Term
| CHAP 1-UNDERSTANDING EMPLOYEE BENEFITS & FUNCTIONAL APPROACH |
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Definition
| CHAP 1-UNDERSTANDING EMPLOYEE BENEFITS & FUNCTIONAL APPROACH |
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Term
| 1-BROAD VIEW/NARROW VIEW OF EMP BENEFITS |
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Definition
| Broad view – any form of compensation other than direct wagesNarrow view – any type of plan sponsored or initiated unilaterally or jointly by employers and employees in providing benefits that stem from the employment relationship and are not underwritten or paid directly by the government. |
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Term
| 1-REASONS FOR GROWTH OF EMPLOYEE BENEFITS |
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Definition
| "Business reasons – attract and hold capable employees, stay competitive, foster good employee morale, productivity, social objectives and employee welfare./ Unions" |
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Term
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Definition
| LMRA or Taft Hartley Act along with the IRC established the distinction between welfare benefits and retirement benefits. |
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Term
| 1-EFFICIENCY IN EMPLOYMENT-BASED BENEFITS |
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Definition
| Efficiency of the employee benefits approach – Simplicity and convenience of providing coverage to people through their place of employment is less expensive than the employee buying individual coverage and easier for providers to communicate and market. |
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Term
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Definition
| "Most contributions to employee benefit plans by employers are deductible as long as they are reasonable business expenses., some not income, some accum tax free" |
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Term
| 1-SETTING OBJECTIVES IN EMPLOYEE BENEFIT PLANNING |
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Definition
| "What benefits, who, options, how is plan financed, administration, plan communication" |
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Term
| 1-FUNFTIONAL APPROACH TO EMPLOYEE BENEFITS |
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Definition
| The functional approach to designing and evaluating employee benefits – A functional approach is an organized system for classifying and analyzing the risks and needs of active employees. Fairly new (1960’s) |
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Term
| 1-TOTAL COMPENSATION PHILOSPHY |
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Definition
| "Salary & wages-average, high, low" |
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Term
| 1-COMPENSATION/SERVICE-ORIENTED PHILOSOPHY & NEEDS ORIENTED PHILOSOPHY |
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Definition
| "Compensation-Relates to compensation or service, Needs-focus on needs of employees & dep." |
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Term
| 1-EMPLOYEE NEEDS AND LOSS EXPOSURES |
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Definition
| "Medical expenses incurred by active employees, dependents, retirees, terminated or suspended employees.* Losses due to short and long term disability.* Losses resulting from death of former or current employees or their dependents.* Retirement needs of employees and their dependents.* Capital accumulation needs and short and long term goals.* Needs arising from unemployment or terminations of employment.* Need for counseling services.* Losses resulting from property and liability exposure.* Need for dependent care assistance.* Need for educational assistance.* Need for long term custodial care.* Other employee needs such as corporate stock or long term incentive programs." |
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Term
| 1-CATEGORIES OF PERSONS COVERED BY EMPLOYEE BENEFIT PACKAGE |
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Definition
| Active full time employees and dependents of active full time employees. Retired employees and dependents of retirees. (FAS 106) Disabled employees and their dependents. Surviving dependents of deceased employees. Terminated dependents and their employees. (COBRA) Employees and their dependents temporarily separated from employer’s service. (FMLA – USERRA) Employees other than full time active employees. |
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Term
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Definition
| "Replacement-retirement income % of est final pay, sSS, acc benefits and retirement" |
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Term
| 1-PROTECTION-ORIENTED & ACCUMULATION-ORIENTED BENEFITS |
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Definition
| Protection oriented and accumulation oriented benefits - The longer the probationary or waiting period the more exposure to risk to the employee. |
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Term
| 1-CONTRIBUTORY/NONCONTRIBUTORY BENEFIT PLANS |
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Definition
| Contributory/noncontributory plans – A contributory plan is when the employee or surviving dependents contribute to the cost of the benefit. This has an impact on whether or not the employee wants to participate in this benefit. The employer has to decide if the contributory plan will be mandatory or voluntary. Salary reduction would play a role in a mandatory contributory plan. Most mandatory plans are not contributory. A non-contributory plan is fully employer provided and is usually mandatory (core benefits). |
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Term
| 1-RELATIONSHIP OF FLEXIBILITY IN EMP BENEFIT PKG DESIGN TO FUNCTIONAL APPROACH |
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Definition
| "Relationship of flexibility in employee benefit package design to the functional approach - flexibility is desired by employees, however most employers will offer a core benefit group so that employees will have basic coverage. In order to determine how much flexibility the employer would like the employees to have in their benefit package as a whole, the application of the function approach would need to be utilized. " |
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Term
| CHAP 2-RISK MANAGEMENT AND INSURANCE TECHNIQUES |
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Definition
| CHAP 2-RISK MANAGEMENT AND INSURANCE TECHNIQUES |
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Term
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Definition
| Uncertainty with respect to possible loss. The ability to determine a future loss and to figure out how expensive it will be should the loss take place. Loss is meant to convey any decrease in value suffered. |
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Term
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Definition
| "A peril is defined as the cause of personal or property loss, destruction or damage. (i.e. fires, floods, illness injuries and death) Insurance policies usually name the perils that are covered (originally called death policies and accident and sickness policies rather than life insurance and health insurance)" |
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Term
| "2-PHYSICAL, MORAL AND MORALE HAZARDS" |
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Definition
| "1. Physical hazard – flammable materials, machines without safety devices 2. moral hazard – dishonest, unethical people who file fraudulent claims, abuse sick leave, falsify their timesheets and expense statements 3. morale hazard – careless or indifferent people who are accident prone or fail to lock rooms, do not report a safety hazard" |
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Term
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Definition
| "Pure risk is a risk in which only two things can happen; 1 – risk will happen and there will be a financial loss, 2 – the risk will not happen and there will be no financial loss. Examples are illness, auto accidents, disability theft and unemployment." |
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Term
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Definition
| "Speculative risk has 3 potential outcomes; a loss, no loss or a gain. Examples are purchasing stock, business acquisitions and gambling. " |
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Term
| "2-METHODS OF HANDLING PURE RISK: AVOIDANCE, CONTROL, RETENTION, TRANSFER, INSURANCE" |
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Definition
| Avoidance– One does not acquire the risk to begin with. Someone who does not drive would not need automobile insurance. For risks covered by employee benefits this technique would not apply. Control- This is a mechanism by which one attempts eithe |
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Term
| 2-CHARACTERISTICS OF INSURANCE |
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Definition
| "Insurance handles the risk, gambling creates the risk." |
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Term
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Definition
| "Gambling is a speculative risk, insurance deals with pure risk." |
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Term
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Definition
| Note: Insurance policies were first written as indemnification policies. An insured person is covered if a loss occurs. |
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Term
| 2-ADVANTAGES AND DISADVANTAGES OF INSURANCE IN FUNDING EMPLOYEE BENEFIT PLANS |
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Definition
| "The advantages of using insurance in the design of an employee benefits plan are as follows:1. The premium is known. The employer can budget with a known cost.2. Using an outside administrator, keeps the employer away from dealing with claims and disputes.3. Employers who contract with a sound insurance provider have the financial backing to pay whatever claims are presented.4. Insurance companies are often leaders in the area of loss control and may help to design and implement a system that will control costs for the employer.The disadvantages of using insurance in the design of an employee benefits plan are as follows:1. Administrative expenses are added to the cost of the premium (loaded) to compensate for their overhead expenses.2. If the insurance company is slow to pay claims and solve problems the employer will be directly affected with complaints from employees." |
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Term
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Definition
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Term
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Definition
| 1. There should be a large number of homogeneous risks.a. Mortality tables2. The loss should be verifiable and measurable.a. Fire and wind damage – easy to measure.b. Theft of money or property – can be falsified or inflated.c. Property provisions in an insurance policy can protect against b.3. The loss should not be catastrophic in naturea. Geographic spread of the risks.4. The chance of loss should be subject to calculationa. Pure premium – the loss portion of the premium. 5. The premium should be reasonable or economically feasible.a. Expense portion of the premium is the Loading.6. The loss should be accidental from the standpoint of the insured.a. Intentional injury or accident will not be covered by insurance. |
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Term
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Definition
| "The greater the number of exposures, more closely actual results will approach proable results" |
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Term
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Definition
