CHAPTER 10 GROUP MEDICAL EXPENSE BENEFITS TRADITIONAL PLANS

CHAPTER 10 GROUP MEDICAL EXPENSE BENEFITS: TRADITIONAL PLANS

Blue Cross and Blue Shield • Blue Cross established by hospitals; Blue Shield by physicians • Each had national governing boards which eventually merged. • 50 plans in existence. Some are only Blue Cross or Blue Shield, but most are both. • Most plans operate in a single state. • Boards now dominated by nonproviders such as labor unions, consumer organizations, foundations, and the general public

Insurance Companies • Most coverage is written by life insurers. Few companies specialize in health insurance only. • Write more coverage than the Blues

Comparison of Insurers and the Blues- • Traditionally There Were Significant Differences, But as Time Goes on They Are Becoming More Alike. – Regulation and taxation – Form of benefits – Types of benefits – Reimbursement of providers • Per diem on Blues

Comparison (cont. ) – National coverage. Insurers operate nationally and may have competitive edge. However, the Blues do have procedures for handling national accounts. – Flexibility. Insurers typically offer employers more flexibility in designing own contract. – Rating--little difference because the Blues now also use experience rating for larger groups – Marketing

Hospital Expense Benefits • • • Room and board Other inpatient charges Preadmission certification Outpatient benefits Exclusions – Possibly pregnancy for smaller employer (<15) • Deductibles and coinsurance-– Rarely used for basic coverage. Limitations in form of maximum benefits payable

Surgical Expense Benefits • Covers physicians' charges associated with surgery • Surgery defined to include items such as suturing, electrocauterization, and treatment of fractures or dislocations • Covers both inpatient and outpatient surgery. Latter may be encouraged by higher benefits. • Second surgical opinions

Physicians' Visits Expense Benefits • Covers charges of physicians other than surgeons • May be for in-hospital visits only or for both in-hospital and out-of-hospital visits

Other Basic Benefits • • • Extended-care facility benefits Home health care benefits Hospice benefits Ambulatory-care expense benefits Birthing centers

Other Benefits (cont. ) • Diagnostic X-ray and laboratory expense benefits • Radiation therapy expense benefits • Prescription drug expense benefits • Vision-care expense benefits • Supplemental accident expense benefits

Types of Major Medical Coverages • Supplemental--an add on to basic coverages • Comprehensive--incorporates basic coverages • Most new plans are comprehensive which are easier to administer and communicate than are supplemental plans. • Reasons for using supplemental

Covered Major Medical Expenses • Types (supplemental, comprehensive) • Exclusions (some examples) – Occupational – Government agencies – Cosmetic surgery – Physicals – Experimental • $ Limitations

Major Medical Deductibles • Definition: The initial amount of covered expenses an individual must pay before benefits are paid. • Types: initial, corridor, integrated • Amounts • Frequency • Expenses to which deductibles apply

Major Medical Coinsurance • Insured must bear a portion of medical expenses that exceed the deductible. 15 -25 percent is normal. • One coinsurance percentage may apply to all expenses. • Separate coinsurance percentages may apply to different expenses. • Most policies contain a stop-loss limit which is an amount of covered expense above which no copayments are required.

Major Medical Maximum Benefits • Lifetime maximum • Per-cause maximum

Managed Care in Traditional Plans • Several managed care techniques (e. g. , hospital certification and second surgical opinions) have already been discussed. Preapproval of visits to specialists • Attempts to minimize use of specialists and emergency rooms when treatment can be provided by primary-care physician. • Primary-care physician does not certify visit to specialist, but must be made aware of the visit.

Managed Care • “Preventive” coverage • Alternative facilities – Extended care – Home health care – Hospice – Birthing centers • Alternative Medicines • MSAs (next slide)

MSAs • <50 ees or self employed • High deductible plan – $1550 < dduct<$2350 for individual – $3100 < dduct < $4650 family • Contibs by ee or er, but not both – Max 65% dduct for indiv, 75% family • Balances carry over without penalty • Balance is part of estate