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BASIC ADJUDICATION TRAINING

TriZetto offers healthcare IT solutions to payers and providers. We provide


integrated healthcare management services to improve efficiencies.
CONCEPT OF BPO

1. BPO (Business Process Outsourcing)


a. Meaning of BPO - Business Process Outsourcing

If a Company’s business expands and they want to take up additional work without
increasing their Infrastructure or Manpower, the best option is to outsource the non core
functions to another Company at some cost so that they can concentrate effectively on
the core functions and take up more work using the available resources
b. Advantages of Outsourcing to India
 Time lag between countries
 All expenses (Infrastructure & human resources) are in rupees instead of
dollars.
c. Types of BPO
 Voice based (Call Centers)
 Non voice based (Transaction processing)
Tela is a Non Voice based BPO specializing in the US Healthcare Insurance Industry.
Hence we need to understand the meaning of Insurance.

2. Health Insurance
Health insurance is protection against medical costs. A health insurance policy is
a contract between an insurer and an individual or group, in which the insurer
agrees to provide specified health insurance at an agreed-upon price (the
premium). Depending on the policy, the health insurance premium may be
payable either in a lump sum or in installments. Health insurance usually
provides either direct payment or reimbursement for expenses associated with
illnesses and injuries.

3. Basic Insurance terminology


a. Premium – The amount paid by the member/employer to the Insurance
Company in installments in order to purchase Insurance coverage.
b. Reimbursement / Benefit – The amount that the Insurance Company pays to
cover the losses incurred by the Insured.
c. Plan Year – This is the period for which the plan is valid/effective
d. Policy /Plan
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i. It is the document that specifies what the Insurance Company is


responsible for and what it is not responsible for. It will specify the
premium amount, the reimbursement, the plan year and all other
conditions of the contract between the Insured and the Insurance
Company.
e. Claim – The word “claim” means “to ask”. When the Insured or the Provider
(on behalf of the Insured) wants to ask for reimbursement from the Insurance
Company, he has to fill up document called “ claim form”
f. EOB – Explanation of benefits. When a claim is submitted by the Provider, it is
the duty of the Insurance Company to explain to the Insured the benefits that are
payable for that claim. The document that describes the benefits is called EOB
i.e. Explanation of Benefits.
g. Grace Period: is a stated period of time during which premium may be paid after
the due date to keep the plan in force.
h. Rider
Insurance policies are usually in a standard form, most of which is dictated by
state insurance law. If any person needs additional coverage or if there are
changes to the standard document, these changes can be made by way of a
Rider. The information to be conveyed in the rider is typed up on a separate
piece of paper, which is attached to the standard policy.

5. Few more terms `


i. TIN -Tax Identification number
A tax identification number is a number assigned by the State in which a
business or entity is operated that identifies it for filing and paying taxes related
to the business or entity.
It is always 9 digit numeric.

j. Vendor / Billing entity


The person/ entity that owns the business.

k. Provider /Treating entity


The person/ entity that provides services. It can be either a person or entity.

l. Individual Provider
Refers to an individual person who provides service – nurse, doctor etc

m. Physician - Doctor

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i. Should have license to perform that particular service


ii. Should have license for that particular State (e.g. Washington) where
services were rendered.

n. SSN- Social Security Number


In the United States, a Social Security number (SSN) is a number issued to
citizens, permanent residents, and temporary (working) residents. It is issued to
an individual by the Social Security Administration of the government of the
United States. Its primary purpose is tracking working individuals for taxation
purposes and to track Social Security benefits.
It is always 9 digit numeric.

o. Subscriber (Policy holder/ The person who subscribes for the policy)
p. Member (Person covered by Insurance Policy)
q. Insured (Person covered by Insurance Policy)
r. Dependent
Some Insurance plans have dependent coverage where the dependents of the
Insured are entitled to benefits under the Plan.
In most cases dependents are either spouse or child <19 years. Children from
19-24 years may be covered in some plans if they are full-time students from an
accredited School/College)

Where does Tela fit in the Claim Cycle? Life of a claim:


a. Provider submits the claim to the Insurance Company /TPA (Tela’s Client)
b. The client sends the scanned images of claims to Tela
c. At Tela, the data on the claims is entered into the system.
d. The output file is then generated in required format and sent to the Client.
e. The Client passes the output through the auto adjudicator.
f. Clean claims will be approved by the Auto adjudicator and the cheque is sent to
the Provider
g. If the claim needs further manual intervention, it suspends and is processed by a
human adjudicator
h. After Human Intervention, if the claim is found clean, payment is sent to the
Provider
i. If the claim is found to be invalid, it is returned to the Provider for Resubmission

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The three types of Insurance Claims are as follows:


 UB Claims (Uniform Billing)
 HCFA claims (Health Care Finance Administration)
 Dental claims

 When is a UB claim submitted?


 To reimburse expenses for services provided by a Hospital except Professional
Fees. Services Include:
 Room & Board Charges
 Charges for use of the Operating Room /Delivery Room.
 Medical supplies provided by the Hospital
 Laboratory services performed in the Hospital etc…

**UB 92 claims and UB 04 Claims are the two versions of UB Claims


UB Claims are of two types:
 UB In-Patient Claims
 UB Out-Patient Claims
…………………………………………………………………………………………………..
 When is a HCFA claim submitted?
To reimburse expenses for services provided by Non Hospital Providers. Services
billed on HCFAs include:
 Professional fees
 Ambulance Services
 DME Services (Durable Medical Equipment)
 Anesthesia Services provided by an Anesthetist
 Laboratory services provided by an Independent Lab

HCFA 1500 is the version of HCFA forms processed in TELA.(1500 0 to 12).


There is another version-CMS 1500. CMS stands for Center for Medicare and
Medicaid Services.
All Non hospital Providers submit HCFAs i.e. Individual Providers and small Clinics.
…………………………………………………………………………………………………..
 When is a Dental claim submitted?
Dental Providers submit Dental claims to reimburse Dental Expenses.

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Degrees of Dental Providers are:


 D.M.D. Doctorate in Dental Medicine
 D.D.S Doctorate in Dental Surgery.
Services include:
– Treatment for Orthodontia
– Placement of Prosthetics
– Other Dental Services

Note:
 The Dental form can be submitted before the services are actually rendered in
order to determine the approximate expense: In this case, the form would be a
Request for Pre-authorization.
 If the form is submitted after the Services are rendered, it would be a Statement
for actual services.
…………………………………………………………………………………………………..