| Whwn individuals with higher than aver risk join a group |
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Term
| 2-CHARACTERISTICS OF THE GROUP INSURANCE TECHNIQUE |
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Definition
| "Group used to control problem of adverse selection-certain groups, steady flow of lives, minimum number, elig req., max limits auto determination of benefits" |
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Term
| 2-SELF-FUNDING/SELF-INSURANCE |
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Definition
| "If a company self funds, it is retaining the risk. The company would have to be large and the insurance company would still have to maintain some of the activities. Most companies that self insure would acquire some sort of catastrophic coverage." |
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Term
| CHAP 3-ENVIRONMENT OF HEALTH CARE AND HEALTH CARE PLANS |
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Definition
| CHAP 3-ENVIRONMENT OF HEALTH CARE AND HEALTH CARE PLANS |
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Term
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Definition
| "1. The political arena – HIPAA in 1996, prescription drug and Medicare and Medicaid programs.2. The decline in the number of covered workers – Kaiser report of 2000 states 74% of the uninsured are in families where at least one person is working full time" |
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Term
| 3-MILESTONES SHAPING THE EVOLUTION OF HEALTH INSURANCE |
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Definition
| "1. The pattern is set in the 30’s, 40’s and 50’s- The defining moments of health insurance: 1930’s – Franklin Roosevelt directed those who were developing his Social Security program to exclude health insurance from the plan. He was sure that opp" |
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Term
| 3-THE UNINSURED IN AMERICA |
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Definition
| "Growing problem-Costs, aging population" |
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Term
| 3-INTENT OF PREPAID HEALTHCARE ARRANGEMENTS |
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Definition
| To change the incentives in Fee for Service system |
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Term
| 3-GROWTH OF HEALTH MAINTENANCE ORGANIZATIONS |
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Definition
| Cost containment-arrangement not indemnity-gatekeeper |
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Term
| 3-PLAYERS IN HEALTH CARE INDUSTRY |
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Definition
| "Physicans&hospitals, Employers, Insurers, Unions, Fed Gov't, States" |
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Term
| 3-HEALTH CARE INSURANCE MARKET ISSUES |
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Definition
| "Shift in gov't policy, cost-shifting" |
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Term
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Definition
| "Manage care plans offer lower reimbursements, providers must capture more patients" |
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Term
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Definition
| Failure to insure translates into denial of care – Courts have ruled that if an insurer fails to insure a service that is the same thing as denying the service. This is public perception as well even though we have Medicaid and other state programs that will pay for medical needs of the uninsured. COBRA is now available for employees who had coverage and lost their jobs. COBRA is unaffordable for most people who do lose their jobs. |
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Term
| 3-COST SHIFTING FROM THE PUBLIC TO THE PRIVATE SECTOR |
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Definition
| Cost shifting to private sector - Medicare as a secondary coverage for workers over 65 rather than employers utilizing a “carve out” method of coverage and COBRA mandated coverage. |
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Term
| 3-CONSOLIDATED OMNIBUS BUDGET RECONCILATION ACT RULE |
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Definition
| COBRA-1986-18 monrh continuation-20 or more employees |
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Term
| "3-QUALIFIED BENEFICIARY, QUALIFYING EVENT AND DURATION OF CONTINUATION OF COVERAGE" |
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Definition
| "Emp, spouse, child, adopted child,Death, term of employment, reduced hrs, divorce, 18 months" |
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Term
| "3-THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT-AVAILABILITY, PORTABILITY AND RENEWABILITY OF HEALTH COVERAGE PROVISIONS" |
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Definition
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Term
| 3-HIPAAS'S NONDISCRIMINATION PROVISIONS |
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Definition
| "Coverage no matter health condition, restricted preexisting conditions, timely disclosure of plan changes" |
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Term
| 3-THE NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT |
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Definition
| Signed into law in 1996 Set standards for health plans relating to benefits for mothers and newborns Minimum hospital stays for childbirth |
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Term
| CHAP 4-HEALTH PLAN DESIGNS AND COST-CONTROL TECHNIQUES |
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Definition
| CHAP 4-HEALTH PLAN DESIGNS AND COST-CONTROL TECHNIQUES |
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Term
| 4-PREPAYMENT VS INDEMNITY PRODUCTS |
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Definition
| Prpaid-set allowance. Indemnity-reimburse set $ to provider |
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Term
| 4-HISTORY AND CHARACTREISTICS OF BLUE CROSS/BLUE SHIELD ORGANIZATIONS |
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Definition
| a. BCBS played a dominant role in setting up hospital insurance and medical care insurance. The hospital insurance was configured as prepayment plans with allowable days of hospitalization. BCBS contracted with the hospitals and paid the hospitals directly. BCBS was non profit organization and used a community rating to figure rates. |
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Term
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Definition
| Subscriber pays no expense |
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Term
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Definition
| "Hospitalization benefits today – Today’s plans cover all hospital services, supplies, and procedures billed through a hospital. " |
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Term
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Definition
| 1. Medical benefits background - Blue Cross provided hospitalization coverage and Blue Shield plans provided insured medical care. Blue Shield plans were service type plans which provided a limit on the services covered rather than a dollar indemnification. Insurance companies provided indemnification to the subscriber up to certain dollar amounts for covered medical services. |
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Term
| 4-MAJOR MEDICAL/COMPREHENSIVE PLAN DESIGNS |
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Definition
| 1. Major medical coverage – background – This type of coverage came into play after hospitalization and medical plans. It was supplemental type coverage with high limits of coverage with deductibles and coinsurance amounts. Deductibles and coinsurance w |
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Term
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Definition
| Deductibles and coinsurance-tow of the earliest |
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Term
| 4-COST-CONTROL TECHNIQUES |
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Definition
| "a. Cost control features: requiring a second surgical opinion, full coverage for certain diagnostic tests, pre-admission certification for hospitalization, utilization reviews and enhanced reimbursement if procedures were performed at an outpatient facility. " |
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Term
| 4-MANAGED CARE MODELS/BENEFITS |
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Definition
| 1. Health maintenance organizations – HMO’s intent is to maintain the participant’s health. HMO’s provide:a. Richer preventative benefitsb. Financial incentives and cost controls structured around routine office visitsc. Controlling specialist referralsd |
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Term
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Definition
| "Individual practice, Group model, Network model, Staff model" |
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Term
| 4-INTERGRATED HEALTH SYSTEMS |
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Definition
| Outgrowth of HMO's and PPO's |
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Term
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Definition
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Term
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Definition
| BCBS-Community rated-geographic area |
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Term
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Definition
| Provider reimbursement approaches1. Fee for service – Health care providers charge separately each time services for care are rendered. A common approach under indemnity plans.2. Capitation – Providers are paid a set amount (generally monthly for PCP’s) for each plan participant regardless of the number of visits provided.3. Other – Some employers purchase cooperatives and coalitions to gain favorable pricing from medical providers. This give the small employer an edge to receive discounts the same as a large employer. |
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Term
| CHAP 5-MANAGED HEALTH CARE-MANAGED CARE SPECTRUM |
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Definition
| CHAP 5-MANAGED HEALTH CARE-MANAGED CARE SPECTRUM |
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Term
| 5-STATE OF HEALTH CARE AT THE START OF THE NEW MILLENNIUM |
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Definition
| "HMO’s are the principal method of health care in the US. Almost 90% of non government employees are enrolled in managed care plans. Managed care has become an industry of it’s own with insurance companies, TPA’s, HMO’s and medical provider groups all offering their own set of products. Despite all this, health care expenses are the largest single nonwage labor cost for many organizations." |
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Term
| 5-ECONOMIC PRESSURES ON EMPLOYERS AS HEALTH CARE PLAN SPONSORS |
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Definition
| 1. Federal government cost shifting – Medicare and Medicaid costs have continued to escalate along with other federal health care programs. The government has to contain federal spending and it does this by shifting the costs of these programs to the ind |
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Term
| 5-HISTORY OF MANAGED CARE |
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Definition
| 1. History of managed care – Baylor University Hospitals started the first type of pre paid health plans in the 1920’s. This led to the BCBS plans that we know today. The initial plan did not practice restrictions or utilization management programs. I |
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Term
| 5-SHIFT IN TYPES OF MANAGED CARE PLANS |
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Definition
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Term
