II.          MANAGED CARE PROVIDERS

THE CATEGORIES OF MANAGED CARE

 

Managed Care Systems all fall into the following categories:

1.        The systems that are used to actually provide health care.
2.        Utilization Management
3.        Those that avoid or prevent illnesses and injuries.
4.        The interceding of the patient in their own treatment(s).

HEALTH MAINTENANCE ORGANIZATIONS  (HMOs)

HMO’s are often considered as synonymous with Managed Care in many people’s mind.  Even Managed Care “experts” will define Managed Care as HMOs.  However, HMOs are only one part of Managed Care, arguably the most important part, and is actually a method of providing Managed Care.  HMOs differ from other health care organizations in several primary respects.

1. Medical care is provided on a pre-paid basis, as opposed to the typical indemnity agreement offered by insurance companies, that pays for medical services after they have been received.
2. Persons that belong to an HMO plan (members)  pay a monthly fee, regardless of how much medical care or medical services they receive that month.
3. In most situations, an HMO provides all types of medical service, including physicians, specialists, surgeons, hospitalization, laboratory work, clinics, and in many cases, even prescription drugs. 
4. A significant feature of HMOs is that preventative care is often included, such as routine physical examinations.
5. HMO’s are noted (or notorious) for tight operational control.  With the exceptions of emergencies, that occur outside of the HMO’s service area, or for treatment not provided by the HMO, HMO members are required to obtain any medical care through the HMO network.  This is accomplished, in most cases, by first consulting a Primary Care Physician (PCP), who will then refer the member to a specialist if the PCP feels it is necessary.

If one factor could be determined as the primary reason that HMO’s have been successful in holding down medical costs, it is the extremely tight utilization rules.

As with any other medical provider, it must be determined as to the type of care that the network is designed to provide.  If an HMO is designed as a “Medicare” HMO, specialists in geriatrics and other age-related diseases must be on the network.  If the HMO is designed as an employee benefit plan, then family doctors, pediatricians, Gynecologists, etc., must be available.  For Workers Compensation Managed Care, physicians specializing in trauma and those experienced in Workers Compensation claims should be available as PCP’s, or at the very least, on the specialist list for referrals.

TYPES OF HMOs

 

Because of the changes in the structure of Health Maintenance Organizations, it has become necessary to categorize HMOs into major sections, or “Models.”  As the HMO concept matures, subtle changes in the way that Managed Care is provided will create additional types, but at this time these types of HMOs are evident.  The variations that have occurred from these models are of such importance that the industry has given them separate names and descriptions, as discussed later. 

The principal differences between these Models are as follows:

1. The amount of control over the health care providers in the organization.
2. How the providers are compensated.
3. Do they treat only HMO members.

The industry has categorized HMOs into four primary “Models” as follows:

1. Staff Model
2. Group Model
3. Network Model
4. Individual or Independent, Practice Association (IPA) model

 

STAFF MODEL HMO

 

A Staff model HMO can be classified as a “classic” HMO, or the “original” HMO, as this was the type of HMO first introduced by Kaiser Permanente.  The health care provider uses the physical facilities that are provided by the HMO.  Hospitals may be owned or leased by the HMO, and include hospital equipment and supplies.

Physicians and other healthcare providers are paid a salary by the HMO, and the salaries are not contingent upon how many patients are treated.  Most of the physicians are Primary Care Physicians, but also includes specialists.  The number of physicians and specialists depends upon the size of the HMO and the number of members.  Only HMO members are treated in the Staff Model HMO.

These HMO’s exercise tight control over the healthcare providers, and therefore are the most effective in managing costs.  The providers have no incentive to over treat patients as all providers are salaried, and their treatment programs can be closely monitored for efficiency in cost and medical treatment results.

Staff Model HMO’s range in size, as large as a multi-state HMO (such as Kaiser) or they can also be located in one building, or even in a hospital.

However, the Congressional Budget Office reports that a Staff Model HMO reduces the use of resources by nearly 20 percent, while the less restrictive models barely reduces the use of resources at all.

 

 

GROUP MODEL HMO

 

The Group Model HMO resulted primarily from reaction by providers, who saw the Staff Model HMO as a threat to their livelihood, and to the medical profession as a whole.  As a defensive measure, providers organized into large professional associations (“P.A.’s”).  This allowed them to negotiate their fees and services with the HMO on a basis of strength in numbers.

The Group Model HMO is usually a corporation that performs all of the duties of an HMO with one important exception; it cannot actually practice medicine.  The HMO must, therefore, negotiate with these large professional groups, what medical services will be required, and the fees that they will pay for these services.  The contract with members of its organization to provide the number and type of physician necessary to provide the types of services needed and contracted for with the HMO.  They provide the necessary hospital services, they pay their providers, and they provide facilities for the contract physicians.  In effect, the professional groups become the service-rendering arm of the HMO, and the HMO performs the marketing and some of the administration.

Whey would these groups need and HMO?  The HMO provides all (or at least most) of the patients for the providers.  They can negotiate for payment amounts and for various operational procedures necessary for the success of the HMO.

An HMO is usually not limited to a contract with only one group practice, and may contract with several such organizations.  However, they always contract with large multi-specialty practices so that more services can be offered to its members.

The Staff and Group Model HMOs continue to lose market shares, and the Group Model shares most of the patient criticisms of the Staff Model.

 

 

NETWORK HMOS

 

Network Model HMOs contract for all of their services, both hospital and physician groups.  Similar to Group Model HMO’s, they contract with physicians to provide healthcare services, however they will contract with physician groups of all sizes, including one-doctor offices.  The providers continue to operate out of their own office or that of the group to which they belong, and they are allowed to continue with their private practice.  Many provider groups will contract with more than one HMO, and still continue their fee-for-service practices.

Hospital services for their members are handled on a contractual basis with local hospitals.  Even though the control exercised by the Staff and Group Models is not present with the Network HMOs, in many respects the Network Model has been just as successful.  Some of the larger health insurance companies have elected to form a Network HMO with allows them to compete with older and more established Staff or Group HMO and to do so with a minimum of organization time.

 

 

 

INDEPENDENT PRACTICE ASSOCIATION (IPA) MODEL HMOS

 

 

(An IPA is also known as an "Individual" Practice Association in some areas).

To classify the IPA Model HMO as "loosely constructed" is an understatement.  To many, it vaguely resembles an HMO, but still maintains some vestige of Managed Care.

The IPA Model is an association of physicians (and other healthcare providers) in individual practice or in practice with a small group of doctors.  These providers contract with the HMO to provide medical services to its members with medical services as contracted with the HN40.  There is little control as to procedures or costs as the percentage of HMO members treated by the provider is small compared to their usual private‑practice patients.  In most cases, the providers continue to work out of their own offices.