Identifying Different Types of HCFA and UB Claims:

1. How to identify the different types of HCFA claims on the basis of POS code and
CPT codes:
o HCFA Ambulance claims:
 POS is either 41 or 42
 41 is for Land Ambulance
 42 is for Air/Water Ambulance
 Box 32 has a “from and “to” address
 Modifiers
 HH –Hospital to Hospital
 RH- Residence to Hospital
 SH – Street to Hospital
 HI – Hospital to Institute
o HCFA DME
 POS is either 4, 8, or 12
o HCFA Anesthesia
 CPT range is 00100 to 01999 or 99100 to 99140
 Time units are billed on the claim form
o HCFA Laboratory
 POS is 81

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 CPT code begins with “ 8”


o HCFA Radiology
 CPT code begins with “7”
o HCFA Office Visit
 POS is “ 11”
o Surgery claims
 CPT begins with “1”, “2”, “3”, “4”, “5”, or “6”,

Refer to the POS chart and Procedure code chart for more detailed identification and
interpretation of services on a HCFA claim

2. How to identify different types of UB claims:


UB claims
 Hot to differentiate between UB In and UB Out?
 Look at the TOB (Type pf Bill). It is a three digit code present in Box 4 of
a UB claim
 If the middle digit is either “1”, “2” or “8”, it is a UB Inpatient claim.
 Examples of Inpatient TOBs are
 111, 125, 183
 If the middle digit is anything other than the above numbers, it is an
Outpatient claim.
 Examples of Outpatient TOBs are
 131, 152,

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What do Diagnosis Codes, Procedure Codes, POS codes and Modifiers describe?

A) Diagnosis Codes: It describes the problem or the illness and is 3 to 5 digits in length.
There are three types of diagnosis codes:
1. Medical Code: e.g. 123.45 (All numeric and has a decimal after the first 3 digits)
2. Routine Code: e.g. V12.34 (Starts with “V”)
3. Emergency Code: e.g. E123.4 (Starts with “E” but has a decimal after first 4 digits)

B) POS Codes (Place of Service codes): It describes the place where the service was
provided.

C) Procedure Codes : It describes the service or treatment that was provided.


It is 5 digits in length. There are 3 types of procedures codes:
1. CPT- Current Procedural Terminology codes - 5 digits all numeric e.g. 12345
2. HCPCS- HealthCare Common Procedure Coding System –Begins with alpha
followed by 4 numeric e.g. A1234
3. Pseudo codes – are temporary procedure codes. Begins with numeric and ends
with alpha e.g. 1234A

D) Modifiers: It is a two-digit code which when used along with a procedure code provides more
information about the procedure or specifies the procedure.

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Place Of Service
Codes Description

3 School

4 Homeless Shelter

11 Office Services

12 Home Health

15 Mobil Unit

20 Urgent Care Facilities

21 Inpatient Hospital

22 Outpatient Hospital

23 Emergency Room Hospital

24 Ambulatory Surgical Center

25 Birthing Center

26 Military Treatment Facilities

31 Skilled Nursing Facilities

32 Nursing Facilities

33 Custodial Care Facilities

34 Hospice

41 Land Ambulance

42 Air/Water Ambulance

50 Federally Qualified Health Center

51 Inpatient Psychiatric Facilities

52 Partial Stay Psychiatric Facilities

53 Community Mental Health Center

54 Intermediate Care Facilities/Mentally Retarded

55 Residential Substance Abuse Treatment Facilities

56 Psychiatric Residential Treatment Center

60 Mass Immunization Center

61 Comprehensive Inpatient Rehabilitation Facilities

62 Comprehensive Outpatient Rehabilitation Facilities

65 ESRD (End Stage Renal Disease) Treatment

71 State/Local Public Health Clinic

72 Rural Health Clinic

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81 Independent Laboratory

CPT Category Description Code Range

Anesthesia 00100-01999 & 99100—99140


Surgery 10021-69990
Radiology 70010-79999
Pathology/Lab 80048-89399
Medicine (Immunizations/Injections) 90281-90799
Psychotherapy 90801-90899
Routine Vision 92012-92014
speech Therapy 92507-92508
93000-94799
Diagnostic Testing
95250-95975
Allergy Services 95000-95199
97000-97002
Physical Medicine & Rehab
97010-97750
Occupational Therapy 97003-97004
Chiropractic Manipulations 98000-98999
Evaluation & Management Visits 99201-99275
Emergency Room Physician Visits 99281-99285
Home Visits/Home Infusion (non-physicians) 99500-99602

HCPCS National Level II Code Section Code Range

Transportation Services (ambulance) A0000-A0999


Medical and Surgical Supplies A4000-A7509
Miscellaneous and Experimental A9000-A9999
Enteral and Parenteral Therapy B0000-B9999
Temporary Hospital PPS C0000-C9999
Dental Procedures D0000-D9999
Durable Medical Equipment (DME) E0000-E9999
Temporary Procedures & Professional Services G0000-G9999
Rehabilitative Services H0000-H9999
Drugs Administered other than Oral Method J0000-J8999
Chemotherapy Drugs J9000-J9999
Temporary Codes for DME Regional Providers K0000-K9999
Orthodontic Procedures L0000-L1999
Prosthetic Procedures L5000-L9999
Medical Services M0000-M9999
Pathology and Laboratory P0000-P9999
Temporary Codes Q0000-Q9999

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Diagnostic Radiology Services R0000-R9999


Private Payer Codes S0000-S9999
State Medicaid Agency Codes T0000-T9999
Vision Services V0000-V2999
Hearing Services V5000-V5999

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MODIFIERS
Modifier Description
21 Prolonged Evaluation and Management Services
22 Unusual Procedure Services
23 Unusual Anesthesia
Unrelated Evaluation and Management Service by the Same
24 Physician During a Postoperative Period
Significant, Separately Identifiable Evaluation and
Management Service by the Same Physician on the Same
25 Day of the Procedure or Other Service
26 Professional Component
Multiple Outpatient Hospital E/M Encounters on the Same
27 Date
32 Mandated Services
47 Anesthesia by Surgeon
50 Bilateral Procedure
51 Multiple Procedures
52 Reduced Services
53 Discontinued Procedure
54 Surgical Care Only
55 Postoperative Management Only
56 Preoperative Management Only
57 Decision for Surgery
Staged or Related Procedure or Service by the Same
58 Physician During the Postoperative Period
59 Distinct Procedural Service
62 Two Surgeons
66 Surgical Team
Discontinued Out-Patient Hospital/ASC Procedure Prior to
73 the Administration of Anesthesia
Discontinued Out-Patient Hospital/ASC Procedure After
74 Administration of Anesthesia
76 Repeat Procedure by Same Physician
77 Repeat Procedure by Another Physician
Return to the Operating Room for a Related Procedure
78 During the Postoperative Period
Unrelated Procedure or Service by the Same Physician
79 During the Postoperative Period
80 Assistant Surgeon
81 Minimum Assistant Surgeon
Assistant Surgeon (when qualified resident surgeon not
82 available)
90 Reference (outside) Laboratory
91 Repeat Clinical Diagnostic Laboratory Test
99 Multiple Modifiers
Anesthesia services performed personally by
AA anesthesiologist
Medically supervised by a physician for more than four
AD concurrent procedures
E1 Upper left, eyelid
E2 Lower left, eyelid
E3 Upper right, eyelid
E4 Lower right, eyelid
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F1 Left hand, second digit