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Definition
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Term
| 5-DEFINITION OF MANAGED CARE |
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Definition
| "Definition of managed care – Managed care uses one or more of the following techniques; Plan design features including incentives and disincentives, Access restricted to a specified group of preselected providers, Utilization review programs intended to preauthorize medical care or monitor the use of expensive forms of treatment." |
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Term
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Definition
| "Steerage is used to direct members to preferred benefits, UM procedures are part of the physician/PPO arrangement, however most services can be obtained through the PPO and are only referred in certain instances. PPO provider is paid at a discounted fee basis." |
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Term
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Definition
| " Very close to standard indemnity but with basic utilization programs such as; precertification, second surgical opinion and concurrent review. Compared to a fully managed care plan design there is the following difference:" |
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Term
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Definition
| "More of a truly managed care program with a choice of provider. Steerage is used to direct members to preferred benefits, UM procedures are part of the physician/PPO arrangement, however most services can be obtained through the PPO and are only referred in certain instances. PPO provider is paid at a discounted fee basis." |
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Term
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Definition
| Also has contracted providers and steerage. A PCP is required and benefit differentials are larger than in PPO’s. Provider reimbursement varies from discounted fees to capitation. |
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Term
| 5-POS PLAN FEATURES USED TO ENCOURAGE IN-NETWORK CARE |
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Definition
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Term
| 5-KEY COMPONENTS OF MANAGED CARE PLANS |
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Definition
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Term
| 5-EXCLUSIVE PROVIDER ORGANIZATION |
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Definition
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Term
| 5-MANAGED CARE APPLICATIONS TO MEDICARE |
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Definition
| "Using managed care with Medicare/Medicaid – Medicare and Medicaid members are restricted to who they can use for services and must comply with UM requirements. By complying with these rules, Medicare and Medicaid members receive full HMO type coverage. By receiving care free or for a minimal fee, Medicare and Medicaid members are more likely to be diagnosed sooner than later as with a FFS type plan." |
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Term
| 5-MANAGED CARE APPLICATIONS TO DISABILITY INCOME PLANS |
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Definition
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Term
| CHAP 6-MANAGED HEALTH CARE-HEALTH CARE COST EQUATION |
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Definition
| CHAP 6-MANAGED HEALTH CARE-HEALTH CARE COST EQUATION |
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Term
| 6-REASONS FOR HEALTH CARE COST INCREASES |
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Definition
| "1. Increased input prices – supply, labor costs (wages paid to medical personnel) and non-wage expenses (malpractice insurance premiums, cost shifting due to indigent care costs being passed on to insured individuals and government underpayments).2. Increased demand for services – AIDS, substance abuse treatments and violence are all society problems that cost insured individuals. These costs distort the economics of managed care. The financial incentives, supply and demand are all compromised.3. Increased service intensity – New medical procedures and techniques.4. Changing demographics – As baby boomers enter their 40’s and 50’s health care costs increase and life expectancy has risen. People are receiving medical care much longer." |
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Term
| 6-HEALTH CARE COST EQUATION |
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Definition
| "1. What type of managed care is best for a health care benefit plan? Plan sponsors must consider the overall cost of establishing the managed care plan and employee’s satisfaction. The employer’s benefit philosophy matters and senior management must agree and fully support this change and the plan itself must be clearly communicated to employees.2. How does managed care save money? The elements that drive health care costs are Price and utilization. The equation is Cost = Price x Use. Employers need to gather information on changing from an indemnity plan to a managed care plan. They must take into consideration the provider discounts, utilization controls and the level or value in the benefit structure. Price management and utilization management controls the cost of health care." |
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Term
| 6-HEALTH CARE PRICE MANAGEMENT |
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Definition
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Term
| 6-HOSPITAL REIMBURSEMENT STRATEGIES |
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Definition
| Hospital reimbursement strategies – This is the most important in terms of cost. Hospital costs account for 40% of health care expenses. Common strategies are – Straight discount (percentage off) this is a negotiated percent off billed charges with no r |
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Term
| 6-PHYSICIAN REIMBURSEMENT STRATEGIES |
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Definition
| Physician reimbursement strategies – Utilization management procedures use medical protocols with advanced medical measurement systems to monitor and regulate physician practice. Risk sharing is used to give providers financial incentives to control patient utilization. The physician reimbursement strategy is considered key in controlling costs. |
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Term
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Definition
| "Physician incentive/bonus rewards positive performance in specific categories such as financial results, quality assurance, and member satisfaction. Results are shared with physicians. Bonus plans are easy to develop and establish. Concerns are whether bonus payments are large enough to affect over utilization and if a comparable system should be established to compare PCP’s with each other." |
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Term
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Definition
| Capitation for defined services provides a fixed fee for each member selecting a PCP. It is very important that each physician understand what the defined services are. See page 178 for listing of common services. Additional reimbursement is given for |
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Term
| 6-REDUCING THE RATE OF HEALTH CARE COST INCREASE |
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Definition
| Elements of utilization management – Price management is considered the initial cost of managed care. Utilization is considered the on-going cost of managed care. Reducing the cost of each unit of care will reduce the rate of the increase in the cost of care. UM is the practice of reducing the number of units. |
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Term
| 6-PRIMARY UTILIZATION MANAGEMENT |
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Definition
| Primary utilization management – Clinical representatives or contracted medical professionals usually handle this type of UM. This form of UM generally focuses on controlling hospital confinements by using the following methods: |
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Term
| 6-EXPANDED UTILIZATION MANAGEMENT |
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Definition
| Expanded UM – these programs are more commonly used with stronger forms of managed care (POS and HMO plans) and are now picking up in the PPO market as well. Elements of this programs includes the following: |
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Term
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Definition
| "Patient care models – this assignment focuses on 3 types of patient care models. In addition to UM, the health care industry has determined that it needs to address the overall population with its wide variety of health needs and different types of patient care. The emphasis is shifting from micromanaging specific episodes to macro managing the member’s continuous health status. The models are as follows:" |
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Term
| 6-HEALTH ENHANCEMENT PROGRAMS |
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Definition
| "Health enhancement programs to help assess the broad lifestyle of the individual members. The focus is on self care techniques, counseling on preventative care, stress management, weight control, smoking cessation etc. This model is focused on specific behavioral changes." |
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Term
| 6-DISEASE MANAGEMENT PROGRAMS |
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Definition
| "Disease management is more appropriate for members with identifiable chronic conditions that require continuous monitoring and occasional or regular treatment. (asthma, diabetes, heart conditions etc.) " |
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Term
| 6-CASE MANAGEMENT PROGRAMS |
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Definition
| "Case management programs deal with specific severe illness in order to avoid unnecessary or excessive care. Such as AIDS, high risk pregnancy and organ transplants. Page 184." |
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Term
| 6-COST DIFFERENCES IN NONMANAGED AND MANAGED HEALTH PLANS |
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Definition
| "2. PPO (managed) plan costs – In a managed care arrangement, the source for savings is found in lower medical costs, network discounts, UM programs and lower reimbursements for non network services. Incentives include withholds, risk pools and bonuses. " |
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Term
| CHAP 7-EVALUATING AND SELECTING HEALTH PLANS |
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Definition
| CHAP 7-EVALUATING AND SELECTING HEALTH PLANS |
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Term
| 7-MANAGING RISK APPROACH TO HEALTH CARE STRATEGY |
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Definition
| "Designing the plan and delivery system involves a three pronged strategy at the macro level. First, the plan sponsor must decide what type of health care delivery system will be used. Second, the organization must decide what benefits will be provided. Third, the plan sponsor must decide what type of contract arrangement and financial arrangement will be negotiated with the providers of medical care and the insurance vendors. The financial arrangement includes a level of risk and risk sharing between all parties involved. The micro decisions that need to be made are as follows:" |
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Term
| 7-BENEFIT COVERAGE FLEXIBILITY |
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Definition
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Term
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Definition
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Term
| 7-UNBUNDLES VS BUNDLED SERVICES |