An IPA offers tremendous flexibility to providers, as an IPA provider can belong to more than one IPA, may belong to one or more PPO network, they can still contract with other HMO's.  In addition, they continue to develop their private practice.  '

Obviously, the HMO has relatively little control over the utilization decisions of these providers, but since the providers are the owners of the IPA, financially it would not be wise to over treat the HMO members.

It would seem that there is little relationship to an HMO, however the IPA physicians are generally paid on a "capitation" basis whereby the provider is paid a flat fee per member each month regardless of how much medical treatment the member receives.  If the provider is unable to provide treatment and a specialist is needed, the specialist can negotiate their own fee for their services.

 

 

 

CASE STUDY:  Victim of an IPA/HMO

 

A thirty-four-year-old mother of one and a patient of a southern California IPA HMO apparently was a victim, of an IPA HMO contract that made her doctors individually responsible for the cost of almost every test and referral they ordered.  Joyce’s tragic death and the subsequent medical malpractice trial against her HMO doctors garnered nationwide news coverage, including a segment on “60 minutes.”

Joyce Ching's two primary-care IPA HMO doctors, according to the contract they signed-with their IPA, had to pay directly for every test or specialist referral they ordered, up to five thousand dollars per patient per year.  They were paid a flat fee of twenty-eight dollars per month by the IPA for each patient assigned to them, significantly-more than the usual eight to thirteen dollars per month primary care sub-capitation that was standard at that time for IPA HMO doctors in southern California.  In exchange for receiving this increased capitation payment, Joyce’s doctors had agreed to take on the individual risk of her medical expenses, they did not share in a risk pool.

On Aug. 14, 1992, Joyce visited her IPA HMO primary-care doctor with complaints of abdominal pains, abnormal bowel movements and rectal bleeding.  During pelvic exam, her doctor noticed a “mass posterior” to Joyce’s uterus.  She asked for a referral to a specialist, but the PCP ordered a pelvic ultrasound and a pain reliever.

The ultrasound could not find a source for her symptoms and the painkiller didn’t work, so 5 days later, she again asked her doctor for a referral to a specialist.  Her PCP said she had to have another office visit with him before he would refer her to a specialist.  Two weeks later, she called again and stated that she was still having the symptoms and wanted a specialist.  She then made an appointment with her doctor’s partner, as her PCP was not available.  The new doctor changed her diet and ordered a series of blood and stool tests.  He also refused to authorize the referral request and did not schedule a follow-up visit.  7 weeks later, still having the symptoms, she pleaded with both doctors for a referral to a specialist, but to no avail.

Joyce and her husband then went to the PCP’s office and begged for a referral.  After refusing again, the PCP then agreed to order a barium enema x-ray as her husband refused to leave until the situation was resolved.  The x-ray showed that she had colon cancer.

On November 2, 1992, Joyce finally got a referral to see a specialist.  She was referred to a gastroenterologist (an internist who sub specialize in the intestines and digestive organs).  After examining her, the specialist arranged to have Joyce admitted to the hospital that day.  Three days later after preoperative preparations and tests were completed; a surgeon removed a tumor the size of a fist from her lower colon.  But it was too late; the cancer had already spread and would kill her a few months later.

During the trial against the HMO doctors, Dave Ching's Attorney presented medical evidence that if Joyce had been referred to a gastroenterologist soon after her initial August 14 visit to Dr. Gaines, such a specialist in the digestive tract, more likely than not, would have started an investigation that quickly would have discovered and led to the removal of her colon cancer.  If her cancer had been removed by the end of August 1992, as the expert witnesses who testified at the trial claimed was the proper and typical amount of time- that an average gastroenterologist would have taken to make the correct diagnosis, the odds would have favored Joyce being alive today.

Furthermore, her attorney argued that the reason she was not referred to a gastroenterologist was that her IPA HMO doctors didn't want to spend the money out of their own pockets to pay the specialist for his examination and the expensive tests such specialists often order.

The attorney for her two PCP’s offered a different version of the events.  He argued that Joyce's initial visit was actually prompted by ovarian discomfort and symptoms of irritable bowel syndrome.  The mass Dr.Gaines felt posterior to Joyce's uterus was actually benign uterine fibroids, which was confirmed by the pelvic ultrasound examination.  The doctors' attorney also argued that even if the cancer had been discovered on Joyce's first visit, it would have been too late because the tumor had already metastasized.

The jury awarded Dave Ching and the Chings' four-year-old son almost three million dollars in a verdict against their HMO doctors.  The Chings' attorney, Mark Hiepler, commenting on why the case was settled in their favor' said that the "jurors told me later they couldn't believe this was how HMOs work."

 

 

CARE MANAGER

The “Care Manager” concept is relatively new, and is a compromise between an HMO and a Point-of-Service plan.  Basically, it is an IPA model HMO that allows patients to choose either full coverage under an HMO or to pick their provider from a list of providers, normally a smaller network that a typical PPO.  Generally, if the patient uses the HMO concept, the co-payment may be eliminated, or at least reduced.  If they want to pick their own provider from the list, they may be subject to a deductible and a co-payment.  The uniqueness of this plan allows the patient to pick which plan they will use at the time they will need the provider services. 

The Care Manager plan is sold almost exclusively as an employee benefit and the premiums are lower than a FFS, POS, or PPO plan. 

MEDICARE HMO

 "Medicare HMO" is simply an HMO that accepts only persons on Medicare, both those age 65 and older, and those under 65 receiving Medicare because of disabilities.  It may be any of the Models listed above, but it also has its own peculiarities.

If a Medicare Beneficiary enrolls in an HMO, the Beneficiary is no longer on Medicare.  To be approved by Medicare, the IB40 must furnish all of the medical services provided by Medicare, plus those services provided by a Medicare Supplemental policy.  The HMO may provide additional services, and many do; for instance many provide routine checkups that would not be covered under Medicare.  In some states the Medicare HMO provided prescription drugs that would not be provided under Medicare, or under most Medicare Supplement policies‑.

In most Medicare HMO's the Medicare beneficiary does not pay a premium to the HMO, but continues to pay the Part B Medicare premium as he would have paid had he remained on Medicare.  The IM40 is paid a contracted sum for each Medicare beneficiary that changes to the BA40.  The sum paid can vary from $300 a month, to twice that

amount or more, depending upon the geographical location and availability of medical care.

In today's market, the HMO is rapidly taking over the need for Medicare Supplements, to the point that in some geographical areas, the HMO "owns" the supplemental market.  In some locations, the IB40s organize Senior Clubs, sponsor outings, provide club houses for social functions and become heavily involved in the social life of the Beneficiaries.