F2 Left hand, third digit
F3 Left hand, fourth digit
F4 Left hand, fifth digit
F5 Right hand, thumb
F6 Right hand, second digit
F7 Right hand, third digit
F8 Right hand, fourth digit
F9 Right hand, fifth digit
FA Left hand, thumb
Monitored anesthesia care (MAC) for deep, complex,
G8 complicated, or markedly invasive surgical procedure.
Monitored anesthesia care (MAC) for patient who has history
G9 of severe cardio-pulmonary condition.
This service has been performed in part by a resident under
GC the direction of a teaching physician.
This service has been performed by a resident without the
presence of a teaching physician under the primary care
GE exception.
GH Diagnostic Mammogram
GN Speech language therapy
GO Occupational therapy
GP Physical therapy
LC Left circumflex coronary artery
LD Left anterior descending coronary artery
LT Left side
P1 Normal Healthy Patient
P2 Patient with Mild Systemic Disease
P3 Patient with Severe Systemic Disease
Patient with Severe Systemic Disease that is a constant
P4 threat to life
Moribund patient who is not expected to survive without the
P5 operation
Declared brain-dead patient whose organs are being
P6 removed for donor purposes
Medically directed by a physician: two, three, or four
QK concurrent procedures
QL
Ambulance service provided under arrangement by a
QM provider of services
QN Ambulance service furnished by a provider of services
QS Monitored anesthesia care service (MAC)
QX CRNA with medical direction by a physician
Medical direction of one certified registered nurse anesthetist
QY (CRNA) by an anesthesiologist
QZ CRNA without medical direction by a physician
RC Right coronary artery
RT Right side
T1 Left foot, second digit
T2 Left foot, third digit
T3 Left foot, fourth digit
T4 Left foot, fifth digit

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T5 Right foot, great toe


T6 Right foot, second digit
T7 Right foot, third digit
T8 Right foot, fourth digit
T9 Right foot, fifth digit
TA Right foot, great toe
TC Technical Component

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1 MD Doctor of Medicine
2 DO Doctor of Osteopathy
3 MS Master of Science / Master of Surgery
4 DC Doctor of Chiropractics
5 DPM Doctor of Podiatric Medicine
6 OD Doctor of Optometric
7 DDM Doctor of Dental Medicine
8 DMD Doctor of Medical Dentistry
9 DDS Doctor of Dental Surgery
10 RN Registered Nurse
11 LVN Licensed Vocational Nurse
12 LPN Licensed Practical Nurse
13 CNA Certified Nurse Assistant
14 CNM Certified Nurse Midwife
15 CNP Certified Nurse Practitioner
16 CRNA Certified Registered Nurse Anesthetist
17 RPT Registered Physical Therapist
18 LPT Licensed Physical Therapist
19 MFC Marriage Family Counselor
20 MSW Master of Social Work
21 MT Medical Technologist
22 PhD Doctor of Philosophy
23 MPH Master of Public Health
24 MRL Medical Record Librarian
25 BM Bachelor of Medicine and surgery
26 PT Physical Therapist
27 OT Occupational Therapist
28 PT Speech Therapist
29 CCSW Certified Clinical Social Worker
30 FNP Family Nurse Practitioner

ABBREVIATIONS

1. Degrees

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2. Other Abbreviations:

1 BC/BS Blue Cross/Blue Shield


2 CPT Current Procedural Terminology
3 HCPCS Healthcare Common Procedure Coding System
4 ICD International Classification of Diseases
5 ASO Administrative Services Only
6 TPA Third Party Administrator
7 HCFA Health Care Finance Administration
8 CMS Center for Medicare & Medicaid Services
9 UB Uniform Billing
10 HMO Health Maintenance Organization
11 PPO Preferred Provider Organization
12 EPO Exclusive Provider Organization
13 POS Point of Service
14 HIPAA Health Insurance Portability and Accountability Act

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MEDICAL TERMINOLOGIES

1. Orthopedic treatment – Treatment related to bones


2. Acupuncture- Treatment given by inserting needles at pressure points.
3. Acupressure-Applying pressure at pressure points
4. Pediatrist - A specialist in the care of babies/children
5. Podiatrist- Podiatrist is a doctor who diagnosis, treatment, and prevention of
conditions of the human feet. Degree is DPM (Doctor of Podiatric Medicine), DPS (Doctor
of Podiatric Surgery)
6. Cosmetic Surgery- Plastic surgery, Botox (removal of wrinkles), Face Lift, Tummy Tuck,
Rhinoplasty (Reconstruction of the nose) Removal of hair (laser therapy)
7. Dermatology- Skin
8. Orthodontic Dentist- Straightening of teeth/ Braces/ Retainer (Clip)
9. Psychotherapy- Counseling
10. Well child- Routine check up for children
11. Cardiology- is the study of the physiology and pathology of the heart.
12. Nephrology- is the study of the physiology and pathology of the Kidney
13. Neurology- is the study of the physiology and pathology of the Nervous system
14. Hematology- Blood
15. Osteopathy- Degree is DO. General Practitioner
16. Oncology- An Oncologist works with patients who have Cancer
17. Chemotherapy is the treatment of disease by means of chemicals that have a specific toxic
effect that selectively destroy cancerous tissue (anticancer therapy).
18. Radiation therapy is a form of cancer treatment that uses ionizing radiation (an intense form
of energy) to damage or destroy cancer cells.
19. Optometrist – Eye check up, prescription of glasses and lenses.
20. Ophthalmologist- Eye Surgeon and can also prescribe drugs
21. Evaluation- Check Up
22. Abortion: The deliberate ending to pregnancy before the fetus can be expected to live.
23. Administration of Injections: Administration fees for injections are charges billed by a
physician for administering any type of injectable medication.

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24. Immunization: It is the process of creating immunity to a specific disease in an individual.