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Definition
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Term
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Definition
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Term
| 7-MULTIPLE PLAN OFFERING EFFECTS |
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Definition
| Use of multiple plan offerings and single or multiple administrators. Employers have the option of placing their entire block of business with one insurer or a single administrative entity. They will usually receive price breaks from the single insurer or entity but they lose the competitive edge to bargain better prices with more than one insurer or entity. If employers give a choice of medical plans to their employees it is usually in the form of a flex plan so that employees can choose the best plan for their individual needs. |
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Term
| 7-SELECTING A FINANCIAL ARRANGEMENT |
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Definition
| "Designing the underwriting and financial arrangements. A financial arrangement needs to be selected that controls costs and allows management to accept a level of risk that it believes to be appropriate. Plan costs should be determined and adjusted based on demographics and geographic variables. More employers are looking to shift more risk to the providers and offer incentives to the providers to offer quality care in an effective manner (capitation with withhold, bonus incentives, FFS with a withhold)." |
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Term
| 7-HEALTH PLAN PERFORMANCE STANDARDS |
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Definition
| "Measuring performance and managing the plan. This function needs to be measured by looking to the plan objectives. Saving money does not matter if the plan objectives are not being met. An effective method is to outline the plan standards and objectives and then assign financial penalties or rewards associated with these standards. For example; performance criteria based on how long it takes to reach a physician by phone, schedule an appointment or on how long it takes the vendor to process claims." |
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Term
| 7-FUNCTIONAL APPROACH TO EVALUATING HEALTH CARE PLANS |
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Definition
| Functional approach to evaluating health care plans consists of the following:a. Planning orientation – addresses the plan sponsors long term commitment to a certain type of health care program. Indemnity and PPO plans lean more toward short term commitm |
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Term
| 7-REQUEST FOR PROPOSAL AND REQUEST FOR INFORMATION |
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Definition
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Term
| 7-DISRUPTION ANALYSIS/NETWORK ADEQUACY |
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Definition
| "network adequacy – Plan sponsors usually hire a agent, broker or consulting firm to select the appropriate managed care option for their employees. An RFP is generated to provide information on the plan sponsor to the companies offering proposals. A qualified professional is the best bet to analyze the RFP responses. Different weights are assigned to each part of the RFP. The person analyzing the data is concerned with how many people would have to switch providers. This is important for two reasons; Improve member acceptance of the new plan and to increase network utilization. (remember a minimum number of participants are needed see page 10). Also to consider are; price management, utilization control and provider access. The bundled vs. the unbundled approach to benefits is also part of the network negotiations. " |
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Term
| 7-QUALITY ASSURANCE/SELECTION CRITERIA |
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Definition
| "quality assurance – Indemnity plans do not monitor the quality of care being delivered. Because managed care restricts utilization, the quality of care must be monitored to insure that quality health care is being provided. In evaluating MCO proposals, quality assurance is a critical component. There must be sufficient numbers of providers within a geographical area, sufficient mix of PCP’s and specialists in the network. Credentialing requirements are listed on page 194-195. Credentialing is an important indicator of the MCO’s commitment to providing high quality care for plan members. The NCQA is the leading accrediting body of managed care plans in the country. " |
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Term
| 7-NATIONAL COMMITTEE ON QUALITY ASSURANCE (NCQA) STANDARDS |
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Definition
| The NCQA is the leading accrediting body of managed care plans in the country. |
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Term
|
Definition
| The purchasing practice of competitive bidding – Competitive bidding refers to the process whereby companies solicit bids form competing carriers to choose the most cost effective. This was not used in the traditional FFS carrier. The bidding process fosters price competition. |
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Term
| 7-EMPHASIS ON DATA COLLECTION OVER QUALITY MANAGEMENT |
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Definition
| Criterion of quality for carrier selection less developed – Only 32% of companies reported that they set specific standards for clinical quality in the contractual arrangements. Customer service was rated higher because it is easier to measure. These large companies also report modest premium increases compared to other smaller companies. Much larger increases where experienced in 2000 and beyond. (Early gains giving way to smaller gains). |
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Term
| "CHAP 8-DENTAL, VISION AND HEARING BENEFITS" |
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Definition
| "CHAP 8-DENTAL, VISION AND HEARING BENEFITS" |
|
|
Term
|
Definition
| "Differences between medicine and dentistry – The differences include practice location, the nature of care and the emphasis being on prevention." |
|
|
Term
| 8-PROVIDERS OF DENTAL COVERAGE |
|
Definition
| "Providers of dental benefits – Can be divided into three major categories: insurance companies such as Cigna, Blue Cross/Blue Shield and state dental associations such as Delta plans; self insured/self administered plans; and group practice or HMO type plans. " |
|
|
Term
| 8-CATEGORIES OF DENTAL TREATMENTS |
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Definition
|
|
Term
| 8-GROUPINGS OF DENTAL TREATMENTS IN PLAN DESIGN |
|
Definition
|
|
Term
|
Definition
| "Scheduled plans – Allow for fixed fees for certain procedures. For example, $50. for a cleaning. These plans can include deductibles and, though rare, coinsurance. There are 3 major advantages to scheduled plans:" |
|
|
Term
|
Definition
| "Non-scheduled plans – Also referred to as comprehensive plans. These plans cover a percentage of R & C charges. Typically this percent is set between 75% and 90% of R & C. Non-scheduled plans usually have a deductible, typically set at calendar year and may reimburse different percentages based on the service. Reimbursement is usually higher for preventative and diagnostic services. There are 2 major advantages of non-scheduled plans:" |
|
|
Term
|
Definition
| Combination plans – This is simply a plan which bases some procedure payments on a scheduled basis and other procedures fall under the non-scheduled basis. Normally this type of plan provides preventative and diagnostic services on a non-scheduled basis without a deductible and other services on a scheduled basis. The major advantage of a combination plan is that it provides a balance between emphasizes preventative treatments and cost control of the plan. |
|
|
Term
|
Definition
| "Incentive plans – Promotes sound dental hygiene through increasing reimbursement levels. Incentive coinsurance provisions generally apply only to preventative and maintenance procedures. Other procedures are covered on a scheduled or non-scheduled basis. The preventative coinsurance usually increases with each year the plan is in place. This deal only applies if the participant visits the dentist annually. If the participant misses one annual appointment, the coinsurance reverts back to the original year. This plan has 2 major advantages:" |
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Term
| 8-MEDICAL PLANS WITH DENTAL COVERAGES |
|
Definition
| Plans providing both medical and dental coverage – These plans are generally characterized by a common deductible amount that applies to both medical and dental expenses. Earlier plan designs had the coinsurance and maximums applied to both medical and dental expenses. The current trend is to have different coinsurance and maximums for medical and dental. The advantages of this approach are the same as the scheduled benefits. The disadvantage is that it is usually written by the medical carrier who may not be competent to handle both medical and dental protection. |
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Term
| 8-DESIGN PECULIARITIES OF ORTHODONTICS |
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Definition
| Orthodontic expenses – This part of the dental plan is usually written with other dental coverage. Orthodontic services are usually only utilized once by the participant in their lifetime. Maximums are expressed on a lifetime basis and if deductibles are applied that is usually a lifetime maximum as well. |
|
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Term
| 8-DENTAL PLAN DESIGN FEATURES |
|
Definition
| "Plan design – The type of plan, deductible, coinsurance, plan maximums, pre-existing conditions, limits of covered services and orthodontic coverage all need to be decided. See page 248 for discussion on the pros and cons of lifetime deductibles. Another major consideration is pre-existing conditions. they can be excluded, included, or covered on a limited basis. With respect to orthodontic coverage, to discourage shopping around, there is usually a non-reimbursable amount for the initial diagnosis. See page 250 for illustration of a typical dental plan design." |
|
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Term
| 8-PREEXISTING DENTAL CONDITIONS |
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Definition
|
|
Term
| 8-SENSATIVITY OF COSTS TO DENTAL PLAN DESIGN |
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Definition
| Requiring dental exams before joining the group and limiting or excluding treatment for pre-existing conditions. |
|
|
Term
| 8-CHARACTERISTICS OF THE COVERED DENTAL GROUP |
|
Definition
| "Characteristics of the covered group – The following characteristics impact cost; age, gender, location, income level of participants, and occupation. People over the age of 30 increase the cost of care, women utilize the plan more than men, dentists charge differently depending on the geographic region, higher income families utilize the dental benefit more than lower income families, white collar workers cost more to insure than blue collar workers. " |
|
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Term
| 8-SPONSOR'S APPROACH TO DENTAL PLAN IMPLEMENTATION |
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Definition
| "Sponsor’s approach to implementation – Dental work, unlike medical care, lends itself to “sandbagging”. If an employee knows ahead of time, that the employer is going to introduce a dental plan, they will wait to have work done. Because dental plans are usually voluntary elections, the people who elect them, need to have dental services which can lead to adverse selection. Typical safeguards for adverse selection include the following:" |
|
|
Term
| 8-VISION CARE BENEFITS AND PLAN DESIGN |
|
Definition