In many retirement areas, HMOs have become popular because of the lack of out‑of-pocket expense (no need to purchase a supplement), and they provide some prescription drug programs where there is none available otherwise.  Many observers are positive that in the not‑too‑distant future, Medicare will be available only in some form of HMO.

INTEGRATED DELIVERY SYSTEMS

 

The Integrated Delivery System refers to the merging of the methods of paying for health care, and can be used when referring to several different organizations.  The delivery of medical services is integrated by uniting groups of doctors and a (or several) hospital(s) into one cohesive unit, or one organization.  A Staff Model HMO which owns its own hospital and employs its own physicians, is an example of such an integrated delivery system.

Staff‑model IB40s are considered fully integrated, both vertically and horizontally.  Vertical refers to the ownership of the hospital and (employee) the physicians.  Horizontal means all of the services that they offer and the financial risk that they assume, i.e. vertical means the entity owns the hospitals and employers the physicians.  Full horizontal integration would mean complete range of medical and claims services managed intensively through utilization management, gate keeping, data management, and assumes full financial risk by providing both physician and hospital care for a tee per person (capitation fee).  Kaiser Permanente is an example of a fully vertical and horizontal integrated delivery system.  A Group Model HMO that does not own its own hospital would not be a fully vertical delivery system.

 

GRADING AN HMO

“QUALITY" OF SERVICES

Many persons are concerned about “Quality” of the care they receive from an HMO, although the individual’s definition of quality varies widely from person to person.  Regardless, this is the major concern of most persons contemplating joining an HMO.

One of the most publicized concerns of HMO members  - and the press blew it completely out of proportion  - was whether the doctors had a financial incentive to under treat the patients.  Since the general public was unfamiliar with “capitation,” this method of compensation was perceived negatively as an “evil” thing.  If doctors were paid to treat a person regardless of whether they even saw that person or not, the doctor would be paid regardless of how much medical service was provided.  If a doctor had to share part of his capitation fee with a specialist, this would entice the doctor to not refer patients so they could keep the entire fee.  While there may have been an incentive to under treat, in actual practice it rarely, if ever, happened.

In the first place, Doctors are highly trained professionals, most of who take the Hippocratic Oath very seriously, and who are genuinely concerned about their patient’s health.  Many take any health reversals or improper treatment personally, and consider it a personal failing and they feel they have not done their job properly.

Doctors are also pragmatic and realize that if their patients are healthy, their patients are well satisfied and will return when more medical care is needed.

HMO’s all have procedures to handle complaints, and if a doctor receives too many complaints, they could stand a chance of being terminated with the HMO.

Besides, if a patient was under treated, they would eventually return and would require even more treatment making it economically unsound to under treat.  Logically, it is not economically sound to under treat any patient.

CASE STUDY: A Satisfied Customer

Brian was a newspaper columnist, well known in his community.  His newspaper came under new ownership and he was offered a traditional insurance plan, a PPO, or an HMO plan run by PacifiCare.  He elected for the HMO because “it provided 100 percent coverage.”  Further, he could continue to see his same doctor, as he was an approved Primary Care Physician with PacifiCare.  Brian felt that he had made the right choice, as he only had to pay a small fee when he went to see his doctor.

About a year after joining the HMO, he suffered a heart attack at work.  He fainted in his office and when he awoke, he found that he was in a private room diagnosed as having a major heart attack.  When he was stable, he was transferred to an area hospital noted for special expertise in cardiology.  A well-known cardiologist reviewed his records and told him that he needed “stents” (devices that hold arteries open) in tow of his coronary arteries, one immediately and one in a 2 weeks.  “Meanwhile I’m hearing nothing about insurance or payment.  All I know is that I’m in a beautiful private room in a famous hospitals getting trillions of dollar of care, with the magic figure of 100 percent stuck in my mind.”

After the 2d stent, he was discharged, but had to return later when it was found that his bone marrow had been poisoned by his heart medication.  He stayed in the hospital for a week, and then was discharged, well and healthy.

Brian described his hospital care as first class, and the medical tab for his treatments was around $250,000.  Under his old insurance plan, he would have had to pay about $50,000.

His experience with managed care demonstrates that excellent care can be, and is, delivered by an HMO.  His doctor considered his care as relatively straightforward, a quick easy diagnosis, followed by standard medical treatment.

CHOICE OF PHYSICIAN

One of the biggest perceived negatives that new HMO enrollees have to overcome, is that they must choose a single primary care physician (PCP) who controls all referrals for hospital and specialist care.  Under a staff or group model, the number of PCP’s to choose from can be quite small.  In network and IPA models, there are a larger number of physicians over a larger geographic area.  However, many people hate to give up the doctors they have been seeing for some time but are now outside of the network.

If enrollees do not like their doctors, they can request a change.  Those providers who are paid a salary (group and staff model physicians) aren’t hurt financially, but an IPA physician may be less inclined to make a patient unhappy if the patient is wanting a referral for more specialized care.

Part of the problem, conjecturally if not actually, is that the doctor has a financial incentive to limit care, but the enrollee does not.  One solution is to educate enrollees as to the care that they actually are entitled to.

A co-payment helps to create a partnership between the patient and the doctors, especially since the co-payment fee for a specialist is higher than with the PCP.  Care must be exercised, however, that the co-payment is not so high as to discourage treatment. 

Originally, the co-payment for a PCP consultation averaged $5.00, but a recent survey shows that presently a $15 co-payment is becoming the norm, and many experts feel that it will soon reach $25.  The reason for this increase is thought to be overutilization because of the lack of financial incentive of the enrollee to avoid unnecessary medical treatment, and the inclination to “run to the doctor for the sniffles.”

 

ACCESS TO PROVIDERS

One of the drawbacks to an HMO for those that travel outside of the immediate HMO area, is that virtually no coverage exists outside of the geographical area of the HMO  (except for emergency care, and then notification must be given).  Also, at the present time, the definitions of “emergency” vary from plan to plan, to the point that Federal intervention in this definition is being considered by Congress.  Since most hospitals have adequate capacity, the problem becomes that of access to providers.  This problem is two-pronged:

Are the HMO physicians located in a reasonable geographical area, easily available to the enrollees?  A group employer should try to establish the area in which the majority of employees reside, and the location of the doctors within that area.

Are there enough physicians to service the HMO’s enrollees?  One of the major reasons for dissatisfaction with HMO’s is the waiting period that an enrollee must suffer before being able to see their doctor.  Americans are used to immediate medical attention. 