25. Ambulance: Emergency and/or medical transportation (land/air) are provided when
transportation by any other means would be a threat to life or limb
26. Anesthesia: is partial or complete loss of sensations with or without loss of consciousness,
as a result of disease, injury, or administration of an anesthetic agent, usually by injection or
inhalation performed by a licensed, credentialed provider.
27. Chiropractic Care: Covered expenses rendered by a licensed chiropractor or physician for
examination due to misalignment or partial dislocation of or in the vertebral column and
correction by manual or mechanical means of the nerve interference. Degree is DC
28. Dialysis: The process of diffusing blood across a semi-permeable membrane to remove toxic
materials and to maintain fluid, electrolyte, and acid-base balance in cases of impaired kidney
function or absence of the kidneys.
29. Durable Medical Equipment (DME): Items of medical equipment owned or rented which are
placed in the home of an insured to facilitate treatment and/or rehabilitation and fall into one
or more of the following categories: 1. Can withstand repeated use; 2. Primarily and
customarily used to treat a medical purpose; 3. Not useful to a person in the absence of an
illness or injury; 4. Appropriate for use in the home; and 5. Not primarily for the convenience
of the patient. E.g. wheel chair, Crutches, walking stick etc.
30. Electroconvulsive therapy :( ECT) involves giving electrical shocks to the brain.
31. Emergency: Any type of sudden and serious or disabling conditions that requires immediate
medical attention.
32. In vitro Fertilization (IVF)
Invitro (Glass)
It is the process in which eggs and sperm are brought together in a laboratory glass dish
to allow the sperm to fertilize an egg. The embryo is then transferred to the woman’s
uterus.
33. Artificial Insemination is the mechanical placement of semen containing viable sperm into
the vagina.
34. Urgent Care Centers: An Urgent care center is a facility licensed to provide medical services
for unexpected illnesses or injuries that require prompt medical attention, but are not life-or
limb threatening.
35. Modifier: A Modifier is a two-digit number that is sometimes found at the end of a CPT
procedure code. Modifiers indicate that a service or procedure has been altered by some
specific circumstance.
36. MRI (Magnetic Resonance Imaging) is a type of diagnostic test using electromagnetic energy.
This technique is valuable in providing soft-tissue images of the central nervous and
musculoskeletal systems.

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37. CAT Scan (Computed Tomography Scan) is a diagnostic test that selects a level in the body
and blurs out structures above and below it leaving a clear image of the selected anatomy.
38. Bone Scan is a diagnostic test that is used to visualize bones.
39. PET Scan (Positron Emission Tomography) is a diagnostic exam that involves physiologic
images based on the detection of radiation from the emission of positrons. Positrons are tiny
particles emitted from a radioactive substance administered to the patient.
40. Occupational Therapy is a treatment using constructive activities to improve functional
restoration of a person’s lost or impaired ability to be able to do ordinary tasks for daily living.
41. Speech Therapy is the correction of speech impairment to the level before impairment,
disease, or injury.
42. Temporomandibular Joint Syndrome (TMJ) : Severe aching pain in and about the
temporomandibular joint (where upper & lower jawbone join) made worse by chewing.
43. Transplant is the grafting of living tissue from its normal position to another site or the
transplantation of an organ or tissue from one person to another.

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U.S. HEALTHCARE INDUSTRY

PLAN TYPES

Government Plans Commercial Plans


1. Medicare 1. Indemnity Plans
ii) PPO
iii) EPO
iv) POS
2. Medicaid 2. Managed Care Plans
3. Tricare (CHAMPUS) i) HMO

Government Plans
1. Medicare
a. Federal health insurance program.
b. People Eligible are
i. People aged 65 or older
ii. People less than 65 years with disabilities
iii. People with End-Stage Renal Disease (ESRD), which is permanent
kidney failure requiring dialysis or a kidney transplant.
c. Medicare has two parts:
Part A, - hospital insurance,
Part B - supplementary medical insurance, which provides payments for doctors
and related services and supplies ordered by the doctor.
Part A is free, but you must pay a premium for Part B.
2. Medicaid
a. Medicaid is a joint federal-state health insurance program that is run by the
states.

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b. Low-income people – People below the FPL (Federal Poverty Line) (especially
children and pregnant women), and disabled people.

3. TRICARE (Tri because Army, Navy & Airforce)


Formerly known as CHAMPUS (Civilian Health and Medical Program of the Uniformed
Services), it is a cost-sharing program for Military families, retirees and their families, some
former spouses and survivors of deceased military personnel
……………………………………………………………………………………………………………
WORKERS COMPENSATION
It is a requirement of the federal government for employers of patients who are injured or
become sick on the job. It is operated by various plans chosen by the employer or can be
operated by state governments

………………………………………………………………………………………………………………
Commercial Plans
1. Indemnity Plans

With an indemnity plan (sometimes called fee-for-service), you can use any
medical provider (such as a doctor and hospital). You or they send the bill to the
insurance company, which pays part of it. Usually, you have a deductible—such
as $200—to pay each year before the insurer starts paying.

Once you meet the deductible, most indemnity plans pay a percentage of what
they consider the "Usual and Customary" charge for covered services. The
insurer generally pays 80 percent of the Usual and Customary costs and you pay
the other 20 percent, which is known as coinsurance. If the provider charges
more than the Usual and Customary rates, you will have to pay both the
coinsurance and the difference.

The plan will pay for charges for medical tests and prescriptions as well as from
doctors and hospitals. It may not pay for some preventive care, like checkups.

2. Managed Care
a. HMO
i. Staff Model
ii. Group Model
iii. Network Model
iv. IPA
b. PPO

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c. POS
d. EPO

I. HMO (Health Maintenance Organization)


2. Network of Providers
3. Member has to select a PCP
4. If the PCP is unable to treat the Member, he can refer him to a specialist WITHIN
NETWORK
5. Member will not get reimbursement for service provided by any Provider other
than PCP without referral from PCP
6. No reimbursement for Out of Network Providers
7. Payment in HMO:
a. Member pays Premium and Copay for each service
b. HMO pays monthly Capitation to the PCP irrespective of the number of
services the Doctor provides
c. PCP is responsible for medical care of the Member. He may also assume
financial responsibility for the charges of Surgeon, lab etc (he will have to
pay for this from his capitation fees) or there may a fixed percentage that
the HMO sets aside for these expenses (Plan specific)
8. Different Models of HMO
i. Staff Model
Staff Model HMOs employ the physicians. These physicians who are
employees of the HMO provide services to HMO members only. The
healthcare center, generally owned by the HMO, offers a range of medical
services from X-Rays to Pharmacy services to general medical care

ii. Group Model


Group Model HMOs contract with physicians who belong to group
practices, group practices have several physicians offering medical
services. They provide health care to HMO members primarily

iii. Network Model


Network Model HMOs contract with physicians in group practices, however
these group practices also provide care to many patients who are not HMO
members.
iv. IPA

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Independent Practice Associations contract with physicians who are mostly


in solo practices. These physicians often also have many patients who are
not HMO members

II. PPO (Preferred Provider Organization.)


1. Network of Providers
2. No PCP. The member can visit any Provider within the Network
3. Member will also get reimbursed for Out of Network Providers,
however at lower benefits
a. E.g. Plan A may offer the following incentive to Members to
visit In Network Providers.
Copay for In Network Providers
Deductibles and Coins for Out of Network Providers
b. E.g. Plan B may offer the following incentive to Members to
visit In Network Providers.
Lesser Deductibles and Coins for In Network Providers.
More Deductibles and Coins for Out of Network
Providers
4. Payment in a PPO plan
a. Member pays Premium, Deductibles and Coins. Copay
for certain services.
b. PPO pays coins on a fee for service basis.