| Vision care – Is often compared to dental care because it is elective and the cost is predictable. |
|
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Term
| 8-COMMON BENEFIT COVERAGE FOR HEARING CARE |
|
Definition
| "Hearing care plans – Majority of plans do not contain this benefit. Surgical procedures involving the ear are covered under a medical plan. Hearing aids may be covered by some HMO’s and major medical plans. The plans that do include this benefit usually have an 80% reimbursement with a maximum. The frequency is usually every 36 months. Exams by a Otology doctor, audiometric exams and hearing aid evaluation and fittings are usually covered benefits in a hearing plan. As with vision plans, an FSA is a convenient vehicle through which to budget for hearing care expenses." |
|
|
Term
| CHAP 9-PRESCRIPTION DRUGS AND MENTAL HEALTH BENEFITS |
|
Definition
| CHAP 9-PRESCRIPTION DRUGS AND MENTAL HEALTH BENEFITS |
|
|
Term
| 9-REASONS FOR GROWTH OF PRESCRIPTION COSTS |
|
Definition
| "Prescription drug benefits – 20 years ago RX benefits represented approximately 4% of total health costs, today they represent approximately 25% of total health costs. Generic RX drugs account for about 50% of all dispensed drugs. The FDA monitors the integrity of all generic drugs. Most RX plans encourage the use of generic drugs. There are several ways to reimburse RX: the traditional indemnity approach, service type card plans, mail order programs and managed care through HMO’s." |
|
|
Term
|
Definition
|
|
Term
| 9-PHARMACY BENEFIT MANAGEMENT ORGANIZATIONS (PBM) |
|
Definition
| "PBM’s administrative and drug use control functions – PBM’s control costs administratively by establishing and maintaining a network of pharmacy providers, efficient claims processing and designing the pharmacy plan benefit. PBM’s control costs with the following drug use control functions: developing and maintaining the formulary, performing DUR, providing academic detailing to physicians (review the physicians prescribing patterns and profiling the physicians)." |
|
|
Term
|
Definition
| "PBM’s typically contract under one of the three contract arrangements: FFS – the PBM creates a pharmacy network and receives a fee for each claim processed, Capitation – a fixed amount is paid to the PBM in advance per covered life per month, Shared risk arrangement – the PBM and the employer share the risk and the savings. If the cost exceeds the target amount, the PBM shares the overage. If the reverse, the PBM shares the savings." |
|
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Term
| 9-PRESCRIPTION BENEFITS UNDER INDEMNITY PLANS AND CARD PROGRAMS |
|
Definition
| Traditional indemnity approach – Drugs are covered under a major medical or comprehensive medical policy. This is no longer a common approach to RX reimbursement. The employee fulfills an annual deductible and then is subject to a co-insurance amount. The total fee is paid at the time the drug is received. The employee then files a claim for reimbursement. Cons: Some people do not bother to submit claims (shoebox effect) between 15 and 20% of drug charges are never claimed under these traditional plans. The carrier incurs a cost of between $6.-$9. To process the claim and issue a check. This can cause the cost of reimbursement to sometimes cost more than the drug itself. Some non-covered drugs slip through the process. |
|
|
Term
| 9-AVERAGE WHOLESALE PRICE (AWP) OF A PRESCRIPTION DRUG |
|
Definition
|
|
Term
| 9-ADVANTAGES AND DISADVANTAGES OF MAIL-ORDER PROGRAMS AND PRESCRIPTION CARDS |
|
Definition
| "Mail Order – mail order services provide for deep discount because the orders are larger than the typical pharmacy RX refill. There is better quality control in mail order because several people are involved in filling the order so mistakes are more apt to be caught. Also, in mail order the pharmacist’s salary and bonus depends on the service provided. The disadvantages of mail order are; can be used only for maintenance drugs, Co-insurance is not recommended with mail order because all order would have to be COD. Usually credit cards are used so that the order is paid for before it is shipped." |
|
|
Term
| "9-COST CONTAINMENT PROGRAMS: MAIL-ORDER, MAXIMUM ALLOWANCE COST PRICING, DRUG UTILIZATION REVIEW, FORMULARIES" |
|
Definition
|
|
Term
| 9-EMPLOYEE ASSISTANCE PROGRAMS (EAP) |
|
Definition
|
|
Term
| 9-MANAGED CARE APPROACHES TO MENTAL HEALTH CARE |
|
Definition
| "Mental health/substance abuse managed care designs – Standard indemnity plans limit these benefits (50% co-insurance), they do not have an incentive for effective utilization and there are no negotiated prices. A Standard EAP program provides access to professional resources and provides early and controlled intervention. Most EAP’s are capitated arrangements and do not include negotiated pricing. An EAP Gate Plan operates the same as the standard EAP except the plan directs more clients to managed care. This provides better utilization control and greater savings than a Standard EAP. Most MH/SA networks have a preferred network of providers who are selected based on their clinical expertise, utilization management procedures and agreement to preferential pricing. An HM/SA network with a EAP gate combines the benefits of experience rating with preferred pricing. " |
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|
Term
| 9-CARVE-OUT BEHAVIORAL HEALTH CARE |
|
Definition
| Structuring behavioral health care – Employers are carving out the MH/SA coverage rather than integrating it with their medical coverage. |
|
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Term
| 9-FINANCIAL RISK ARRANGEMENTS OF CARVED-OUT SERVICES |
|
Definition
|
|
Term
|
Definition
|
|
Term
| 9-RATIONALE FOR PARITY BETWEEN MENTAL HEALTH AND NONMENTAL HEALTH CARE COVERAGES |
|
Definition
|
|
Term
| 9-MYTHS SURROUNDING SUBSTANCE ABUSE |
|
Definition
|
|
Term
| CHAP 10-MAINTAINING AND IMPROVING EMPLOYEE HEALTH |
|
Definition
| CHAP 10-MAINTAINING AND IMPROVING EMPLOYEE HEALTH |
|
|
Term
| 10-TRADITIONAL MEDICAL MODEL/PUBLIC HEALTH MODEL |
|
Definition
| Definition of health promotion – Health promotion is the science and art of helping people change their lifestyles to move toward a state of optimal health. |
|
|
Term
| 10-PRIMARY/SECONDARY/TERTIARY PREVENTION IN THE PUBLIC HEALTH MODEL |
|
Definition
| "Optimal health is defined as a balance of physical, emotional, social, spiritual, and intellectual health. These are known as the dimensions of optimal health. A supportive environment seems to have the most beneficial effect on optimal health." |
|
|
Term
| 10-DEFINITION OF HEALTH PROMOTION/WELLNESS PROGRAMS |
|
Definition
|
|
Term
| 10-HEALTH CONTINUUM/HEALTH MATRIX |
|
Definition
| Health continuum is shown on page 274 Figure 12-2. The extreme left represents illness and premature death. The extreme right represents optimal health. The mid point is a neutral point with no discernable illness or wellness. Medicine has typically f |
|
|
Term
| 10-GROWTH OF WORKPLACE HEALTH PROMOTION PROGRAMS |
|
Definition
| "Current state of health promotion programs in the U.S. – Over 90% of employers with 750 or more employees offer some sort of health promotion in the workplace. Interesting to note, most employers do not feel that employee health is a number one concern. Most employers need to see financial returns such as serious reductions in health care costs or productivity enhancements in order to continue health promotion programs. " |
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|
Term
| 10-EXAMPLES OF WORKPLACE HEALTH PROMOTION PROGRAMS |
|
Definition
| Specific types of programs offered – See page 277 for a listing of specific worksite programs and informational programs. |
|
|
Term
| 10-REASON EMPLOYERS SPONSOR HEALTH PROMOTION PROGRAMS |
|
Definition
| Business reasons for offering health promotion programs – See page 278 Figure 12-4. |
|
|
Term
| 10-COST/BENEFIT ANALYSIS OF A HEALTH PROMOTION PROGRAM |
|
Definition
| Health promotion programs impact on productivity is a difficult area to measure and there is very little research on this issue. Measuring employee’s labor as output per unit can be done among blue collar workers. Some white collar workers could have th |
|
|
Term
| 10-LEVELS OF PROMOTION IMPACT |
|
Definition
| Health promotion programs impact on company image is more important to the employer who develops these programs. A favorable company image attracts other employees. |
|
|
Term
| 10-HEALTH CONDITIONS AND ORGANIZATIONAL PROBLEMS AND PROGRAMS/INITIATIVES DESIGNED TO ADDRESS THEM |
|
Definition
|
|
Term
| 10-VALIDITY OF RESEARCH ON FINANCIAL IMPACT OF PROGRAMS |
|
Definition
|
|
Term
| 10-DEMAND-SIDE APPROACHES TO IMPROVE QUALITY OF CARE |
|
Definition
| Demand side approaches to improving quality of care can be found under demand management. Demand management is defined as the support of individuals so that they may make rational health and medical decisions based on a consideration of benefits and risk |
|
|
Term
| 10-NURSE TELEPHONE TRIAGE LINES AND ASSOCIATED COMPONENTS |
|
Definition
| "The expansion to total prospective health management includes the triage line as well as: risk assessments of the covered population with questionnaires, classifying the assessed patients into “well”, “at risk”, “chronic” and “catastrophic”, expanding the nurse triage line so that risk assessments are used to counsel the caller, using a data warehouse with medical and RX data, disease management programs that work with attending physicians to ensure effective treatment, disability management to try to minimize time out of work, utilization review and case management programs to monitor acute events, and wellness programs to encourage healthy lifestyles. " |
|
|
Term
| 10-ENSURING THE QUALITY OF TELEPHONE TRIAGE LINES |
|
Definition
|
|
Term
| 10-COST SAVINGS AND PATIENT SATISFACTION |
|
Definition
|
|
Term
| 10-TOTAL PROSPECTIVE HEALTH MANAGEMENT APPROACH |
|
Definition
| Implementing a comprehensive health management approach is not cheap and benefits may not be evident for 3-5 years. |
|
|
Term
| CHAP 11-PURCHASING QUALITY HEALTH CARE |
|
Definition
| CHAP 11-PURCHASING QUALITY HEALTH CARE |
|
|
Term
| 11-IMPORTANCE OF QUALITY OF CARE FOR THIRD-PARTY PAYERS |
|
Definition
| Is quality of care important? – Quality of health care is important for the following five reasons: 1) There are widespread documented errors in the delivery of health care service. 2) There is substantial evidence for extensive overuse and underuse of various healthcare services. 3) Poor quality of care erodes the value of health care purchases. 4) Failure to exercise due diligence in evaluating quality of care may increase an employer’s liability for a bad outcome of care. 5) Lack of attention to quality of care can have negative consequences for an employer in employee relations and relationships with providers and other in the local business community. |
|
|
Term
| 11-ERRORS IN DELIVERY OF HEALTH CARE SERVICES |
|
Definition
| "Errors in the delivery of health care services – Just in in-patient hospital care, studies have concluded that 3.7% of hospital admissions in NY suffered injuries due to medical mismanagement. Of these injuries 27.6% were the result of negligence. Based on this study, all hospital admissions in the U.S. that occurred in 1997 would result in 98,000 deaths. This does not include out patient care. More people die from medical errors than from motor vehicle accidents, breast cancer or AIDS. The cost of these preventable deaths is between 17 and 29 billion dollars. Clearly medical errors impact employer health care costs as well as employee health outcomes. " |
|
|
Term
| 11-INAPPROPRIATE AND UNNECESSARY CARE |
|
Definition
