Healthcare Basics

_experience the commitmentTM

Agenda

Introduction to Insurance Key Business Processes In an Insurance Company (General departments) Types of Insurance Introduction to Healthcare Healthcare Terminology Evolution and current trends in managed care Government sponsorship Medicare, Medicaid & Tricare. Miscellaneous Healthcare reformis it a gain for us (IT-world)

INTRODUCTION TO INSURANCE

What is an Insurance?
Insurance is a method of spreading over large number of persons a possible financial loss too serious to be conveniently borne by an individual. Insurance in simple terms means spreading of risk over a large number of people exposed to the same risk. Risk in insurance parlance means uncertainty about financial loss and represents an accidental or fortuitous event by which the insured sustains monetary loss. To relate risk to insurance, focus would be on a risk that can result in financial loss. Financial loss may be defined as a decline in or disappearance of value due to a contingency.

INTRODUCTION TO INSURANCE

What is Risk?
Risk is defined as the possibility that positive expectations will not be fulfilled. Risk can also be defined as a condition where, there is a possibility of an adverse deviation from the desired outcome. The essential feature of the Risk is the uncertainty as to its occurrence and invariably beyond ones reasonable control. The possibility of an indeterminate outcome is a pre-requisite for a Risk to exist.

Classification of Risk..
Pure Risk Personal Risk Property Risk Liability Risk Speculative Risk

Risk
Pure Risk Personal Risk Property Risk Liability Risk Speculative Risk

Note: In general only Pure Risk is covered by insurance

INSURANCE LEGAL ASPECTS

What is a contract?
An agreement between two or more parties to do or to abstain from doing an act, with an intention to create a legally binding relationship.

Essentials of valid contract

_ _ _ _ _ _ _ Legal relationship Legal of purpose Offer and acceptance Consideration Capacity to contract Certainty of terms Possibility of performance

PRINCIPLES OF INSURANCE

Principle of Utmost Good Faith Principle of Insurable Interest Principle of Proximate Cause Principle of Indemnity Principle of Subrogation Principle of Contribution

INSURANCE - KEY BUSINESS PROCESSES

General departments Underwriting /New business Actuarial /Product development Marketing & distribution Policy administration General Administration Customer service Claims management Investment management Reinsurance Accounting Legal Compliance Human resources IT services

TYPES OF INSURANCE

_ Health insurance _ Life insurance _ Auto insurance (Vehicle insurance) _ Home insurance _ P&C insurance _ Liability insurance _ Unemployment insurance _ Aviation insurance _ Other insurance

Introduction to Health Insurance

INTRODUCTION TO HEALTH INSURANCE

In todays scenario of escalating medical costs, most people cannot afford to pay the full costs of their medical treatment should they become seriously ill, nor can most people afford a loss of income when they are unable to work because of an illness or injury. Health insurance primarily addresses these two needs of protection against medical costs and loss of income. Life and health insurance companies market a range of individual and group health insurance products designed to protect against the risk of financial loss, which the insured are likely to experience as a result of an illness or injury. Thus, the health insurance products essentially provide two types of coverage:

_ Medical expense coverage providing benefits to pay for the treatment of an insured's illnesses and injuries. _ Disability income coverage providing income replacement benefits to an insured who is unable to work because of sickness or injury.

INTRODUCTION TO HEALTH INSURANCE

The two main types of health insurance, they are private and public. Most people get their health insurance through one of the many different private health insurance companies. People who have children, have limited income, are retired or are injured on the job might be able to obtain insurance through governmental/public programs. Private insurance has two majors types: Major medical (Indemnity) and managed care. Managed care health insurance plans are divided into three major types: HMO - health maintenance organizations, PPO - preferred provider organizations and POS - point of service. There are other health insurance plans that can help cover more special needs such as short-term coverage, disability, Medicare supplements and more.