III. EPO (Exclusive Provider Network)


In short, EPO is the same as PPO with one difference. Out of Network Providers are not
covered.
1. Network of Providers
2. No PCP. The member can visit any Provider within the Network
3. Member will NOT get reimbursed for Out of Network Providers.
4. Payment terms in an EPO plan:
a. Member pays Premium, Deductibles and Coins. Copay for certain services.
b. PPO pays coins on a fee for service basis

IV. POS (Point of Service)


1. Network of Providers
2. Hybrid between HMO and PPO Plan.
3. In a POS plan the person basically opts for a HMO plan and by paying a slighlt higher
premium gains PPO benefits as well.

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Out of pocket expenses


o Copay
A payment made by an individual who has health insurance, usually at the time a service is
received, to offset some of the cost of care. Co-Payments are a common feature of HMO (Health
Maintenance Organization) and PPO (Preferred Provider Organization) health plans in the US.
Co-Payments size may vary depending on the service, generally with low co-payments required
for visits to a regular medical provider and higher payments for services received in emergency
room unless it is absolutely necessary.

o Deductibles
An amount the covered person must pay before payments for covered services begin.
For example, a $500 deductible means that an individual must pay for the first $500 worth of
health care expenses before the insurance company begins to pay for services for the rest of the
year.

a. Individual Deductible
b. Family Deductible

o Co- insurance
Co-Insurance refers to money that an individual is required to pay for services, after a deductible
has been paid.” Co-insurance” is often specified by a percentage. For example, the employee
pays 20 percent towards the charges for a service and the employer or insurance company pays
80 percent. It is a cost-sharing arrangement between an insured person and the health insurance
company in which the insured person is required to pay a percentage of the cost for health care
services received. Coinsurance typically applies after satisfaction of a deductible. For example,
80% coinsurance may apply after a $500 deductible has been satisfied. For Medicare Physicians’
Services. The beneficiary pays co-insurance of 20 percent of allowed charges.

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Group Insurance vs Individual Insurance:


1. Group Insurance
2. Individual Insurance

1. Group Insurance
In-group Health Insurance, a single policy covers the medical expenses of many different people,
instead of covering just one person. Unlike individual insurance, where each person’s risk
potential is evaluated to determine insurability, all eligible people can be covered by a group
policy, regardless of age or physical condition. The premium for group insurance is calculated
based on the characteristics of the group as a whole, such as average age and degree of
occupational hazard.
Many employers offer group health insurance as part of their employee benefits package. Other
groups that may offer insurance coverage include churches, clubs, trade associations, chambers
of commerce, and special-interest groups.

Benefits of Group Insurance


Physical Examination
Under a group health insurance arrangement, the insurance company agrees to insure all
members of the group, regardless of current physical condition or health history. The only
condition is that the group members must apply for insurance within the specified eligibility period.
Clearly, this is better for those with chronic health conditions, who might be unable to get
individual insurance.

Cheaper than Individual Insurance


Because only one policy is issued for entire group, the initial cost of establishing group coverage
is lower than the cost of issuing a separate policy to each person. Also, group insurance is
somewhat less risky for insurers than individual insurance, since the risk is spread out among a
larger number of people. Within a fairly large group, it is almost certain that the good insurance
risks will equal or exceed the bad insurance risks. Since the group Insurance costs less for the
insurance companies to establish and administer, it generally costs less to purchase.

Affordable
In many cases the employer or association will pick up some or the entire group insurance
premium. This can make group insurance even more affordable.

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Drawback of Group Insurance


Group insurance policies cannot be customized. In a group insurance situation, the provisions of
the policy are negotiated between insurer and master policy owner (usually an employer or
association). There is a little freedom into having provisions included or excluded, and the
deductible amount and co-payment percentage are determined in advance.

2. Individual Insurance
Individual insurance covers the medical expenses of only one person or family. Unlike group
insurance, the individual purchases the individual insurance directly from an insurance company.
When any person applies for individual insurance, they are evaluated in terms of how much risk
they present. This is generally done through a series of medical questions and /or a physical
exam. Their risk potential determines whether they qualify, and how much their insurance will
cost.

Before issuing an individual insurance policy, the insurer obtains the individual’s personal health
history. If the insurer doesn’t want to cover a particular health condition, any person may still be
able to get a policy with an exclusion rider.

If available, group insurance is generally a better option, since it is usually more comprehensive
and less expensive than individual insurance. However, individual coverage is infinitely better
than being uninsured in the event of illness or Injury. Although one may think that one can do
without health insurance, there exists a major risk for choosing not to get coverage. An
unexpected illness or serious injury can put an individual or their close family in financial peril.

In a group insurance situation, the provisions of the policy are negotiated between the insurer and
master policy owner (usually an employer or association). With individual insurance, an individual
is directly in control of the insurance policy. An individual can negotiate to have certain provisions
included or excluded, and can often chose their deductible amount and co-payment percentage.
However, the insurance premiums will depend on the deductible and Co-pays.

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GLOSSARY

Other Terminology.
1. Self funded /Self Insured Plan:
Basic Definition
Usually in large Companies, the Employer may prefer to invest in a fund
(managed by the Employer himself) to support Insurance for its employees rather
than paying premium to Insurance Company. In this case whenever a claim in
incurred, money is withdrawn from this fund. However, the responsibility of
creating the Policy and also the work of processing claims may be outsourced to
a TPA. The benefit if this kind of plan is that the funds left over after all claims are
paid will belong to the Employer instead of the Insurance Company.

Other definitions
Employers may elect to self-insure or self-fund an employee benefit program
rather than obtain coverage through an insurance company. This funding method
offers employers an option to standard insurance contracts.
Self-insured plans are employee benefit plans or programs which are funded
through financial vehicles other than insurance contracts. Self-insured plans may
also be called self-funded programs. They can be funded through employer
contributions, employee contributions, or a combination of both.
Some self-insured plans are funded through the unsegregated general assets of
a company. These plans are often called "pay as you go" programs. Other plans
are funded by making contributions to a segregated trust fund which accumulates
contributions (employer and/or employee) specifically for the purpose of funding
a benefit program.
Self-funded/self-insured plans may include short term disability, long term
disability, medical benefits, etc. Almost any type of benefit plan provided through
an insurance policy can also be delivered on a self-insured/self-funded basis.
Self-funded vehicles were established to provide benefit funding options to
employer groups or other group purchasers/users of benefit programs.
The costs associated with a self-insured program are the following:
• the actual costs of the benefits paid,
• costs for claim administration, including enrollment and termination processing,

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and
• cost associated with the collection of plan contributions.
An employer undertakes a detailed financial planning process to decide whether
it would be optimal to self-fund or insure.

