managed care update

Managed Care Update

Anthony N. Akosa, M.D.

Types of Health Plans Medicare: managed by Centers for

Medicare & Medicaid Services (CMS). Products offered include traditional, Medicare Advantage (Part C) & Part D.

Medicaid: administered by the states. Commercial: offered by managed care

organizations (MCO) - private (MPlan, ADVANTAGE) and publicly traded (Anthem, Aetna).

Managed Care OrganizationsTypes of managed care plans HMO: Oldest form, least flexible, lowest

premiums. Must choose PCP to coordinate care.

PPO: Less restrictive. Services offered on a FFS basis. Financial incentive to stay within PPO network.

POS: A blend of HMO and PPO models. Selects PCP but can self refer, use OON providers.

Common Terminology Co-payment: a specified flat amount

paid for a specific service e.g. $10 for PCP office visits.

Coinsurance: % of the charge the plan and the patient share.

Out-of-Pocket Maximum: the maximum amount of coinsurance you will pay before the plan begins to cover 100% of the charges.

Common Terminology Deductible: amount required to be

paid by the insured before benefits become payable.

Spend-down: The medical expense relative to income that qualifies an individual for Medicaid. Similar to deductible as the amount is the member’s responsibility.

Commercial Plan: Market Share

PPO – 60% HMO – 20% POS - 13% HDHP – 4% Others – 3%

About 155 million Americans are covered by employer-sponsored health insurance

Source: Employer Health Benefits 2006 Annual SurveySource: Employer Health Benefits 2006 Annual Survey

Commercial Plan: Annual Premium Contribution

Single Coverage $ (employee/employer)

Family Coverage $ (employee/employer)

HMO $590 / $3459 of 4049

$3079 / $8198 of 11278

PPO $637 / $3749 of 4385

$2915 / $8850 of 11765

POS $634 / $3534 of 4168

$3226 / $7881 of 11107

HDHP $569 / $2836 of 3405

$2247 / $7238 of 9484

ALL PLANS $627 / $3615 of 4242

$2973 / $8508 of 11480

EmployeeContribution

15% of total 26% of total

Medicaid & Medicare cards

Medicare Of the 40 million Medicare beneficiaries,

89% were covered by traditional FFS plans in 2003.

The Medicare managed care product (Medicare Advantage) accounts for the remaining 11%.

Medicare Advantage offers additional benefits like prescription drugs, routine physicals, hearing aids, etc.

Medicare Premium: Most beneficiaries do not

pay Part A (hospital insurance). Part B (medical insurance) monthly premium for 2007 is $93.50.

Deductible: $131 annually for Part B. Beneficiaries pay 20% of Medicare approved amount for services after the deductible is met.

Medicare Drug Benefit The voluntary outpatient prescription

drug benefit (Part D) began January 1, 2006.

Standard Benefit: Estimated monthly premium of $37; deductible of $265; up to an initial coverage limit of $2,400.

Beneficiary pays 100% during coverage gap (“donut hole”).

Catastrophic coverage kicks in above stop-loss of $3,850.

Medicare Drug Benefit

PatientInsurance(ADVANTAGE PreferredPlus Part D Benefits)

$2.15 Generic$5.35 Brand or 5% (whichever is greater)

Pays claim balance

Stop loss limitOf $3,850

Pays 100% Pays $0

Initial coverage limit of $2,400

$10 Generic$29 Preferred Brand$58 Brand

Pays claim balance aftercopays

Medicare In addition to the Medicare part B

premium, Medicare Advantage beneficiaries have to also pay a monthly premium to the MCO.

Medicare Advantage premiums are lower than the Medigap (supplemental insurance) plans.

Medigap is sold by private insurers to fill the “gaps” in the original Medicare plan.

Medicaid Indiana Health Coverage Programs

(IHCP) Hoosier Healthwise Risk Based Managed

Care (RBMC) and Medicaid Select. Approximately 535,000 Hoosiers. Hoosier Healthwise was created in 1994

for low income Hoosiers with children, pregnant women and children.

Medicaid MDwise is the only locally owned and

operated, non-profit Hoosier Healthwise plan in the state.

The other MCOs are Anthem and Managed Health Services (MHS).

Medicaid Select (now called Care Select ) was created in Jan 2003 to take care of the aged (65 and over), blind and disabled.

Medicaid Reimbursement RBMC – MCOs paid capitated monthly

premiums. Medicaid Select – Fee-for-service and $4

PMPM administrative fee to providers. Administration fee to be increased to $15

PMPM in Nov 2007 when Care Select program is phased- in.

Additional $40 twice a year for communication.

High Deductible Health Plans (HDHP) Features higher annual deductible than

other traditional health plans. Maximum limit of the sum of annual

deductible and out-of-pocket medical expenses for covered expenses.

Usually includes an HSA (Health Savings Account) or an HRA (Health Reimbursement Account).

HSA (Health Savings Account) A tax-exempt trust or custodial account

created exclusively to pay for qualified medical expenses of the employee, spouse or dependents.

Employer usually contributes at least $500 for individuals or $1,000 for families.

Maximum contribution for 2007 as determined by IRS is $2,850 for individuals and $5,650 for families.

IRS Requirements for HDHP in 2007

Single Plan Family Plan

Minimum Deductible $1,100 $2,200

Maximum Out-of-Pocket $5,500 $11,000

HDHP Enrollment

2005 – 1 million members 2006 - 3.2 million members 1/2007 – 4.5 million members

Source: America’s Health Insurance Plans (AHIP)

HSA vs HRAHSA HRA

Do the funds belong to the employee

Yes No

Can the money be invested and earn interest

Yes No

Is it portable Yes No

Can funds be used for non medical expenses

Yes (IRS 10% penalty + tax)

No

Do the funds rollover year to year

Yes No(generally)

Can employees contribute Yes No