business Integration

• One or more separate non-clinical business functions into one.– e.g. To carry out billing, collections and contracting

Clinical Integration• Involves making variety of health services available to patients from same

organization or entity.• Advantages

– Common patient record, single medical record.– Coordination of care– More streamlines administrative processes

Provider integrationProvider integration

The amount of provider integration displayed by each provider organization falls somewhere on a continuum stretching from minimal integration to fully integrated.

Independent Practice Association (IPA) minimal integration. Integrated Delivery System (IDS) fully integrated.

Full range of healthcare services from “birth to death” Other organizations

Group practice without wall (GPWW)• Multiple physician practices under same umbrella org. and performs

certain business operations for member practices. Management services organization (MSO)

• Organization that providers management and administrative support• Relieve physicians from non-medical business functions.

Physician practice management (PPM)• Purchases physician practices, long term contract with physicians or

equity to physician. Manages non-medical aspects.

Continuum of Operational IntegrationContinuum of Operational Integration

Physician only models

Physician and Hospital models

Less IntegratedLess Integrated More IntegratedMore Integrated

GPWW, MSO

GPWW, MSO

PPM Company

PPM CompanyIPAIPA Consolidated

Medical GroupConsolidated

Medical Group

PHOPHO IDS, Medical Foundation

IDS, Medical Foundation

Less IntegratedLess Integrated More IntegratedMore Integrated

Contracting with Providers - IContracting with Providers - I

IPAIPA

MCOMCO

Cont

ract

sCo

ntra

cts

PhysicianPhysician

PhysicianPhysician

PhysicianPhysician

PhysicianPhysician

PhysicianPhysician

Negotiate contract termsNegotiate contract terms

Contracting with Providers - IIContracting with Providers - II

MCOMCO

IPAIPA

Cont

ract

sCo

ntra

cts

PhysicianPhysician

PhysicianPhysician

PhysicianPhysician

PhysicianPhysician

PhysicianPhysician

ContractContract

Provider integrationProvider integration

Medical Foundation Corporate practice of medicine is not permitted in some states. Hospital & health plan creates medial foundation

• Not–for–profit – benefit to community.• Purchases and manages physician services

Provider organizations that bear insurance risk. IDSs, IPAs, PHOs – integrate provider operations and take financial risk. Provider Organizations that bear insurance risk are referred to as “ at risk”

Key TermsKey Terms

Integration

Structural, operational integration

Merger, consolidation, acquisition, joint venture

Business integration

Clinical integration

IPA

Messenger model

Group practice without wall. – GPWW.

Physical practice management (PPM compay)

Integrated Delivery System - IDS

Medical foundations

At- risk organization

THANK YOU! Questions?

Schedule for Day - 3 Schedule for Day - 3

Topic 9: Managed Healthcare Operations - Overview

Topic 10: Medical Management

Topic 11: Key Healthcare Operations

Topic 12: Healthcare Industry Protocols

healthcare 101 an introduction day ii_ust

Documents

managed care benefits

managed care plans network

provider organizations

weighted value

cost of medical services

preventive care

consumption of healthcare

plans providersschedule