3. Contributory vs. Non contributory Plan


The cost of the plan whether Insured or self-funded, can be allocated in two
ways:
• Noncontributory, or
• Contributory.
A noncontributory plan provides coverage at no direct cost to eligible employees
as employers pay all costs to provide benefits to their eligible employees.
A contributory plan furnishes coverage at full or partial cost to eligible employees.
In some contributory plans, the employee pays the whole cost. This is sometimes
referred to as an "employee-pay-all" plan.
In other contributory plans, the employee contributes a fixed amount or a
percentage of the cost of the plan, and the employer pays the balance of the plan
cost. The employer's and employee's contribution toward the cost can vary from
plan to plan. The plan funding type can be either fully insured or self-funded. At
the same time, the plan cost can be noncontributory (employer-pay-all), fully
contributory (employee-pay-all), or partially contributory (employee and employer
share cost).

4. Actuary
An expert who calculates insurance risks and premiums. It is the actuary's
responsibility to see that an insurer's operations are conducted on a sound
financial basis through setting adequate premium rates and policy reserves.

5. Underwriter
Underwrite - literally, to set one's name to an insurance policy and thereby
become responsible for a designated loss. An underwriting department in an
insurance company is responsible for evaluating and accepting or rejecting
applications for coverage. An individual who performs these tasks for an insurer
is termed an underwriter.

6. Administrative Services Only (ASO)

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An agreement between the employer and an insurance company or Third Party


Administrator to only administer the employer's self funded plan, and does not
include any protection against financial losses caused by claim expenses. Claim
expenses are the responsibility of the plan and/or employer.

7. TPA
An organization that handles the administrative duties of claims administration.
TPA’s are typically used by organizations that self-fund health benefits but do not
find it effective to administer the plan themselves.

8. Reinsurance (Stop Loss) -

Basic Definition:
Most Self funded Plans as well as Insurance Companies prefer to have a backup
plan in case the claims incurred for that year exceed the fund set aside for the
claims. In order to do so, they purchase re-insurance. The re-insurance Company
is responsible to cover all losses above the maximum set aside.

Other definitions:
A term used to describe policies, which are designed to spread a risk between
two or more insurers. Reinsurance may be purchased by employers to reimburse
large claims incurred under self-funded employee benefit plans.

9. Preferred Provider
A preferred provider is a health care provider who has made an agreement with
your plan to offer health care services at a discounted price. A Preferred Provider
is also referred to as Participating Provider, Par Provider, In-Network
Provider.

10. PCP / Gatekeeper


In HMO plans, each member is assigned a physician who is his PCP or Primary
Care physician. It is the responsibility of the PCP or Gatekeeper to provider the
patient with basic medical care. The PCP must be consulted before the member
can see a specialist. If the person does not obtain a referral from his PCP before
obtaining services from a specialist, the cost will not be covered by the plan.

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11. Authorization
Authorization can be defined as the permission that a member is
required to obtain before he can avail certain services.
In HMO plans, the member needs authorization from the PCP to
receive service from any other Provider in the Network
Other plans require authorization for admission to a hospital
Authorization may also be required for services like Surgery etc.

12. Referrals
If a PCP determines a member requires services that he/she cannot render, the doctor refers
the member to a provider who can provide those services. The PCP completes a referral and
lists the services to be provided by the specialist. The referral should identify the patient, the
authorized services, the number of visits authorized, the name of the specialist provider, and
the dated signature of the PCP. The PCP must use the Maryland Uniform Consultations
Referral Form when referring patients. The referral form can be mailed or faxed. Some plans
do not require a paper referral and will accept a phone call from the primary care physician’s
office.

o Referrals may be good for one or more visit(s). For example, a referral to a
cardiologist for evaluation of hypertension may be good for only one visit, but a
referral to an orthopedic surgeon for treatment of a fracture may be good for multiple
visits.

o It is also important to check the date when the member’s PCP completed the referral.
This is necessary to confirm the referrals’ validity at the time of the appointment. If
too much time has elapsed between the date the referral was completed and the
specialist visit, the member will need to obtain another referral from his/her PCP.

o A referral may be valid for as long as 90 days, but a member may lose his/her benefit
eligibility through loss of employment (or any other reason). Before services are
rendered, the member’s eligibility must be verified by the doctor’s office.

o As indicated on the referral completed by the member’s PCP, the specialist may
provide certain services to the member, but he/she is not responsible for coordinating
the member’s care. If additional services are necessary for diagnosis and treatment,
the specialist should report his findings to the PCP and await approval for further
treatment.

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o Referrals made to other specialists without the proper referral from the patient’s PCP
may result in either nonpayment or payment at a reduced rate leaving much of the
responsibility to the member (dependant on the type of health insurance plan).
Adhering to this method of coordinating care allows the PCP to control the member’s
utilization and quality of care.

13. Utilization Review

Utilization review is a method used to determine the medical necessity and quality of
services rendered. The review may take the form of either a pre-admission review (called
pre-certification), a concurrent review, or retrospective review. It is not unusual for
managed care organizations to engage in all three types of utilization review.

Precertification review involves examination of the anticipated services requiring an


inpatient stay by the patient’s health plan to determine whether the admission and
recommended treatment plan, e.g. open heart surgery, as well as the site of care, e.g.
inpatient vs. outpatient, are medically necessary. This review is conducted prior to
inpatient admission.

 A concurrent review is conducted while the patient is hospitalized to ensure


appropriate medical care, resource utilization, length of stay, and discharge
planning.
 A retrospective review is a review that occurs sometime after a patient is
discharged and associated claims have been submitted to the health plan. The
health plan’s retrospective review determines medical necessity of all services
rendered and resources consumed
14. Pre-surgical testing
Pre-surgical testing is generally necessary laboratory and radiology testing
ordered by the admitting physician and performed seven days prior to surgery
where a general anesthetic will be used. The surgery may be in an out patient
setting.

15. Pre-admission testing


Preadmission testing is generally necessary laboratory and radiology testing
ordered by the admitting physician and performed seven days prior to inpatient
(not outpatient) hospital confinement. The tests must be performed in an
approved facility.

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16. Second Surgical Opinion


A “second surgical opinion program” is a prospective screening process based on a
consulting physician’s or surgeon’s evaluation of the need for surgery that has been
recommended by another surgeon. This type of program was introduced into plans since
it is believed that a large percentage of elective surgery performed in the US is
unnecessary. There are certain surgeries for which a claimant may be required to receive
a second opinion by another physician or surgeon for non-emergency surgery.

17. Cosmetic Surgery


Any surgery performed for the sole purpose of enhancing the appearance of an
individual and which is not medically necessary.
Exception: Cosmetic surgery required as the result of an accidental injury or
congenital defect is generally not excluded

18. Emergency Surgery


An operation performed immediately as a result of a urgent medical condition
and cannot be postponed to a further date or time.

19. Elective Surgery


An operation the patient chooses to have done, which may not be essential to
continuation or quality of life. There are certain surgeries for which a claimant
may be required to receive a second opinion by another physician or surgeon for
non emergency surgery.