HEALTHCARE TERMINOLOGY
Set 1 (People/Org) _ Insurer _ Insured _ Payers _ Providers _ Member _ Third party Administrator (TPA) Set 2 ($) _ Premium _ Co-payments _ Deductibles _ Coinsurance _ Stop Loss _ Out-of-pocket Maximums

Set 3(Others) Pre existing condition Elimination period Medical Loss Ration (MLR) Explanation of Benefits (EOB) Coordination of Benefits (COB) Administrative Services Only (ASO) Electronic data interchange (EDI) Centers for Medicare & Medicaid Services (CMS) Health Insurance Portability and Accountability Act (HIPAA) The National Association of Insurance Commissioners (NAIC)

EVOLUTION OF HEALTHCARE AND ITS TREND

Types of Plans and Trend

Indemnity/FFS:"Indemnity" originally meant that insured people were billed by their providers, paid these bills themselves, submitted the bills to their insurance company, and then were reimbursed ("indemnified") for the bills by the insurance company. "Fee-For-Service (FFS)" means that providers are paid a specified amount for each service provided a fee for each service.

Health Maintenance Organizations (HMOs):An HMO is a private corporation that contracts with physicians, hospitals, employers and individuals to provide health insurance coverage in exchange for a fixed fee, or premium. Individuals must choose a primary care physician (PCP) within the HMO network, through which all the healthcare decisions will be made (medication, hospitalization, tests and referrals to specialists).

EVOLUTION OF HEALTHCARE AND ITS TREND

Preferred Provider Organizations (PPOs) :A PPO has a provider network like an HMO, but differs from a traditional HMO because it provides some coverage for services by providers outside the network. PPO members can see providers outside the network, but must pay more out of their own pocket when they do.

Point of Service (POS) :An option provided by some HMOs that allow covered persons to go outside the plan's provider network for care, but requires they pay higher cost sharing than they would for network providers. These plans can also be PPOs that have strong gatekeeper and utilization review like an HMO, but offer out-of-network coverage like a PPO. With a POS plan, a member chooses to seek treatment in-network or out-of-network at the time they need the service.

Long term care (LTC) :"Long Term Care (LTC)" is the general term for ongoing care for a chronic illness or disability. Long term care can be provided in a variety of settings ranging from a person's own home, to an assisted living facility, to a skilled nursing facility.

Evolution of Healthcare and its trend:

Consumer Driven Health Care (CDHP)

Apart from these regular plans, there are other accounts, which can be used in to pay for premiums of the policies. These are driven by the employees themselves, Consumer Driven Health Care, so as to be a part of the health care they get, as they can carefully exercise what amount is being spent and how it is spent for there medical expenses. Consumer Driven Health Plans (CDHPs) are health benefits plans that engage covered individuals in choosing their own health care providers, managing their own health expenses, and improving their own health with respect to factors that they can control.

Generally CDHPs involve :

A three-tier structure of payment for health care: a tax-exempt health account that an individual uses to pay for health expenses up to a certain amount, a high-deductible health insurance policy that pays for expenses over the deductible, and a gap between those two in which the individual pays any health care expenses out of their own pocket

EVOLUTION OF HEALTHCARE AND ITS TREND:

Consumer Driven Health Care

Generally CDHPs involve :

Individuals have the opportunity to save money that they do not spend this year for health care expenses in future years (or, in some plans, for withdrawal during retirement). Support systems (usually on the internet) to help individuals select good providers, get reasonable prices, track their health care expenses, and improve their health.

These are:

Flexible spending accounts (FSAs) Medical savings accounts (MSAs) Health reimbursement arrangements (HRAs) Health savings accounts (HSAs)

EVOLUTION OF HEALTHCARE AND ITS TREND: Consumer Driven Health Care

FLEXIBLE SPENDING ACCOUNTS (FSAs):- A "Flexible Spending

Account (FSA)" is a federally-qualified, tax-exempt individual health account that an individual employee uses to pay a portion of their health care bills. There are two main tax code restrictions on FSAs: (1) the employee loses whatever funds are left in the account at the end of the year; and (2) the employee cannot withdraw cash from the account. FSAs have been used for years to accompany complete group health insurance. FSAs can encourage wasteful spending at the end of the year and dilute the cost-containment incentives of Copays on complete health insurance.

MEDICAL SAVINGS ACCOUNTS (MSAs) :- One of the most prominent

types of new health accounts is the "Medical Savings Account (MSA)". An MSA is a federally-qualified, tax-exempt individual health account that an individual uses to pay their health care expenses. It is similar to an Individual Retirement Account (IRA) that saves up untaxed money, but is used to fund health care expenses instead of retirement income.