 

COMPARISON OF WAITING PERIOD

 

PROFIT AND EXPENSE COMPARISONS - HMO & TRADITIONAL       

 

Traditional insurers have a lower expense ratio, 6.9% compared to HMOs average of 10%.

HMOs earn 8.3% profit on every dollar or premiums, indemnity insurers earn only 3.7% profit margin on their premium dollar.  Managed care organizations spend proportionately less on providing medical care per premium dollar than do indemnity insurance payers.  A 1995 CBO study concluded that Managed Care organizations reduce use of health care services by 8% when compared with a typical indemnity plan.

HMO members generally experience lower hospital admission rates and lengths of stay, than indemnity plan policyowners.

HMOs use fewer expensive procedures, e.g. average Managed Care patient spent 2 fewer days in intensive care and 5 less days in the hospital, with financial differences approximately $4,000 for average patient.

National Cancer institute found that a study of breast cancer surgery results found that survival rates were “significantly worse at HMO hospitals than at large or small community hospitals.”

HMOs do provide as much diagnostic and preventive care, if not more than, indemnity programs.

A 1996 report found that significantly higher dissatisfaction among sick members of Managed Care plans as opposed to fee-for-service plans in the wait for appointment and the doctors interest in the case.  Many doctors feel that “Managed care and rationed care are synonymous.”  (Dr. Warren Francis, Letters to the Editor, New York Times, Feb. 26, 1995.)

Younger and healthier people have more interest in HMOs as they have no particular relationship with a family doctor and they like the preventative care and the reduced premiums.  This has left the fee-for-service and indemnity companies with those who are older and of poorer health.

PREFERRED PROVIDER ORGANIZATIONS (PPO’S)

The basic similarity of HMOs and PPOs is that they both consist of healthcare networks.  However, with a PPO the providers are paid for the medical services they actually provide, as if they were in a fee-for-service system.  The principal difference between the PPO and the fee-for-service (FFS) system is that the providers cannot charge whatever they wish, as they have contracted with the PPO to accept a pre-determined fee for the services rendered.  In most cases, the fees are discounted from what they would normally charge for the service.  In addition, providers usually agree to certain Managed Care procedures imposed by the PPO.

The employee benefits plans or individual contracts utilizing PPOs have a financial incentive to use the network.  The coinsurance payment required by the plan will be markedly reduced if non-network providers are used.  As an example a traditional plan will offer 80% coverage for medical bills (after a deductible, or without a deductible, depending upon the plan) if network providers are used.  If non-network providers are used, then the plan will only pay a reduced amount, such as 60%.  This would provide sufficient inducement to receive treatment only from the network providers.

An additional incentive frequently arises as the network providers have all contracted for the amount that they will charge for the medical procedure.  A non-network provider has no such contract, and can, and frequently will, charge more than the plan allows.  The user of the plan is responsible for the amount charged by the provider and that was not paid by the plan.

With the pre-determined fees and the Managed Care procedures imposed on the PPO providers, PPO medical care costs have remained lower than the FFS costs.  The HMO’s experience a lower cost for medical care than do PPOs, however the PPO users are generally much more satisfied with their plan than those covered under HMOs.  The principal attraction appears to be the fact that the PPO member can choose a provider from a large number of providers, and they can also choose their own specialist, regardless of what their doctor wants.  The amount of “freedom of choice” that a PPO user loses when they leave a fee-for-service plan, appears to be acceptable in these situations.

PPOs can be sponsored by a wide variety of businesses and organizations.  Most of the PPOs are sponsored by insurance companies, but there is a rapidly growing group of independent investors who own PPOs.  Also, hospitals, doctor groups (or an arrangement between both), HMO’s, or Third Party Administrators (TPAs) own PPO’s.  In some cases, smaller PPO organizations band together to form a larger PPO that can offer more services.

Most PPOs attempt to offer the broadest range of medical care possible, including hospitals, laboratory and x-ray facilities, and even mental, vision and dental care.  By offering all of these services, there are fewer incentives for patients to go outside of the network and the easier it is to control costs.

Originally, PPO providers were paid on a contractual pre-negotiated discount system.  However, some providers would raise their rates until the actual amount they received was equal to (or more than) the fee before the discount.  Obviously this was counterproductive, so a system of fees, pre-negotiated, was developed based on the numeric codes used by physicians to describe the medical procedures they provide to their patients.

There are two code systems, the Current Procedural Terminology (CPT), which described the procedure, such as suturing, injections, etc., and the International Classification of Diseases, 9th Edition (ICD-9), describing the diagnosis.

A price is assigned to each code, and this price is the amount that is paid to the provider.

Medicare with its ever-increasing amount of paperwork, adopted the RBRVS (resource based relative value scale) in 1992 as a method of compensating physicians.  Because of the growing number of Medicare recipient’s providers are familiar with the system.  One advantage of the RBRVS system is that it takes into consideration services other than treatments, such as consultation, examinations, etc.  This was appreciated by those in general or family practices as they spend more time with their patients than do the specialists.

Hospitals obviously use different systems, as their billing procedures are much different.  Originally they used a negotiated discount, but have now adopted one of the following systems:

1. Per Diem:  A set fee is paid for each day a patient stays in the hospital, thereby eliminating any reason to raise fees to compensate for any discount.
2. Tiered Per Diem:  A set fee is paid for each day a patient stays in the hospital, but the fees vary according to specialty area within the hospital.  It may also upon the number of PPO patients in the hospital.
3. Per Care (Diagnosis Related Group):  Medicare introduced the DRG method in 1983, and it has been adopted by many private hospitals.  The amount of care that is necessary to treat each patient is determined, and the hospital is then paid on that diagnosis instead of being paid for the actual amount of care that was received.  This led to the “sicker and quicker” concept of getting patients out of the hospital before they are completely cured.  In turn, this produced a rash of regulations and the problem appears to have been mostly solved.  Providers are sensitive to any adverse publicity as a result of being discharged too quickly while under the provider’s care.

 

CASE STUDY:  Buyers Beware of PPO’s

Leo, a 58-year old semi-retired man purchased an individual Preferred Provider Plan, principally because a PPO plan was considerably less than traditional plans, and the network included both major hospitals in his hometown, and there were over 160 participating doctors in the county.  After a $500 deductible, the plan paid 80% of all medical costs until the out-of-pocket was $3,000, however the providers in the directory must be used, except for emergency.  If out-of-network providers were used, the plan only paid 60% of the “approved amount.”  The agent explained that the approved amount was the amount the insurer paid the provider for the particular medical service, and it was generally quite a bit lower than the doctor’s normal charge.