| "Overuse of health care services – There is a large and growing body of research on the extent of medical care that is inappropriate or unnecessary. So far, studies have shown that about 32% of medical procedures are inappropriate. Results of a NY study on cardiac procedures found that nearly 38% of a type of angioplasty surgery was of uncertain appropriateness and 4% were clearly inappropriate. Artery bypass surgery was determined to be 7% uncertain and 2.4% inappropriate. Even though these percents may seem small, consider that the death rate for patients undergoing these procedures was 2% and the rate of complications for patients undergoing these procedures was 17%. These studies suggest that inappropriate medical care has substantial negative consequences for employer health care costs and employee health." |
|
|
Term
| 11-DEFINITION OF HEALTH CARE QUALITY |
|
Definition
| "Defining quality – Health care quality has 3 components: appropriateness, excellence and satisfaction. Appropriate is measured by the state of the art medicine, excellence is measured by how the health care is executed and if both of these components are on target, satisfaction is met. All of these components are measurable." |
|
|
Term
| 11-JOINT COMMISSION ON ACCREDITATION OF HEALTHCARE ORGANIZATIONS |
|
Definition
|
|
Term
|
Definition
|
|
Term
| 11-NATIONAL COMMITTEE ON QUALITY ASSURANCE (NCQA) |
|
Definition
| Changing the content of reputation – Rather than use word of mouth as the way to get information on physicians and hospital reputations out there in today’s world we have access to report cards from MCO’s and physician profiling. There are associations such as the NCQA and the Health Care Financing Administration (HCFA). States also provide information to the public on the academic qualifications of physicians and any disciplinary action against them. |
|
|
Term
| 11-HEALTH PLAN EMPLOYER DATA AND INFORMATION SET (HEDIS) |
|
Definition
|
|
Term
| 11-SUPPLY-SIDE APPROACHES TO IMPROVING QUALITY |
|
Definition
| Improving quality using supply – side approaches. This is the other side of the consumer or demand side approach which we discussed in Chapter 10. Supply side approaches – Individuals or small businesses could not impact the health care industry if they |
|
|
Term
| 11-WORD OF MOUTH/REPUTATION |
|
Definition
| Changing the content of reputation – Rather than use word of mouth as the way to get information on physicians and hospital reputations out there in today’s world we have access to report cards from MCO’s and physician profiling. There are associations such as the NCQA and the Health Care Financing Administration (HCFA). States also provide information to the public on the academic qualifications of physicians and any disciplinary action against them. |
|
|
Term
| 11-REPORT CARD METHOD OF MEASURING AND DISSEMINATING INFORMATION |
|
Definition
| report cards online – making this information available online is the best way to get it in the hands of the people. |
|
|
Term
| 11-ACCESSING INFORMATION THROUGH THE INTERNET |
|
Definition
| Internet remedies: Accesses to information – people are using this method and new health sites are springing up all the time. People are comfortable getting information from the web. The reasons for the growth in internet information are: |
|
|
Term
| 11-MEASUREMENT IMPROVEMENTS DERIVED FROM THE INTERNET |
|
Definition
| "Internet remedies: improvement in measurement – The internet greatly reduces the cost and ease of routine collection of quality data and provides for ready aggregation and dissemination of such information. Adverse drug reactions, adherence to treatment guidelines and interactive interfaces for patient’s to follow a course of treatment are all being used on the internet. Standards need to be established for representation of the data. This plus web based quality reporting is being acted on. " |
|
|
Term
| 11-PROBLEMS NOT SOLVABLE BY THE INTERNET |
|
Definition
| medical error reporting – Private institutions try to keep things private with respect to medical errors. Hospitals do not want to divulge that they have staff that routinely works excessive hours or that physicians on staff may have had their license sa |
|
|
Term
| CHAP 12-HEALTH BENEFITS FOR RETIREES |
|
Definition
| CHAP 12-HEALTH BENEFITS FOR RETIREES |
|
|
Term
| 12-OBJECTIVES OF RETIREE WELFARE BENEFIT PROGRAMS |
|
Definition
| "Employer objectives in retirement benefit programs – When employers starting providing post retirement benefits, retiree populations were small and the cost of benefits was much less then it is today. Employers want to provide benefits for their retired employees and are focusing on certain objectives:a) Protecting retirees against the cost of rising medical expenses and providing some life insurance for burial expenses.b) Promoting cost effective medical care and discouraging unnecessary medical care.c) Ensuring that employer contributions make the retiree benefit program competitive with other companies and that the employee contribution is manageable.d) Attracting and retaining experienced workers.e) Containing employer costs." |
|
|
Term
| 12-CHANGES IN RETIREE HEALTH PLANS |
|
Definition
| "With respect to retiree medical benefits, employers will modify some specifics in the actual benefits such as: revising the definition of what is a covered expense, increase employee contribution obligations, limit the amount of employer contributions and using more managed care techniques. The biggest question employers must consider is whether they can afford to continue to offer a retiree medical plan, and if they do continue it, what modifications need to be made and how should it be funded. Also, if changes are made, should people be grandfathered into certain elements of the existing plan?" |
|
|
Term
| 12-MEDICARE BENEFITS UNDER HOSPITAL INSURANCE (HI) AND SUPPLEMENTARY MEDICAL INSURANCE (SMI) |
|
Definition
| When Medicare became effective in 1966 employers felt that they could offer supplemental coverage to their retirees. This has now become cost prohibitive because Medicare is responsible for less medical coverage and the “supplemental” employer coverage has increased tremendously in cost. |
|
|
Term
| "12-MEDICARE OFFSET-CARVE-OUT, GOVERNMENTAL EXCLUSION, COORDINATION OF BENEFIT" |
|
Definition
| "The offset method – This is cost sharing with Medicare. The employer plan provides the same benefit structure, but the benefits are offset by Medicare payments. The offset method can be a carve out (the net benefit is the regular plan benefit less the amount paid by Medicare). Government exclusion is when Medicare benefits are subtracted from covered expenses before calculating the plan benefits or a traditional COB (when the net benefit is the amount of covered expenses less the amount paid by Medicare not to exceed the regular plan benefit)." |
|
|
Term
|
Definition
| "Medigap coverage is a fill in approach. Medigap plans cover what Medicare does not cover. In a Medigap approach, the hospital deductible of the Medicare Part A plan would be covered. Medicare requires a co-payment after 60 days of hospitalization. Medigap would cover the co-insurance, deductibles and co-payments that would normally be the patient’s responsibility" |
|
|
Term
| "12-ELIGILILITY REQUIREMENTS-AGE, SERVICE, RULE OF 80" |
|
Definition
| Eligibility in a typical retirement plan usually follows the same rules as the employer’s pension plan. The most common definition specifies attainment of age 55 and at least 10 years of services. Some employees are eligible after 30 YOS no matter what their age is. The Rule of 80 is satisfied when the age and YOS added together = 80. Nearly all retiree plans extend coverage to the spouse and dependents of the retiree. |
|
|
Term
| 12-NONCONTRIBUTORY/CONTRIBUTORY/GRANDFATHERING |
|
Definition
| "Employee contributions vary significantly but nearly all employers require new retirees to make some sort of contribution. Retiree contributions can be a percentage of cost, a flat fee or the difference between the employer’s cost and the total premiums. The percentage approach is the most common method used today. This tends to keep up with inflation as medical cost increases." |
|
|
Term
| 12-PERCENTAGE OF COST/FLAT DOLLAR AMOUNT APPROACHES TO EMPLOYEE CONTRIBUTIONS |
|
Definition
|
|
Term
| 12-UTILIZATION REVIEW PROGRAMS AND INCENTIVE ARRANGEMENTS |
|
Definition
|
|
Term
| 12-REASONS FOR SHIFT TO COMPREHENSIVE MEDICAL PLANS |
|
Definition
| "Employers understand that retiree benefits are a way to recruit and retain employees especially employees over the age of 40. There will be more employees leaving the workforce then entering the workforce in the coming decade, so companies need to keep their older, experienced workers. Employers also have to consider how benefit programs fit into their total compensation strategy. Retiree benefits can be a cost effective form of deferred compensation with tax benefits to the employee. " |
|
|
Term
| 12-COST-MANAGEMENT TECHNIQUES |
|
Definition
| "Employers need to select vendors for their retiree health care programs by weighing the quality of care and service, access and cost. Employers should assign weights to each of these selection criteria and negotiate the best deal. " |
|
|
Term
| 12-MEDICARE+CHOICE OF THE BALANCE BUDGET ACT OF '97 |
|
Definition
| "Medicare – Prior to 1966 most employers did not offer medical coverage to their employees. Initially Medicare applied to people 65 and older and primarily for hospitalization coverage. In 1972, disabled SS beneficiaries who had been on the benefit rolls" |
|
|
Term
| 12-ADVANTAGES OF DEFINED DOLLAR BENEFIT/DEFINED CONTRIBUTION APPROACH |
|
Definition
|
|
Term
| "12-FINANCING CONSIDERATIONS, EXPENSE RECOGNITION AND COSTS" |
|
Definition
|
|
Term
| 12-LACK OF PREFUNDING OF RETIREE HEALTH BENEFITS |
|
Definition
| "Legal issues – ERISA requires vesting for pension plans. It does not require this for retiree medical benefits. Employee communication materials usually specify that the employer has the right to change the retiree benefits. Without this disclaimer, em" |
|
|
Term
| 12-BENEFIT STRATEGY TO SUPPORT BUSINESS OBJECTIVES |
|
Definition
| "Employers need to consider certain strategic questions; how to use health benefits to support their business, whether to target certain employee groups, what sort of plans to offer and how to select, manage and communicate the plans." |
|
|
Term
|
Definition
| "Employers need to select vendors for their retiree health care programs by weighing the quality of care and service, access and cost. Employers should assign weights to each of these selection criteria and negotiate the best deal. " |
|
|
Term
|
Definition
|
|
Term
| 13-DEFINITION OF LONG TERM CARE |
|
Definition
| Definition of Long Term Care (LTC) – A system of health and custodial services to support people who have chronic or long-term physical or mental conditions for which there are not remedies. LTC has different classifications of care: |
|
|
Term
| 13-CUSTODIAL SERVICES/CHRONIC CONDITIONS |
|
Definition
| "Some examples of formal services include nursing homes, LTC facilities in hospitals, home health agencies, assisted living facilities and adult day care." |
|
|
Term
| 13-CLASSIFICATION OF LTC AND LTC PROVIDERS |
|
Definition
|
|
Term
| 13-PUBLIC CONCERN OVER LTC |
|
Definition
| Public awareness about the risks and cost of LTC has not been communicated effectively. People who think they won’t need LTC should be aware that if you live to age 65 there is a 40% chance that you will spend some time in a nursing home facility. Also there are very few employers who offer this coverage to their employees. This leaves the private sector to fund LTC policies. If you have to purchase an individual policy you run the risk of obtaining low levels of coverage due to cost and restrictive underwriting rules. |
|
|
Term
| 13-LTC LAWS AND REGULATIONS AT THE STATE AND LOCAL LEVEL |
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Definition
