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How the Insurance Industry Works

Discussion in 'Topics in Healthcare' started by MollyMalone, Dec 2, 2005.

  1. MollyMalone

    MollyMalone I'm a Score Quadruplet
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    Hey people, thought I'd dive into the new forum with a question for you all. Do you think a primer on the insurance industry would be valuable reading for premeds (and medical students, for that matter)? It seems to be a topic that comes up frequently and I seem to see a lot of misinformation about.

    I ask because I know someone in the industry who would be willing to work on such a thing and/or answer any questions that people have about the topic. If there's an interest, I'll try to make it happen.

    Thanks for reading!
     
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  3. QofQuimica

    QofQuimica Seriously, dude, I think you're overreacting....
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    I'd read it.
     
  4. ClearDay

    ClearDay Senior Member
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    count me in
     
  5. gonadotropins

    gonadotropins Member
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    Not to dissuade anyone from putting together a primer, but there is a lot of literature out there on the healthcare industry. Perhaps a collection of links, or resources could get us started or perhaps complement the primer.

    to get this started...a wide range of topics on healthcare are addressed here: http://en.wikipedia.org/wiki/Category:Healthcare
     
  6. bananaface

    bananaface Pharmacy Supernerd
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    It depends on the manner in which it is presented. What did you have in mind?
     
  7. MollyMalone

    MollyMalone I'm a Score Quadruplet
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    Dunno, really... that's why I wanted to see if people would be interested... then I could find out what they wanted to know. Perhaps something like an FAQ.

    Some things I thought of were:

    Defining HMO, PPO, fee-for-service, Medicare, Medicaid.

    How insurance companies are financially structured -- for-profit, not-for-profit.

    Defining a certificate and how to use the information contained therein.

    How decisions get made.

    What rights patients have (this is primarily state-based, but still) to appeal and grieve decisions,

    Etc.
     
  8. bananaface

    bananaface Pharmacy Supernerd
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    I really like your idea. From experience, I can say that a primarily text based passage would be preferable to a series of links to external sites. Inevitably links go down and updates are required. And, people skip over less information when it is consolidated into one place. You'd have to be careful around legal issues so as to not be percieved as offering advice.
     
  9. almost_there

    almost_there Senior Member
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    Great idea! I'd read it...

    a_t
     
  10. jebus

    jebus Membership Revoked
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    I think this would be a great idea. All I know is I pay a co-pay that varies depending on the type of medical coverage I receive or what prescriptions I get filled. If I had an Rx for it, Viagra has a high co-pay - so does Nexium & that makes my stomach hurt. That's all I know. I know nothing about how other people pay; I know that medicare covers kidney transplant recipients, too.
    This would be a great idea to give me (and others like me) a breadth of introductory knowledge and a better idea of where insurance in the US is going. Also, if your friend could include some information about other societies' insurance (european) without sounding pedagogical that would be fantastic.
     
  11. MollyMalone

    MollyMalone I'm a Score Quadruplet
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    Thanks for the responses!

    I will try to work on this with him over winter break. Meanwhile, everyone is more than welcome to post suggestions or questions.

    Thanks!
     
  12. travelbug73

    travelbug73 Member
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    Something I really do not understand is how doctor's get paid, essentially, how the insurance companies and physicians' salaries/services provided by doctor's work. I think this information will help to-be-doctors a lot because none of this is covered in med school or residency.

    Thank you
     
  13. LooKing4Ward

    LooKing4Ward Member
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    Without insurance:
    * You walk into the doctor's office and get charged full rate. It's a profitable day. The doc's a happy camper!
    * The insurance company knows you're a sucker and you'll be their bitch some day. They may not have made money from you today, but you'll come crawling. They'll be a happy camper!

    With insurance:
    * You walk into the doctor's office and get charged contract rate. It's a so so profitable day and the doc's willing to live with it, as long as it pays the office bills and provides income. In return the doc gets listed in the insurance company's provider network list (ie., an advertisement list) and gets continuous customers. The doc's a willing-participant-type of happy camper!
    * The insurance company makes money off of you. They're a happy camper!!!
    * You don't get charged full rate and you have a selection of doctors to choose from. You're a happy camper! You still hate the insurance company, but you're a happy camper.

    What if there were never any insurance companies to begin with? Just the supply and demand of doctors and patients dictate the rates.