Within a year of issue, Leo developed cancer of the larynx.  Because of the location of the tumor, he had to have all of his teeth removed and the oncologist and his family doctor both notified the insurer that they were removed for medical purposes as he could not get radiation treatment unless his teeth were all removed.  The insurer refused to pay for the teeth removal as they considered it as “dental” treatment.  This was appealed, but the insurer refused to budge, and the Department of Insurance backed up the insurer.  However, the insurer did pay for the false teeth.  Leo had made sure that his doctor, surgeon, oncologist and hospital were all approved provider.

After Leo returned from the hospital with tubes sticking out of his throat and with a hole in his throat, he desperately needed home health care.  The hospital sent their home health care nurses to take care of these needs; at least Leo assumed they were from the hospital as they had the same name as the hospital. 

After receiving home health care, Leo started getting bills from the home health care agency.  He checked with is agent who made repeated telephone calls to the home health care agency and the insurer in an attempt to determine why he was getting these bills.  Eventually, Leo got a nasty letter from a collection agency asking for approximately $2500 for home health care.

During this period his wife had been cashing small checks, without really understanding what they were for.  Needing cash, she felt that she should take what she was receiving to help with the bills.

Six months after receiving home health care, the agent discovered that the home health agency was not an “approved” provider, so the insurer was paying only a small amount of what the agency billed.  For example, a $240 service was billed, the insurer only approved $74, and they paid $44.40 to Leo.  Leo then received a bill for $195.60.  To Leo, it would seem that if a patient went to the “Acme” hospital, an approved provider, and Acme hospital provided home health care from the “Acme Home Health Care” agency after he left the hospital, how was he to know that the home health care agency was not approved.  The insurer responded that (1) in the front of the provider book, there are specific instructions for the policyholder to check with the provider to make sure they were still “approved” and (2) many home health agencies are privately and independently owned, even though they are allowed to use the name of the hospital, and they either do not wish to be approved, or don’t meet the insurer’s qualifications.

 

MANAGED CARE MANAGEMENT FOR PPO’S

 

PPO providers must contract for and agree to utilization management controls.  These controls pertain to practice patterns, outpatient procedures, hospital care, and specialized areas such as chiropractic care, physical therapy and mental health.  These utilization procedures consist of analyzing treatment patterns, and if the pattern falls outside of the norm for the same or similar medical situation, this information is provided to the participating providers.  This allows the providers to compare their treatment of a specific condition, and the results thereof, with that of their contemporaries in their geographical region or in their area of specialty.

POINT - OF SERVICE PLANS

For the user, it can be difficult to differentiate between PPOs and Point-of-Service (POS) plans, as they are actually HMOs.  POS plans can provide for out-of-network coverage with a penalizing reimbursement differential so as to direct patients to their network.  Providers may be compensated on a variety of systems, either per-patient capita system, or under some contractual fee arrangement.

Points-of-Service name arises because members can access medical care at a point of service other than their PCP.  Since the choice of physician restriction posed a major barrier to acceptance of HMO’s by the members and by the general public, POS plans have grown to be very popular and most of the recent growth in HMO enrollment is from Point of Service plans.  And importantly, they have contained healthcare costs as well as HMO’s.

CASE STUDY:  Obtaining Referrals in an HMO

The experience of George Baker illustrates the difficulty patients frequently have obtaining referrals outside their HMO.

Through a company in the Los Angeles area for which he was a broker, George had belonged to a local staff-model HMO for many years, but he had rarely seen a doctor.  He'd occasionally gone to the walk-in clinic with a cold or a sinus infection and seen a different doctor each time.  He had never established a relationship with a primary-care physician.  At age forty-four, he began noticing that his right leg seemed slightly numb and weak during his daily three-mile jog.  In a couple of months, he detected a slight weakness in his leg even when he was not jogging.

He then made an appointment with the primary-care internist assigned to him by the HMO.  The doctor examined George, found no abnormalities, and told him the weakness was caused by irritation of a nerve root in his back from excessive jogging.  He was told to give up jogging for a month, and the weakness should get better.

George did as the doctor recommended, but at the end of the month when he resumed jogging, his right leg seemed even weaker and cramped easily.  George asked the internist to refer him to a neurologist, but the doctor said George simply needed some physical therapy on his back.  After the four physical therapy sessions his HMO approved, George was no better.

George wanted to see a neurologist.  He went to the HMO's patient services department and asked, nicely at first, - for a referral.  The clerk, trained to handle such requests, told George that only a primary-care physician could make a referral to a specialist; he would have to see another HMO internist if his primary-care internist didn't want to send him to a neurologist.

More than three weeks later, another HMO internist examined George.  He told George that the initial diagnosis was correct and a referral to a neurologist was not indicated at that time.

Based on his own observations and intuition, George knew better.  His leg was slowly getting progressively weaker.  His back did not hurt.  How could he have nerve irritation without any pain?  Something was wrong.

This time at the patient service department, George demanded to see a neurologist this week.  Three clerks, an administrator, and an hour later, George was reluctantly given an appointment with an HMO neurologist, for six days later.

The neurologist conducted a number of tests, including a MRI scan of George's lower back, all of which were normal.  An electromyography (EMG) and a nerve conduction velocity study of both legs, however, showed problems with the nerves in George's right leg and, unexpectedly, some mild abnormalities in the nerves going to his left leg.  When all of the test results were available, the neurologist called George in for a conference.  In his office, he told George that he believed George had a form of amyotrophic lateral sclerosis, or Lou Gehrig's disease.  Unfortunately, there was no cure or treatment;, it would slowly completely paralyze him; and it probably would be fatal within three or four years.

A few weeks later, after his mind had cleared somewhat, he decided to learn more about AILS before he planned the rest of his apparently dramatically shortened life.  He visited the library and read all he could on the disease.  The more he read, the more, he doubted this diagnosis.  Many of his symptoms and their progression, were similar to those of the usual ALS cases, but in many, they were not

His research revealed that a world-renowned expert in ALS, Dr. Brown, worked less than fifty miles from the University Medical Center (UMC).  George: saw Dr. Brown the following week, incurring a consultation fee of $250.  In seeing Dr. Brown, George utilized the point-of-service (POS) option that was part of his HMO policy, which allowed him to see any physician outside of his HMO without prior authorization.  When he used the POS option, he had a. $300 yearly deductible after which his HMO would reimburses him 70% of his medical expenses.  Using the POS option, he didn't have to wait to see if his HMO would pay for the consultation with Dr. Brown.

After Dr. Brown had taken a complete physical examination, and reviewed George’s records from the HMO neurologist, he informed George that he didn’t have ALS.  That was the best news money could buy.