| "A decade of legislation and regulation – As LTC coverage has grown the government has had to step in to regulate this product to prevent abuses in the sales and marketing of LTC. The NAIC meets regularly to adopt model laws and regulations on all insurance products. However the NAIC does not have the authority to make these “models” required laws. Once a state adopts the model L&R it becomes a regulated product in that state. Currently about 40 states base their laws on the model L&R. Of these 40 states none are using the most recent model law passed in 2000. These L&R require that the states review all policy forms, rates and marketing materials for compliance. " |
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Term
| 13-STATE LONG-TERM CARE PLANS |
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Definition
| "State plans that are sold by insurance companies are LTC policies that meet special state defined minimum provisions. States have a financial interest in LTC policies because they pay a portion of Medicaid costs. Nursing homes and home health care costs are a large part of Medicaid expenses. State plans allow for protection of the consumers assets and income. This asset/income protection is only available in the state in which the policy was written, even thought the LTC can take place in another state. State plans have only been developed in a handful of states." |
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Term
| 13-PRINCIPLES OF LTC PLAN DESIGN |
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Definition
| Principles of LTC plan design – A benefit manager should keep the following 7 principles in mind when designing a LTC plan for employees: |
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Term
| 13-COVERAGE AND ADMINISTRATION ISSUES |
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Definition
| Levels of coverage should be adequate and appropriate. |
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Term
| 13-FUNDING AND FINANCING OF OF LONG TERM CARE PROGRAMS |
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Definition
| "From the financing side of LTC plan designs these types of decisions need to be made: How will reserves in the plan be valued? (Portability options, transfers to another provider) Premiums rates should vary by age. Will retirees continue paying into LTC? Are premiums waived if benefits are being paid? What underwriting guidelines? (Pre-existing conditions, waiting periods) What actuarial assumptions will be used? (Cost of future care and projections)." |
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Term
| 13-FINANCING ISSUES IN THE DESIGN |
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Definition
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Term
| 13-TAX CONSEQUENCES OF HIPAA |
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Definition
| HIPAA effects – qualified HIPAA grandfathered provisions should remain intact. Care should be taken not to disqualify the plan. |
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Term
| 13-DEFINED BENEFIT VS DEFINED CONTRIBUTION LTC PLANS |
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Definition
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Term
| 13-INSURANCE CO EXPERIENCE IN WRITING LTC POLICIES |
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Definition
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Term
| 13-EFFECTIVE COMMUNICATION OF LTC PLANS TO EMPLOYEES |
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Definition
| Employers also need to continue the communication regarding LTC programs. This will keep employees expectations in line with the policy and allow the company and the employees to get the most out of the LTC program. |
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Term
| 13-IMPACT OF EMPLOYEE CAREGIVER PRODUCTIVITY |
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Definition
| "Caregivers – also in need of assistance – Currently about 20 – 25% of employees are responsible for taking care of an aged or disabled parent or spouse. Studies show that employees with this type of obligation, lose valuable work hours, tend to get sick more themselves from physical and emotional strain and are less productive when they are at work. In their own interests, employers have devised a variety of programs described as elder care. Elder care programs do not involve tax problems because they do not provide any tangible benefit, similar to an EAP program." |
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Term
| 13-HUMAN RESOURCE POLICIES/PROGRAMS FOR CAREGIVERS |
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Definition
| "A direct elder care programs are designed to help caregivers with information on seminars and meetings, support groups or counseling services, referral and linkage programs for geriatric care and other resources and reimbursement programs to subsidize services such as respite care to allow the caregiver time away from the patient." |
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Term
| 13-EMPLOYER-SPONSORED PROGRAMS DESIGNED TO HELP CAREGIVERS |
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Definition
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Term
| 13-TRANSFERRING LTC COVERAGE TO A NEW CARRIER |
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Definition
| "Reserve Transfer – unless the existing LTC contract was very specific about how the transfer was to be calculated, the timing of the transfer, and any termination penalties, there will almost always be a disagreement between the current provider and the employer about the reserve transfer." |
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Term
| CHAP 14-INSURING AND MANAGING EMPLOYEE DISABILITIES |
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Definition
| CHAP 14-INSURING AND MANAGING EMPLOYEE DISABILITIES |
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Term
| 14-FINANCIAL IMPACT OF DISABILITY RISK |
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Definition
| "Disability risk – The risk of both long and short term disability increases with age. Even though disability is a low incident event it has a more serious financial impact than other insurable events. A 40 year old earning $50,000 will lose 2.4 million in earnings if he or she becomes disabled and unable to return to work before age 65." |
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Term
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Definition
| "Workers compensation is one of the public insurance programs that provide wage replacement and medical benefits to workers for injuries arising “out of and in the course of employment”. It is the oldest form of social insurance and has been paying benefits since the early 1920’s. In the late 1980’s and early 1990’s, the focus was on the cost problems associated with WC. Employer’s costs were doubling as insurance premiums were rising dramatically. The prevailing thought was that fraudulent claims were being filed and paid on a regular basis. The general feeling was that this system needed to be looked at and overhauled. In the mid to late 1990’s this all seemed to turn around. As a result of legislative rulings, economic conditions and lower medical inflation, WC revived itself in the public eye." |
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Term
| "14-OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE (OASDI)" |
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Definition
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Term
| 14-STATE RETIREMENT SYSTEMS |
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Definition
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Term
| 14-STATE-MANDATED SHORT-TERM DISABILITY PLANS |
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Definition
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Term
| 14-INTERGRATION OF PUBLIC-SECTOR AND PRIVATE PLANS |
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Definition
| "Types of disability income in the private and public sectors – Public programs include: Social Security, Workers compensation, Veterans benefits, State retirement systems and State mandated plans (STD). " |
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Term
| 14-ELIGILILITY FOR SOCIAL SECURITY DISABILITY BENEFITS |
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Definition
| "A worker is eligible for SSDI if that person is insured, under age 65, disabled for 12 months and is expected to be disabled for at least 12 months or die, filed an application for disability benefits and has completed a 5 month waiting period (unless exempt from this requirement)" |
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Term
| 14-CALCULATION OF SOCIAL SECURITY DISABILITY BENEFITS |
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Definition
| The benefit is equal to the person’s Primary Insurance Amount (PIA). The benefit is then offset by any worker’s compensation benefit. Benefits are payable to age 65. |
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Term
| 14-DEFINITION OF DISABILITY |
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Definition
| The definition of disabled under Social Security is the inability to engage in any substantial gainful activity by reason of any medically determined physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of not less than 12 months. |
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Term
| 14-SOCIAL SECURITY DISABILITY INCOME (SSDI) & SUPPLEMENTAL SECURITY INCOME (SSI) PROGRAMS |
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Definition
| The benefit is equal to the person’s Primary Insurance Amount (PIA). The benefit is then offset by any worker’s compensation benefit. Benefits are payable to age 65. |
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Term
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Definition
| "Sick leave – Employers provide a certain number of days paid sick leave. Employers usually self insure sick leave. The way most sick leave plans are designed, the employees can accumulate the sick leave that is not used and take this accumulated time if an extended illness or disability occurs. Some employers add sick leave days to employees with certain YOS. This type of arrangement will have a maximum limit." |
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Term
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Definition
| "STD – Employees generally must be unable to work for 5 consecutive days because of a non job related sickness or accident. Most STD plans replace 50% to 66.6% of income for up to 26 weeks. Whether this plan is self insured or fully insured, payments during this 26 week period are considered wages and are subject to taxes." |
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Term
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Definition
| "LTD – These plans usually provide income replacement after 13 or 26 weeks under a 2 part definition of disability. The first part applies to the first 2 years that LTD benefits can be paid and states that the employee must be disabled to an extent that they cannot perform the duties of their own occupation. The second part apples to the time frame after the initial 24 months of LTD and states that benefits will continue to be paid if the person is unable to engage in any work or occupation for which he or she is reasonably fitted by education, training or experience. Benefits continue until retirement age. Benefits cease if the person dies or returns to work. Some LTD plans replace as much as 75% of income. LTD benefits are not subject to taxes like STD is. However, LTD benefits are subject to income tax if the premiums are employer paid. " |
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Term
| 14-TAXATION OF STD AND LTD |
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Definition
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Term
| 14-REPLACEMENT RATIOS IN STD AND LTD |
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Definition
| Duration – Plans may exclude new employees from both STD and LTD coverage for a set period of time. LTD benefits will continue until age of retirement. Pension plans contain some sort of continuance for accrual of benefits during a disability period. |