EVOLUTION OF HEALTHCARE AND ITS TREND:

Consumer Driven Health Care

HEALTH REIMBURSEMENT ARRANGEMENTS (HRAs) :Health Reimbursement Arrangements (HRAs) have been developed so that larger employers (more than 50 employees) who are not allowed to offer a true MSA can offer their employees something like an MSA. A HRA is a tax-exempt account that an employee uses to pay health care bills. However, unlike a true MSA, money in a HRA is never really paid to the employee. The money remains with the employer. The employee just directs how the HRA money is used. An employee cannot withdraw cash from a HRA.

HEALTH SAVINGS ACCOUNT (HSAs) :-

Health Savings Accounts The Medicare Modernization Act (MMA) of 2003 accelerated the consumer-directed healthcare movement by creating the most recent CDHP option, the health savings account (HSA). The HSA is designed to address several of the limitations of previous personal healthcare account products: It allows funding by both employees and employers and provides for employee (or individual) account ownership, portability, annual rollover, and tax-free investment earnings and gains.

GOVERNMENT-SPONSORED PROGRAMS:

Medicare
Medicare is available for: Persons age 65 or older Persons with qualifying disabilities (regardless of age) Persons with end-stage renal disease (ESRD) Medicare Part A

_ Hospitalization _ Confinement in an extended-care facility after hospitalization _ Home health care services.
Medicare Part B Medigap Medicare Part C Medicare Choice (M+C) program Medicare Part D prescription drug benefit delivered through new Medicare Advantage (MA).

GOVERNMENT-SPONSORED PROGRAMS:

Medcaid
Title XIX of the Social Security Act of 1965 established Medicaid, a joint federal and state program that provides hospital expense and medical expense coverage to the low-income families with dependent children, certain aged and disabled individuals. The federal government, through CMS, establishes broad guidelines for Medicaid programs, provides partial funding for states, and sets minimum standards for eligibility, benefits, and provider participation and reimbursement. Individual states provide additional funds and administer the programs.

Tricare
The Military Health System (MHS) is a worldwide healthcare system operated by the U.S. Department of Defense (DoD). The MHS focuses its efforts on population health improvement by integrating the delivery of healthcare services for active-duty personnel, retirees, and the families of active-duty personnel and retirees.

GOVERNMENT-SPONSORED PROGRAMS:

Tricare
In the mid-1990s, the DoD began offering ongoing healthcare coverage to military personnel and their families through the TRICARE health plan. TRICARE, is a Department of Defense, regionally managed healthcare program for active duty and retired members of the uniformed services and their families that combines military healthcare resources and networks of civilian healthcare professionals. The strategic goal of the TRICARE program is to provide access to high-quality care that ensures mission readiness while supporting military operations. Active-duty military personnel typically receive medical care through a network of military treatment facilities. Military treatment facilities (MTFs) are hospitals, clinics, and treatment centers that the Army, Navy, Air Force, and Coast Guard operate to deliver care to MHS beneficiaries.

Miscellaneous

HIPAA :-

The law known as HIPAA stands for the Health Insurance Portability and Accountability Act of 1996. This landmark law to provide consumers with greater access to health care insurance, to protect the privacy of health care data, and to promote more standardization and efficiency in the health care industry. While HIPAA covers a number of important health care issues, this informational series focuses on the Administrative Simplification portion of the law specifically HIPAAs Electronic Transactions and Code Sets requirements. HIPAA promotes standardization and efficiency in the health care industry.

COBRA :-

Title X of the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) is a federal law that gives people with employer-sponsored health insurance (from an employer with more than 20 employees) the right to continue coverage for 18-36 months if they would otherwise lose coverage due to circumstances beyond their control. These circumstances include: (1) they lose their job; (2) their hours are cut; (3) their employed spouse dies or divorces them; or (4) they are a student who graduates and losses parental plan coverage. When coverage is continued under COBRA, the employee must pay the full premium including any portion previously paid by the employer.

Healthcare Reform

In March 2010 Congress enacted the Patient Protection and Affordable Care Act (PPACA), often referred to as the Affordable Care Act (ACA) and commonly called simply healthcare reform. Addresses following:
Medical loss ratio Preventive care Technology
Data reporting is high and Information technology need more new technology and staff to address this.

Q&A

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