     
  14. QofQuimica

    QofQuimica Seriously, dude, I think you're overreacting....
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    I spent four months working in my dad's FP office, and I can answer this one for community FP anyway. The answer is complex. :p
    1. Some patients, even now, pay cash for services, but they are the minority. The doctor is free to charge what he wishes if the patient will pay it.
    2. Many patients belong to HMOs that capitate. What this means is that the HMO pays the doctor a fixed amount of money for each member whom it assigns to that doctor, regardless of how often the patient utilizes services. So if you are a patient on one of these kinds of HMOs, the doctor gets paid a set amount of money for you every month, regardless of whether you go to his office ten times, once, or not at all that month.
    3. Some patients are on HMOs or PPOs that pay based on the visit and the services rendered. The doctor's office must send a claim form with the proper codes to get authorization for payment from the insurance company. So if you go to the doctor for a cold, he gets paid based on how long your office visit was (with like five different levels of involvement). If he performs services that do not have codes (or if he screws up the coding for authorized services!), he won't get paid. Many HMOs also charge patients a co-payment of $5-$20 per office visit (which goes to the doctor) to keep unnecessary office visits down. The doctor's office is responsible for collecting the co-payments from the patients.
    4. Some HMOs offer risk contracts. They give the doctor a pool of money at the beginning of the year, and any expensive care required by his patients is paid for from that pool. If there is money left over at the end of the year, the doctor gets to keep it. If the costs of care go over the amount in the pool, the doctor must pay the difference out of his own pocket. So naturally, this gives the doctor a huge incentive to provide the least possible care, and my father refuses to take any risk contracts for exactly this reason.
    5. Many elderly patients have Medicare (paid for by the gov), as well as some kind of private insurance that is geared toward elderly people. The gov. sets the rate of compensation, and if it won't cover a service, then the doctor can try to get payment from the private insurer.
    6. Indigent patients have Medicaid, also paid for by the gov. Again, the gov. sets the rates. Medicaid reimbursement rates tend to be very low, so most doctors cannot have a huge proportion of their patients be on Medicaid, or they will not be able to afford to stay in business.
    7. Worker's compensation pays for medical services for patients who have been injured on the job. This is paid for by the patient's employer. My dad sees injured employees from one of the grocery store chains here in FL.

    As you can probably guess, dealing with HMOs, each of which has its own rules and codes, requires a huge amount of paperwork. My dad's office has several staff members who are dedicated to coding, negotiating contracts with about a dozen different HMOs, verifying patients' insurance information (because sometimes it changes from visit to visit or even month to month, and if you don't know that the patient has a new insurance company, you won't get paid), billing patients who owe money for copayments or private payments, re-submitting denied claims, etc.
     
  15. Abe

    Abe Senior Member
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    so whats the difference between an HMO and PPO, both are providing discounted rates on services right? And both have doctors that u have to go to right?
     
  16. Non-TradTulsa

    Non-TradTulsa Senior Member - Resident
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    Well, yes and no. Yes, HMOs and PPOs both negotiate contracts with providers so that the HMO/PPO receives a discount for the services it's paying for (most HMOs operate this way - they contract with physicians or physician groups - a few HMOs, such as Kaiser Permanente, employ their own physicians and even own their own hospitals).

    The difference comes when the patient wants to go to a non-contracted provider. Usually the HMO does not provide coverage for a visit to a non-contracted provider, unless it's a documented emergency or unless the non-contracted provider is supplying a service that is not available within the HMO (although that fact will have to be established through a pre-certification process in virtually every case).

    A PPO, on the other hand, is a "Preferred Provider Organization" rather than a "Health Maintenance Organization." With a PPO, if you want to go outside the contracted "network", you can - but you'll pay a penalty in that you will receive a lower levels of benefits and may have a significantly larger co-pay.

    So, as a general rule of thumb: an HMO is often quite restrictive while a PPO allows you more freedom with reduced benefits.

    I spent a whole lot of years in hospital and physician group finance and administration before I realized what I wanted to be when I grew-up. If I can be a resource for these business-type questions, I'm happy to do that - makes me feel useful! :)
     
  17. medicalbound

    medicalbound Senior Member
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    Here is a great (concise) document on health care trends in the 21st century that the AMA put out. It discusses medicare, medicaid, access to care, demographics, medical technology, medical education, etc.

    http://www.ama-assn.org/ama/pub/category/4266.html
     
  18. MDhopeful023

    MDhopeful023 ...hopeless romantic...
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    thanks medicalbound! great input overall!!!!!!!!
     
  19. Shredder

    Shredder User
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    how about the good stuff...controversy
     
  20. SlippingSloth

    SlippingSloth Senior Member
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    A pretty readable primer to US Insurance is Thomas Bodenheimer's "Understanding Health Care Policy." It goes through the basics and has examples. It definitely is not a comprehensive book, but it is a good place to start. Sadly it is also the only required reading book for UCSD med students that covers anything related to the business of medicine. It may be decent starting material, but I will continue to advocate that medical students should be taught basic private practice dynamics while in school. It seems ridiculous to me that highly educated and motivated individuals are released as LEADERS into the private health care sector by the thousands annually with such little business acumen.
     
  21. MollyMalone

    MollyMalone I'm a Score Quadruplet
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    Heh. That's covered in the etc. :rolleyes:

    If you've got suggestions about controversial topics you want us to delve into, I would be grateful to hear them!
     
  22. Shredder

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    nothing specific, just the current state of insurance and healthcare. the heated discussions that the execs have in board meetings and over beers. but you know i have a penchant for heated discussions. dunno, to be safe the guy may want to speak pc and that would make it difficult to address real issues. it would really help to break up pedantic(ism) though thats for sure
     
  23. MollyMalone

    MollyMalone I'm a Score Quadruplet
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    :laugh: Trust me, PC is not my friend's strong suit.
     

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