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Term
| 14-FACTORS IN DISABILITY INCOME PLAN DESIGN |
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Definition
| "Elements in plan design – Include group size, age, preexisting conditions, gender, occupation, duration, funding, limiting exposure and disability management. " |
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Term
| 14-AGE DISCRIMINATION IN EMPLOYMENT ACT (ADEA) |
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Definition
| "Age – Age is a key factor, however it is discriminatory to use age to determine the eligibility for the group. All employees within an eligible class must be included in the plan. The benefit period must provide cost equivalent benefits when compared to benefits of younger workers. ADEA also specifies that workers age 70 or older must receive a minimum of 12 months of disability benefits." |
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Term
| 14-PREEXISTING CONDITION CLAUSES |
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Definition
| "Preexisting conditions – Exclusions for preexisting conditions minimizes the risk of anti-selection. For example, if a person files a claim for a condition that they were treated for 3 months prior to purchasing the policy, the insurer will not pay benefits for that claim. STD plans do not have this type of look back. You may be eligible for STD benefits for the same condition that is denied under LTD." |
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Term
| 14-GENDER AND OCCUPATION AS FACTORS IN CLAIM FREQUENCY |
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Definition
| "Gender – Women have a higher degree of disability than men at younger ages, but a lower incidence at older ages. " |
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Term
| 14-FACTORS IN FUNDING AN LTD PLAN |
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Definition
| "Funding – Risk is a primary concern in designing disability income benefit plans. A fully insured or partially insured plan is the best bet. Employers need to look at the size of the group, the structure of the plan (employers may want to self insure the first 2 years only on an LTD plan), stop loss coverage." |
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Term
| 14-CONSIDERATIONS IN DECISIONS TO SELF-FUND |
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Definition
| "Limiting exposure – If an employer is going to self insure an LTD plan, he needs to place a maximum benefit exposure on any given individual. Accounting standards also need to be reviewed. Claims management expertise should be utilized. " |
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Term
| 14-INTERGRATED DISABILITY MANAGEMENT |
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Definition
| "Disability management – Preventing disabilities from happening is the most important tool. Wellness programs, safety programs etc. need to be included as employee education. The indirect costs are in overtime costs, replacement workers needed and/or workstation accommodations. These indirect costs can be up to 8% of payroll. The most effective disability management is prevention of the disability. " |
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Term
| CHAP 15-WORKERS' COMPENSATION |
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Definition
| CHAP 15-WORKERS' COMPENSATION |
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Term
| 15-DEVELOPMENT OF WORKERS COMPENSATION SYSTEM IN THE US |
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Definition
| "The first WC laws passed legislation and were enacted by 9 states in 1911. By 1920, most of the remaining states had WC laws. Prior to this, workers had to bring legal action against their employers and rely on common law remedies. In order to be successful in winning this lawsuit, workers had to prove that their injuries were a result of employer negligence. Employers then had to strike back with a legal defense proving among other things, contributory negligence. As industrialization increased in the early 1900’s the number of workplace accidents rose and so did the number of personal injury lawsuits. This legal process created a financial hardship for the worker and uncertain results for the employer. These factors brought about the quid pro quo concept. " |
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Term
| 15-ELECTIVE NATURE OF WORKERS COMPENSATION IN SOME STATES |
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Definition
| "The Quid pro quo concept for WC means that in exchange for relinquishing legal rights to bring suit, workers would be guaranteed indemnity (lost wages) and medical benefits. Thus, WC became the sole remedy for workplace injuries and accidents. (now we all pay directly and indirectly for WC claims)." |
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Term
| 15-WORKERS EXEMPT FOR WORKERS' COMPENSATION |
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Definition
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Term
| 15-PREFUNDED NATURE OF WORKERS COMPENSATION |
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Definition
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Term
| 15-THREE METHODS OF FINANCING |
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Definition
| "Employers can purchase insurance from private insurance companies, state run insurance or by self-insuring. Employers are required to set aside funds (reserves) for all future benefit payments. Some states do not allow employers to buy insurance from private companies. The states that do allow private insurance also permit the employer to buy insurance with a deductible. This essentially is the employer self-insuring part of the benefit. This concept was not allowed until the early 1990’s and in the past several years, this concept has grown dramatically. " |
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Term
| 15-MONOPOLY STATE FUNDS/COMPETITIVE STATE FUNDS |
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Definition
| "Each state regulates the solvency of the insurers, the insurance contract provisions and policy forms and various pricing programs. Employers are charged rates per hundred of dollars of payroll. Some employers, depending on the type of business, pay much more than other employers. The wage benefit is usually tied to the nominal statewide average weekly wage. Medical costs are also normally higher than the medical costs for the general population. " |
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Term
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Definition
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Term
|
Definition
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Term
| 15-REGULATION OF WORKERS COMPENSATION |
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Definition
| "The oversight and regulation of WC insurance is basically a state not a federal issue. Even though WC is supposed to be”no fault” insurance, usually lawyers need to get involved. This is due to the fact that the compensation laws and the administration is complex and the legal, actuarial and underwriting parts need to be interpreted by a lawyer. " |
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Term
| 15-MANUAL RATES AND CLASS CODES |
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Definition
| "A manual rate is priced per $100/ payroll. Premium and loss data is collected for each employer. Firms are separated into five areas of economic activity: manufacturing, contract construction, producer/dealer, office/clerical, and all other. They are then classified further by type of business and assigned to one of more than 600 workers compensation class codes. Actuaries use the coding together with historical data and projected costs and revenues to assign a manual rate. Employers are required to set aside funds to cover future costs. Actuaries need to also consider the amount of payments that will be paid out over time. The historical data needs to be adjusted to handle changes in payroll, legislative changes and trends. " |
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Term
| 15-ADJUSTMENTS TO MANUAL RATES |
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Definition
| "Employers with premiums greater than $5,000/year are given mandatory premium discounts. Firms with manual premiums above a certain threshold are subject to experience rating. If a firms experience is better or worse than previous years, the rate can go up or down accordingly. " |
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Term
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Definition
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Term
| 15-FIVE TYPES OF WORKERS COMPENSATION CLAIMS |
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Definition
| Non-compensatory medical or medical only claims – Basically this type of claim is a result of an injury that does not require time out of work. There is no cash benefit claim for lost wages. This is the most common type of claim and account for 75-80% o |
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Term
| 15-COORDINATION WITH OTHER PROGRAMS |
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Definition
| "Social security limits the combined WC and SS benefit to 80% of pre injury earnings. Some states have offset provisions for unemployment benefits. The federal government has prohibited any further offsets by the states. Although there are some exceptions, WC benefits take precedence over other programs." |
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Term
| 15-STATE INITIATIVES TO CONTROL COSTS |
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Definition
| "Because the states are most interested in the worker returning to work, MC principles may not be used exclusively. In order to treat the injury aggressively, some traditional methods may also be required. Proponents for this mixture of medical remedies site the higher cost in the short term for medical care is worth the employee returning to work sooner. The sooner the employee returns to work, the sooner the employer stops paying WC costs for that individual. Opponents to this medical delivery mix claim that the state is rushing the employee back to work too soon, before he is medically ready. " |
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Term
| 15-MANAGED CARE OF WORKERS COMPENSATION-BASIS STRATEGIES |
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Definition
| "Managed care became part of WC in the early 1990’s. Managed care consists of 4 strategies: active case management cost effective contracts with medical providers, outcomes measurement and utilization control. See page 15.25 for an example of how a claim is handled without managed care. The claims adjuster is not going to manage the treatment or try to contain costs. The physicians are unhappy with the reimbursement rate and the extra workload. The injured person is represented by the insurance carrier and becomes defensive about the care he is going to receive. " |
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Term
| 15-DIFFERENCES IN NONMANAGED CARE AND MANAGED CARE CLAIM HANDLING |
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Definition
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Term
| 15-REPRICING IN WORKERS COMPENSATION MANAGED CARE MODEL |
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Definition
| "The prevailing community rate is used when medical charges are accessed in WC cases. This means that the fee for each service/treatment should be based on the cost of providing service by the most efficient high quality method available, plus a reasonable compensation for the professional skill and time required. Most states use a physician fee schedule for reimbursement and some states dictate that the WC charges cannot exceed the U & C charges for that region." |
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