20. Ambulatory Surgical Center


It is a licensed facility whose primary purpose is to provide surgical procedures
and in which the patient is admitted to and discharged within the same day. It
has one or more Physicians on duty whenever a patient is in the facility. It is not a
facility existing for the primary purpose of terminated pregnancies or an office
maintained by a Physician for the practice of medicine and it does not provide
services or accommodations for patients to stay overnight.

21. Incidental Procedure

Incidental procedure is a procedure that, when performed with another


procedure, is typically included as part of that procedure and not separately
reimbursable.

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An incidental procedure is a procedure that is performed at the same time as a


more comprehensive procedure. The incidental procedure does not add
significant additional work to the physician and/or is integral to the work of the
comprehensive procedure and hence a code determined to be incidental will not
be eligible for separate reimbursement and will be denied as included in the
allowance for the comprehensive procedure.

22. Occupational Injury


Occupational injury is defined as an injury, which occurred or arose from
compensated employment. In other words, any injury that occurred at the work
place or due to conditions in the workplace. In case of an occupational Injury, the
reimbursement will primarily be the responsibility of Workers' Compensation.

23. Per Diem Cost


Mostly for hospital stays, the Insurance Company prefers to pay fixed rates on a
per day basis instead of paying for every service provided. This per day rate is
called Per Diem Cost.
Example: If a person is hospitalized for a certain illness, the plan may state that
it will reimburse at a per diem cost of $100. This means that the person will be
reimbursed depending on the number of days spent in the hospital irrespective
what services were received during that stay. The total bill may be $600 but if the
person has been in the hospital for 5 days, the plan will pay 5 X 100 = $500 only.
Primarily Per Diem cost includes Room & Board charges and Ancillary charges.
Services like Surgery etc will not be included.

24. UR & C (Usual, Reasonable & Customary) or R & C (Reasonable & Customary)
a. Usual, reasonable, customary and regular terminology is used to signify the
extent of benefits, which are available under any particular plan provision. Rather
than indicating a scheduled amount for each possible benefit, a plan may provide
for payment of covered charges to the extent such charges are reasonable for
the areas where a service is provided and for the type of service provided.
b. R&C rates are applicable to Non Par Providers. If a member avails service out of
network, the MCO will only reimburse only at R&C rates. Any charge billed by the
Provider that exceeds the R & C rates becomes the responsibility of the Member.
Example:
R & C for Injection = $ 100
Non Par Provider bills $150
MCO will consider only R & C i.e. $100 for reimbursement.

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The difference between R&C and billed ($150 – $100 = $50) is considered as non
covered and will be the Patient’s responsibility.

25. Threshold Limit/Corridor Limit


As seen in the above case, If the billed amount exceeds the R & C rates, the
difference between billed amount and R&C rates is always considered as non
covered and will be the Patient’s responsibility. However, there is a Grace amount
(currently $10) by which the billed amount is allowed to exceed R & C. This grace
amount is called the Threshold limit or Corridor limit. If the Provider bills within this
limit, the MCO will consider the billed charges instead of R & C rates.
Example:
Threshold limit = $10
Billed amount = $120
R&C = $110
MCO agrees to cover $ 120 since it is within threshold limit
However if billed = $130, then MCO will only cover $110 since the billed did not fall
within threshold limit.

26. Allowed Amount/ Negotiated Rates


a. The Managed care Organization (MCO) will have a contract with Providers in its
Network to obtain discounted rates. These rates are called Negotiated Rates or
Allowed Amount. The Par Provider is obligated to charge members of the
Managed Care only Negotiated Rates for services provided. If they bill more than
negotiated rates, the excess amount will neither be borne by the MCO nor by the
patient. It has to be waived off by the Provider.
Example:
Negotiated rates or allowed amount for Injection = $ 100
Par Provider bills $150
As per the contract between the Par Provider and the MCO, the Par Provider is
obligated to charge members of the Managed Care only Negotiated Rates.
Hence, the difference between Allowed amount and billed ($150 – $100 = $50)
will neither be borne by the MCO nor by the patient. It has to be waived off by the
Par Provider.

27. Yearly Max


This is the maximum amount that the Insurance Company is willing to reimburse
for that plan year. If the Patient incurs any expense above the yearly max, it will

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not be covered by the Insurance Company. It becomes the Patient’s


responsibility.

28. Lifetime Max


This is the maximum amount that the Insurance Company is willing to reimburse
for that plan. The plan is active as long as the lifetime max is not met (this could
be for years).However, as soon as the member exceeds the lifetime max (even if
it happens within the first 2-3 years of the plan), the plan is terminated. He will
have to purchase another plan. .

29. OOP limit (Out of Pocket limit)


This is the maximum amount that the patient is obligated to pay out of his own
pocket for services incurred within the plan year.
When a person incurs an expense, the plan is responsible for some portion of the
covered expense and the remaining portion has to be paid out of the member’s
pocket (deductible and coins).However, the amount that the member pays out of
his pocket is added up and once this amount crosses a certain limit predefined in
the plan, then the plan is responsible to reimburse all expenses incurred above
that at 100%.

30. Eligibility
Common Criteria to become eligible for a plan
a. Should be an employee
b. Should be a dependent if plan has dependent coverage(either spouse or
child <19 years) Children from 19-24 years may be covered in some
plans if they are full-time students from an accredited School/College)
c. Should be “Actively at Work” when the plan becomes effective.

Factors due to which you may lose coverage:


a. Termination of employment
b. Child >19 will no longer be covered. Or Children from 19-24 years will
not be covered if they are not full-time students from an accredited
School/College)
If you get divorced, your spouse will no longer be covered.

31. Special Enrollee

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An Employee or dependent who is entitled to and requests special


enrollment within 30 days of losing other coverage or within 30 days of
acquiring a dependent through marriage, birth, adoption or placement for
adoption.

32. Coordination of benefits (COB)


A system to eliminate duplication of benefits when you are covered under more
than one group plan. Benefits under the two plans usually are limited to no more
than 100 percent of the claim.
The possibility of a person purchasing two plans for himself is very less since it is
not feasible to pay premium for both plans. However, a person may have
coverage under two plans. This situation arises when the person, in addition to
his own plan is also covered under his spouse’s plan or a child covered by both
his parents. In this case when a person has dual coverage, the rule of COB
applies which ensures that the person does not get duplicate benefits from both
plans. Benefits under the two plans are limited to no more than 100 percent of
the claim.
Which plan will be considered primary?
1. In case of an Employed person, the person’s plan will be primary and
spouse’s plan secondary.
2. In case of a child covered by both parents, the primary plan will be decided
based on the Parent’s Birthday. The parent who’s Birthday (dd/mm) comes
first in that calendar year will have to be the Primary coverage. If the father’s
birthday is in March and the Mother’s Birthday is in January, the Mother’s
plan will be primary for the child. If both parents have their birthday on the
same day, then the plan earliest in effect will be the primary plan.