The news was not all good, though.  Dr. Brown's opinion was that George actually had a rare condition called an arteriovenotis malformation (AVM): his arteries and veins had grown together in an uncontrolled manner and formed an enlarging mass that was pushing on the nerves of his spine and robbed it of its vital blood supply.  This condition could become quite serious, leading to paraplegia.

Dr. Brown recommended that George undergo a specialized, somewhat risky angiogram of the arteries surrounding his spinal cord to confirm the diagnosis.  He said that a radiologist at UMC was the only doctor in the Los Angeles area who was experienced at performing this rare angiogram.

George scheduled the angiogram with the radiologist for ten days later.  Including hospital charges, it would cost a little over five thousand dollars.  The procedure was completed without complications.  George did have the rare AVM and knew he'd be facing surgery.

With his POS HMO policy, George was able to schedule his difficult spinal surgery with one of the best spinal surgeons in the country without having to get approval from his HMO.  Tapping his savings, he paid his 30 percent share of the nearly thirty thousand dollars the surgery cost, his HMO paid the rest.  The surgery was a success.  George's recovery was complete and uneventful.

 

EXCLUSIVE PROVIDER ORGANIZATIONS (EPO)

 

Exclusive Provider Organizations are PPOs that provide no coverage outside of the network.  To the consumer it is difficult to differentiate between an EPO and an HMO.

PHO’S  -  PHYSICIAN-HOSPITAL ORGANIZATIONS. 

 

The PHOs meld a variety of providers to provide health care services for insurance companies and employers.  In 1996, 10 percent of all medical groups with more than 50 doctors were owned by hospitals.

Also, 69% of physician groups, 62% of home health agencies, 55% of Managed Care organizations and 46% of skilled nursing facilities were involved in these integrated health systems.

Some provider groups have decided to go directly to employers and offer their services, thereby bypassing the HMOs.  This way they will be rewarded for keeping costs down, while if they were with an HMO, the HMO would keep the savings for themselves.

Hospitals have formed subsidiaries that are designed to bring the physicians into a closer business relationship with the hospital without making them employees.

The Physician-Hospital Organization (PHO) brings physicians and hospitals together in a joint business enterprise.  Frequently, a PHO consists of one hospital and many doctors that contract with the hospital to accept their Managed Care patients.  By physicians and hospitals working together, large numbers of patients can be channeled to certain providers.  By forming a PHO, both hospitals and physicians can create a more powerful contracting entity.  A feature of the PHO that can have powerful influence on Managed Care in the future, is their ability to advance both vertically and horizontally, and as they evolve, they can be substantial competitors with HMOs and PPOs in the health care market.

Physician groups that “capitate” and act as insurers, can eliminate the “gatekeeper” function of the Primary Care Physician.  The gatekeeper function was found during a survey to be of significant concern to 68% of American consumers.  There is little data available as this is a relatively new arrangement, but it appears that these groups do not increase the cost of care, but may even decrease the cost because of the elimination of the gatekeeper function.

CARVE - OUTS

 

“Carve-Outs” refers to a plan that is taken from a larger plan providing more benefits, and provides services only to a special or particular area.  Many such medical services can be “carved-out”, including mental health, dental or vision benefits, chiropractic, physical therapy, prescription drugs, etc.  Usually they consist of healthcare providers who contract with insurers or HMOs to provide certain specialized benefits and at a fixed price.  These providers are usually part of a loosely organized provider network.

One example is a network of cardiologists and heart surgeons, with over 500 members located all over the United States.  In order to qualify each physician must perform at least 150 heart bypasses or similar operations, and to do so in hospitals that do at least 500 or more of such procedures each year.  They are subject to strict peer review and their mortality rate must be very low in order to participate.

A PPO or HMO that specialized in a particular type of care may be more successful at controlling costs for that type of care than a general purpose medical care network.

Prescription drugs are the most familiar “carve-out”, as prescription drugs appear to be approaching 25% of the total medical care costs.  In order to contain these costs, certain options for prescription drugs are available.

CARD PLANS

 

Card plans are the most popular plan.  The customers are issued cards to be presented to a pharmacy (that is part of the network) which has agreed to furnish drugs at a predetermined discount.  Since this is done electronically, administrative costs are lower and paperwork is reduced dramatically.  Some card plans require a co-payment only, frequently differing from generic and standard brand drugs, and the plan paying the remainder of the cost.  Some plans provide for drug utilization review, which reviews the drugs and its application, and uses a “formulary”.  (A formulary is list of drugs that covers all, or most of drug therapy that might be used to cover the treatment offered by the plan.  An “open” formulary allows for drugs not listed, wherein a “closed” formulary restricts drugs to only those on the provider list.)

 

CASE STUDY: Prescription Card ‑ Frosting on the Cake

 

Beth Middleton owns a small business, a dress and fashion shop, and employs 5 salespersons on a full‑time basis.  It is difficult for her small business to provide health insurance benefits for her employees, but after doing a lot of shopping, she finally decided on a PPO that had a sizable list of providers the area.  This PPO was able to work with her on benefits and provided her with a plan at an attractive premium, but with some exceptions.  The principal exceptions were that maternity benefits were not covered, and prescription drugs were covered as part of the deductible ($500), and were treated as any other medical expense, i.e. the company would pay 80% of the prescription drug bills after the deductible was satisfied.

While the employees were grateful that they finally had some coverage, they really considered it as "catastrophic" coverage as $500 was a lot of money for them to pay out of their own pockets every year to satisfy the deductible.

In an effort to pacify her employees without paying too much for insurance, Beth was able to find a company that provided substantial discounts for prescription drugs, and at a cost of about 25% of what it would cost to add a drug card to her benefit plan.

 

MAIL - ORDER PLANS

 

A mail-order plan allows customers to order drugs through the mail.  These drugs are primarily for maintenance, such as high-blood pressure, allergies, etc. as obviously they cannot be obtained quickly for medical emergencies.  This provides considerable savings as they can usually be obtained in a larger supply than normal and the pharmacies supplying these drugs furnish the prescriptions at substantial discounts.

Some firms offer a managed prescription drug plan wherein they contract with a large number of employees and furnish the prescription drugs at a negotiated price.

 

MENTAL HEALTH AND SUBSTANCE ABUSE

 

Another Carve-out program is for Mental Health and Substance Abuse.  It is necessary to carve-out these plans because either (a) the benefits provided by the general healthcare plan are too limited, such as being restricted by the provisions of an HMO; or (b) the employer wants to keep the inpatient benefit for mental health or substance abuse from being overutilized.  An employer may also wish to offer expanded mental health and substance abuse benefits and at the same time keep control of the costs.  The carve-out allows this.

