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3-04 Insurance Claims Process

The document summarizes how health insurance works in the United States. It explains that subscribers pay premiums and cost-sharing amounts like deductibles and co-pays to access medical coverage through insurance plans. There are different types of insurance plans like HMOs, PPOs, and consumer-driven plans that offer varying degrees of flexibility and costs to subscribers. The claims process involves submitting forms like CMS-1500 and UB-04 to receive reimbursement for medical services from insurance payers.

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208 views13 pages

3-04 Insurance Claims Process

The document summarizes how health insurance works in the United States. It explains that subscribers pay premiums and cost-sharing amounts like deductibles and co-pays to access medical coverage through insurance plans. There are different types of insurance plans like HMOs, PPOs, and consumer-driven plans that offer varying degrees of flexibility and costs to subscribers. The claims process involves submitting forms like CMS-1500 and UB-04 to receive reimbursement for medical services from insurance payers.

Uploaded by

abraham_sse1594
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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THE INSURANCE CLAIMS

PROCESS

HOW HEALTH INSURANCE WORKS


Health insurance is insurance against the
cost of medical procedures
Subscribers enter into an agreement with the
payer, wherein they pay a certain regular
amount (along with procedure-specific costs)
in order to shield themselves from the
possibility of extremely high medical costs

HOW YOU PAY FOR INSURANCE


Premiums
A regular subscription fee, may be charged
annually or monthly

Deductibles
The amount a subscriber must pay before the
payer will reimburse the provider for their
services
If there is a $500 procedure, and a patient has a $200
deductible, the patient must first pay $200 before their
coverage kicks in

CO-PAYS AND CO-INSURANCES


Co-pay
A small fixed fee that must be paid before any
medical service is rendered
Does not count against the deductible
A patient with a $100 deductible and a $25 co-pay must pay
$125 before their coverage starts

Co-insurance
Arrangement with insurance company that
divides responsibility for payment along a fixed
ratio
Payers portion comes first, then patients
A person with a 70-30 co-insurance would have to pay for 30%
of their medical costs, while the payer would cover the 70%

CO-INSURANCES AND DEDUCTIBLES


Co-insurances also interact with deductibles
If a patient has a $100 deductible and an 8020 co-insurance, theyd have to meet the
deductible before the co-insurance kicks in
$300 (total cost of procedure)
$100 (deductible)
= $200 x 20% = $40

So the patients total cost for this procedure would be $140.


The payer would have to cover the 80% of the $200 after the
deductible is paid (which would come to $160).

INDEMNITY INSURANCE
Most basic form of insurance
High premiums
You may also have to pay a deductible and a
co-insurance or co-payment, depending on
your agreement with the payer
No restrictions on which providers they can
see

MANAGED CARE ORGANIZATIONS (MCOs)


Seek to reduce the cost of healthcare and
increase efficiency by establishing networks
of providers and monitoring the quality of
healthcare
In general, they cost less than indemnity
plans
Four main types of MCOs:

Health Maintenance Organization (HMO)


Preferred Provider Organization (PPO)
Point of Service plan (POS)
Consumer-Driven Healthcare Plan (CDHP)

HEALTH MAINTENANCE ORGANIZATION


(HMO)
Original type of MCO
Low premiums, but little flexibility
Restricts subscribers to a network of
providers
Will not cover procedures out-of-network

Now increasingly less popular


Often makes use of Primary Care Physicians
(PCPs)
Act as gatekeepers that recommend patients to
other, in-network specialists

PREFERRED PROVIDER ORGANIZATION


(PPO)
Unlike HMOs, a PPO subscriber may see any
doctor, but they pay less if they see a
provider in-network (hence Preferred
Provider)
Higher premiums than HMOs, but allow for
more flexibility

POINT OF SERVICE PLANS (POS)


Slight variation on HMO
Subscribers seek most services in-network,
but may go out-of-network if they pay a
higher fee
Many POS plans are tiered
A subscriber may pay more if they see an out-ofnetwork specialist, but slightly less if they are
recommended to see that specialist by an innetwork physician

CONSUMER-DRIVEN HEALTHCARE PLANS


(CDHP)
Relatively recent development
Enable PPO-like benefits after subscribers
have paid a certain (usually high) deductible
Creates a savings account that subscribers
can pay untaxed wages into to help pay for
these high deductibles

CLAIM FORMS
Two most common claim forms are the CMS1500 and UB-04
UB-04 is actually a variation on the CMS-1500
UB-04 is sometimes called the CMS-1450

CMS-1500 generally used in non-institutional


facilities (like private practices)
UB-04 forms are used in institutional
facilities (like hospitals)

CLAIMS FORMS
Today, HIPAA requires claims to be
submitted electronically, but even electronic
claims follow roughly the same format as the
CMS-1500 and UB-04 claim forms
Notable exceptions:
Practices with fewer than 10 employees
A practice experiencing a power outage

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