33. Subrogation
In simple words:
If an Insured incurs a loss due to another party (common example is accident),
the Insurance Company will have to reimburse the Insured for losses incurred,
but can then sue the Third party in order to recover the amount.
Similarly if the Insured causes loss to a third party, the Insurance Company will
have to reimburse the third party although it may be the fault of the Insured
(incase the Insured was drunk while driving). However, it can then sue the
Insured and recover the losses.

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When an insurer is required to pay a claimant a sum of money, it is almost


always allowed to sue in the name of the claimant against any person who was
responsible for the loss. This concept allows an insurance company to sue on
behalf of its insured if it is required to pay the insured for a loss caused by
another person. In most cases, subrogation is fought between two insurance
companies disputing who was ultimately responsible for the loss without putting a
financial burden on the insured parties.

34. Carry Over Deductible


In some plans, the amount paid towards an individual deductible can carry
over to the following plan year. If the deductible applies to an individual, but
the individual does not meet the deductible for the year, any claims for
services incurred within the last 3 months of the plan year are carried over &
applied to the deductible for the following year. However, this condition
applies only if the Plan has the Carry over deductible Provision
Summary:
o Provision of Carry over Deductible should be included in the plan
o Member /Dependent should NOT have met their deductible for the
previous year
o ONLY the amount of deductible met in the last quarter (3 months ) of the
previous plan can be carried forward to the current plan year
o The amount met in last 3 months will be subtracted from the deductible
of the current year.
o Example. Consider a plan A with Carry Over Deductible Provision and
Deductible limit of $900
Deductible applied in March = $200
Deductible applied in October = $450
Deductible applied in November = $100
Total deductible met for the year = $200 + $450 + $100 = $750
No other charges incurred in this plan year.
As you can see, deductible has not been met for last plan; hence all
deductibles met in the last quarter (Oct, Nov, Dec) will be carried forward
to next plan.
The next plan has a deductible of $900. However, since there is a carry
over, the deductible for the next plan will be
$900 – $550 (deductible met in last quarter) = $350

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35. Pre-Existing Conditions


A pre-existing condition is a medical condition diagnosed or treated
before joining a new plan. In the past, health care given for a pre-existing
condition often has not been covered for someone who joins a new plan
until after a waiting period. However, a new law—called the Health
Insurance Portability and Accountability Act—changes the rules.
Under the law, most of which goes into effect on July 1, 1997, a pre-
existing condition will be covered without a waiting period when you join
a new group plan if you have been insured the previous 12 months. This
means that if you remain insured for 12 months or more, you will be able
to go from one job to another, and your pre-existing condition will be
covered—without additional waiting periods—even if you have a chronic
illness.
If you have a pre-existing condition and have not been insured the
previous 63 days before joining a new plan, the longest you will have to
wait before you are covered for that condition is 12 months.

36. COBRA

What happens if you or your family member leaves the job? You will lose
your employer- supported group coverage. It may be possible to keep
the same policy, but you will have to pay for it yourself. This will certainly
cost you more than group coverage for the same, or less, protection.

A Federal law makes it possible for most people to continue their group
health coverage for a period of time. Called COBRA (for the
Consolidated Omnibus Budget Reconciliation Act of 1985), the law
requires that if you work for a business of 20 or more employees and
leave your job or are laid off, you can continue to get health coverage for
at least 18 months. You will be charged a higher premium than when you
were working.

You also will be able to get insurance under COBRA if your spouse was
covered but now you are widowed or divorced. If you were covered
under your parents' group plan while you were in school, you also can
continue in the plan for up to 18 months under COBRA until you find a
job that offers you your own health insurance.

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Other Explanation:
COBRA contains provisions giving certain former employees, retirees,
spouses former spouses, and dependent children the right to temporary
continuation of health coverage at group rates. This coverage, however,
is only available when coverage is lost due to certain specific events.
Group health coverage for COBRA participants is usually more
expensive than health coverage for active employees, since usually the
employer pays a part of the premium for active employees while COBRA
participants generally pay the entire premium themselves. It is ordinarily
less expensive, though, than individual health coverage.
The qualifying event requirement is satisfied if the event is :
(1) the death of a covered employee;
(2) the termination (other than by reason of the employee's gross
misconduct), or a reduction of hours, of a covered employee's
employment;
(3) the divorce or legal separation of a covered employee from the
employee's spouse; (
4) a covered employee becoming entitled to Medicare benefits under
Title XVIII of the Social Security Act; or
(5) a dependent child ceasing to be a dependent child of the covered
employee under the generally applicable requirements of the plan and a
loss of coverage occurs.

37. ERISA -Employee Retirement Income Security Act, ERISA


The Employee Retirement Income Security Act, which is more
popularly known as ERISA, is a federal act that establishes basic rules
for employment based retirement funds and programs. There are also
provisions related to health insurance benefits and third party recovery of
benefits paid. Recovery occurs through what is called subrogation.
The Employee Retirement Income Security Act of 1974 (ERISA) is a
federal law that sets minimum standards for pension plans in private
industry. For example, if your employer maintains a pension plan, ERISA
specifies when you must be allowed to become a participant, how long
you have to work before you have a non-forfeitable interest in your
pension, how long you can be away from your job before it might affect
your benefits, and whether your spouse has a right to part of your
pension in the event of your death. Most of the provisions of ERISA are
effective for plan years beginning or after January 1, 1975. ERISA does

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BASIC ADJUDICATION TRAINING

not require any employer to establish a pension plan. It only requires that
those who establish plans must meet certain minimum standards. The
law generally does not specify how much money a participant must be
paid as a benefit. EBSA's compliance assistance information will assist
employers and employee benefit plan officials in understanding and
complying with the requirements of ERISA as it applies to the
administration of employee pension and welfare benefit plans.

38. Global Package: Global package is a one-time cost for an entire treatment. The
reimbursement made by the Insurance Company would cover the main procedure as well as
other related procedures. The most common example would be a global package for pregnancy.
If pregnancy is covered under a global package, the Insurance Company would have to pay a
lump sum amount for the entire pregnancy. This payment would cover all the expenses related to
the pregnancy including all office visits during the pregnancy but excluding the first visit where the
pregnancy was first detected.

Global Surgical Package:


In case of a global surgical package, the payment would cover all the services related to the
surgery.

The following components constitute a common global surgical package when performed
by the same physician:

 Preoperative Visits: Preoperative visits after the decision is made to operate beginning
with the day before the day of surgery for major procedures and the day of surgery for
minor procedures.
 Intraoperative Services: Intraoperative services that are normally a usual and necessary
part of a surgical procedure.
 Complications Following Surgery: All routine additional medical or surgical services
required of the surgeon during the postoperative period of the surgery including
complications which do not require additional trips to the operating room; also includes
writing orders, talking with the family, evaluating the patient in the post-anesthesia
recovery area.

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