 

COMPARISONS OF CARE DELIVERY SYSTEMS

PROS AND CONS OF VARIOUS TYPES OF HMOs

 

 

ADDITIONAL PROS AND CONS OF HMO VS.  FEE-FOR-SERVICE

(FROM THE VIEWPOINT OF THE CONSUMER)

 

For those who have the choice of a Fee - for - Service (FFS) plans, the following illustrates the differences to consumers:

1. Choice of Doctors: With FFS insurance, you can see any doctor you wish, anywhere in the country, when you want to.  HMOs, on the other hand, are geographically dependent - they severely limit your choice to a small list of doctors in a fairly small geographical area around where you live.
2. Specialist Referrals: With FFS insurance you can see any specialist you choose without having to ask permission from your primary-care, gatekeeper physician.
3. Out-of-Town Services: FFS insurance will pay for doctor visits or emergency room visits anywhere in the country, while HMOs are, again, geographically dependent.  If you go to a doctor or an Emergency Room not contracted with your local HMO because you're out of town, and don't get pre-approval for the visit (often there isn't time for that), the visit will be reviewed by your HMO and, if judged not a medical emergency," it may be denied for payment, leaving you to pay the bill.
4. Medications: Many HMOs give their doctors a financial incentive to prescribe fewer medications or the lowest cost medications.  At the end of the year, doctors who have saved a significant amount of money for the HMO through their prescribing patterns may get some of the savings kicked back to them as a bonus.  FFS insurance companies do not give their doctors a bonus for prescribing less medications or less expensive medications which helps insure that you'll be prescribed the best medication for your problem.

Conversely, there are reasons why an HMO may be a good choice.  While some members of HMOs have received inadequate health care because of HMO policies, they're the rare exceptions.

 

Here are some reasons for joining an HMO:

1. Less Expensive:  Joining an HMO can make good financial sense because it means very low fees for doctor visits and prescriptions with low deductibles.
2. Less Paperwork:  When you join an HMO you can avoid the frustrations and confusion of trying to decipher the multiple bills from doctors, specialists, hospitals and other health-care providers that many consumers experience,  With an HMO you pay a small, fixed copayment for each service and there is no billing to worry about.

No Unnecessary Procedures:  With an HMO you don't have to worry that you’ll be persuaded to undergo marginally indicated, unnecessary, or even potentially dangerous test or operations, as can happen when you have FFS insurance.  Remember, that under FFS insurance, the tendency is that you will get too much care.

Quality Doctors:  Ifyou select a high-quality HMO, you won't need to worry whether your doctors may be under investigation from medical regulatory agencies or may be incompetent without your knowledge.

High-quality HMOs have enough doctors to choose from, and have sufficient liability, that they generally do a decent job of verifying credentials and investigating the doctors they employ or contract with.  The doctors may not be the best in the area, but they usually are not the worst either.  If you're seeing a doctor in private practice, though, you need to do your own investigations.  There is a small, but significant number of private practice doctors out there who shouldn't be practicing medicine.  The regulatory agencies overseeing doctors are not as vigilant in this respect as the HMO’s.

And to make it even more significant, the following statistics are interesting:

 

PERCENTAGE OF PEOPLE COMPLETELY OR VERY SATISFIED

	HMO/Staff Model	FFS with
		PPO
Overall Satisfactory	70%	54%
Ease of seeing a doctor of your choice	50+%	90+%
Ease of referrals to Specialist	50%	90+%
Time spent waiting beyond time of appointment	45%	46%
Days between appointment and seeing a doctor	56%	63%
Time spent doing paperwork	80%	45%
Out-of-pocket costs	63%	33%
No complaints or problems	78%	82%
Would recommend their doctor	85%	90%
Medical care outcome	65%	65%
Overall Quality of care	65%	72%

 

An interesting point that can leave one rather confused, is that while 70% of the HMO members are satisfied overall with their HMO, compared to only 54% with the Fee-for-Service with PPO plan, the ease of seeing a doctor and of referrals very heavily in favor of the FFS with PPO.  Waiting time was about equal  - one could surmise that waiting for a doctor has become part of the American culture.  The two big “plusses” for the HMO would seem to be the cost (always, always significant) and the lack of paperwork.  It is most interesting to note that the Medical care outcome is equal, and the overall quality of care is only slightly lower with the HMO.

 

CASE HISTORY:  Who’s Responsible in the Emergency Room?

 

A pregnant woman in southern California was rushed to a hospital emergency room with sever lower abdominal pains and vaginal bleeding - almost certain signs of a miscarriage.  After a rapid exam, the ER staff urgently called her HMO to find out how it wanted her treated.  It took two and a half hours before the HMO returned the call.  In an interview with the Los Angeles Times, the ER doctors said that for the next six hours the HMO and the ER staff argued about who was obligated to provide care for the patient.  Eventually the HMO agreed that she could be admitted to the hospital she had been taken to.  A doctor directing the ER said the HMO’s actions “appeared tantamount to abandonment.”

Los Angeles Times, Aug. 30, 1995

ERISA

 

The Employee Retirement Income Security Act (ERISA) was passed in 1974 and was originally designed to protect pension-plan funds against raids by unscrupulous labor leaders.  It promulgated regulations that safeguards retirement funds, but it also included a clause which preempted any state laws from regulating employee benefit programs, including health insurance.  That this means is that, under ERISA, an employee cannot sue an employer-sponsored insurance plan in a state court.  This prevents a dissatisfied or injured employee from bringing a bad-faith lawsuit against an employer self-insured health plan, such as the type of plan offered by an HMO.  It also stops state laws aimed at protecting health-care consumers on other issues.  

ERISA limits legal remedies of consumers to recovery of “reasonable” legal fees and restoration of benefits owed to the consumer.  The consumer cannot sue for punitive damages or emotional distress.  So, if an employee was originally denied surgery and consequently lost their house because they had to pay for medical expenses from their own funds, a later finding by the court that the employee should have been covered for the surgery, plus attorney’s fees, but not the loss of the house.

Some attorneys believe that ERISA created an immunity for health insurance companies.  Normally a consumer would need an attorney where ERISA is involved, however because of the limits ERISA puts on punitive damages, few lawyers will touch these cases, particularly on a contingency basis.

To appeal an HMO decision as a result of ERISA, is by arbitration.  While this doesn’t usually make a wronged patient or a malpractice attorney wealthy, it can cause financial problems for an HMO. 

 

CASE STUDY:  ERISA Protecting Negligence

When nine-year-old Carley Christy was diagnosed with a cancerous kidney growth called a “Wilms’ tumor,” she was referred to her HMO’s urologist for surgery.  With some research her father discovered that the same university hospital at which the HMO urologist worked had a multidisciplinary team that specialized in treating Wilms tumors.  He asked for Carley to be treated by them.  The HMO stubbornly insisted that its own urologist (who had never removed a Wilms’ tumor) do Carley’s surgery, and that if the Christie refused, it would not cover another surgeon’s bill.  Because they know Carley’s surgery had to be done right away, the Christi’s paid to have the Wilms’ tumor specialists take charge of her and Carley’s kidney growth was successfully removed.

The Christies were astonished when the HMO also refused to pay the $47,000 hospital bill, since Carley would have had her HMO-funded surgery there anyway.  With his daughter on the road to recovery, Harry Christie took his case to the American Arbitration Association, which ordered the HMO to pay the entire cost of Carley’s treatment (including arbitration costs).  Still not satisfied, however, Christie notified the State Department of Corporations, which, upon investigation, found that the HMO had failed to provide Carley with access to an appropriate pediatric surgeon, had retaliated against the family by refusing to pay the surgeon and hospital bills, and that denial of these services was prompted by the HMO’s own financial considerations.  The State Department fined the HMO $500,000 for its actions.

Los Angeles Times, August 27, 1995

 

CASE HISTORY:  Fighting for a Transplant

 

Morris Gitterman lost his wife of 43 years as she died waiting for a lung transplant in England after fighting a long and hard battle to get on the waiting list for the transplant.  Gitterman feels that his HMO treated her with a “cold-blooded corporate indifference.”

An arbitration decision against the HMO after his wife’s death confirms his feelings.

In the summer of 1989, his wife’s pulmonologist told her that he suspected she had a progressive scarring process in her lungs that would eventually kill her, and the only treatment was a lung transplant.  The family sought and paid for outside opinions, all of whom confirmed the HMO doctor’s diagnosis and treatment plans.  The Gitterman’s elected to arrange for a pay for the treatment, and one center told them that she was a possible candidate but she must have a lung biopsy to confirm the diagnosis.

The biopsy was done in an HMO approved hospital and supervised by her HMO lung specialist.  As she was discharged, she was told that needed to be on oxygen at home, but the case manager told them that oxygen therapy was considered “durable medical equipment” which the HMO excluded.  Even though this did not make sense, the Gittermans decided to pay the $300-$400 a month charge themselves.

When they asked the HMO to pay for the single lung transplant recommended by all of the specialists, they were turned down.  The HMO considered a one-lung transplant an experimental procedure, and therefore not covered under the plan.  However, they would cover a heart-lung procedure, as it was not considered experimental.  Even though her heart was in good condition, she had no choice but to reapply for the heart and lung transplant.

Realizing that time was getting short, Gitterman wrote to the HMO’s president and to the state Department of Insurance.  The president’s office said they would review the matter.  The Insurance Department told them to settle their differences and then report to the Department as to the outcome.  At this point, Gitterman realized that the HMO was procrastinating and was using an effective stalling technique.  He finally found a lawyer who would handle the case for him, and who immediately instituted arbitration.  The HMO continued with their stalling tactics, refusing to agree to an arbitrator and not being willing to expedite the appeal process.

In the meantime, his wife was being turned down by transplant centers because she was 61 years old, but they finally found a surgeon in London who agreed to evaluate her.  He was successful in getting his wife to London, and after she was declared a lung-transplant candidate, she was put on a waiting list.  However, there were no appropriate lungs available in time, and one month later she died in a London intensive care unit.

The American Arbitration Association awarded Gitterman $234,314 after finding that the single-lung transplant is no longer considered experimental and that his wife was an acceptable candidate for this procedure.  Gitterman feels that the HMO still came out ahead as it did not have to pay for the procedure ($300,000 plus lifetime care), and under ERISA, it saved money on the award, which would have gone to $1 million if tried before a jury.

The final straw for Mr. Gitterman:  The HMO refused to pay the London hospital’s intensive-care bill!

 

 

STUDY QUESTIONS

1.  Managed Care Systems into the following category(s) except for

A.  the systems that are used to provide health care.

B.  utilization Management.

C.  those that avoid or prevent illnesses and injuries.

D.  isolating patients from their own treatments.

 

2.  The four primary Models of HMOs are

A.  Staff, Group, Network and IPAs

B.  PPO, POS, FFS and Care Manager

C.  Professional Associations, Primary Care Physicians and Workers Compensation.

D.  Providers, Hospitals, Professional Associations and Specialists.

 

3.  The “classic” HMO with very tight controls is

A.  the Staff Model.

B.  Professional Provider Organization.

C.  the only type of HMO that is still in operation today.

D.  growing faster than any other HMO today.

 

4.  “One of the biggest perceived negatives that new HMO enrollees have to
      overcome is that they must choose a single PCP.   A “PCP” is:

A.  a type of HMO that is owned by physicians.

B.  insurance that pays after the medical service has been performed.

C.  a premium payment plan using automatic bank drafts.

D.  Primary Care Physician.

 

5.  A co-payment is

A.  the annual deductible that must be paid before services are rendered.

B.  the amount that is split between the doctor and the hospital.

C.  the amount that is paid to the provider by the policyholder or member when they  receive medical care.

D.  the premium that is paid every two weeks.

 

6.  A “PPO” is

A.  the primary care physician with an HMO plan.

B.  a Point - of - Service plan.

C.  a group of doctors that incorporate to create their own HMO.

D.  a Preferred Provider Organization.

 

7.  Which type of an HMO is where the professional groups of doctors are the service rendering arm of the HMO, and the HMO performs marketing and some administration.

        A.  Staff Model

        B.  Group Model

        C.  Network Model

        D.  IPA

 

8.  Which type of an HMO will contract with hospitals and physicians, including one-doctor offices.

        A.  Staff Model

        B.  Group Model

        C.  Network Model

        D.  IPA

 

9.  An Association of physicians and healthcare providers in either individual or group practice, who then contract with an HMO to perform certain services, is called

        A.  a Staff Model HMO.

        B.  a Group Model HMO.

        C.  a Network Model HMO.

        D.  an Independent Practice Association (IPA).

 

10.  The type of plan is actually and IPA type of HMO which allows their patients to choose either full coverage under an HMO, or to pick a provider from a list of providers, is called

        A.  the Care Manager concept.

        B.  a Primary Physician Organization.

        C.  a Point-of-Service plan,

        D.  a Fee-For-Service plan.

 

ANSWERS TO STUDY QUESTIONS

 

1D     2A     3A     4D     5C     6D     7B     8C     9D     10A