Medical Billing Basics – Payer Types
Most providers have to deal with a number of different payer types and plans, each with its own specific policies and methods of reimbursement. For that reason, it is important to become familiar with the guidelines for every payer and plan that your practice has contact with. Some insurance plans are administered by either the federal or state government, including Medicare, Medicaid, and TRICARE. Private payers range from fee-for-service plans to health maintenance organizations.
Administered by the federal government, Medicare provides health insurance benefits to those 65 years of age and older, and individuals of any age who are entitled to disability benefits under Social Security or Railroad Retirement programs. In addition, individuals with an end-stage renal disease that require hemodialysis or kidney transplants are also eligible for Medicare benefits. Consisting of two parts, Medicare Part A (for which all persons over 65 are qualified) covers hospitalization and related care while Part B (which is optional) covers physicians and other related health services.
Fees for Medicare services are based on the Medicare fee schedule. In addition, the Medicare+Choice plan, created in 1997 as part of the Balanced Budget Act (BBA), allows managed care plans, such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs), to join the Medicare system. Access to these various options depending on where the beneficiary lives and the availability of plans in their community.
Medicaid is administered by the state governments under federal guidelines to provide health insurance for low-income or otherwise needy individuals. In addition to the broad guidelines established by the federal government, each state has the responsibility to administer its own program including:
- Establishing eligibility standards
- Determining the type, amount, duration, and scope of services
- Setting payment rates for services
- Program administration
Formerly called CHAMPUS, TRICARE provides health insurance to active and retired military personnel and dependents.
Blue Cross and Blue Shield
Blue Cross (hospital services) and Blue Shield (physician services) were the first pre-paid health plan in the country. Although all “Blues” plans are independent, they are united by membership in the national Blue Cross and Blue Shield Association (BCBSA). The Blue Cross and Blue Shield System are responsible for the administration of the four million-member Federal Employee Program (FEP), comprising all federal government employees, retirees, and dependents.
Health Maintenance Organizations (HMOs)
The most common form of managed care is the HMO. This type of plan has several variations, but basically, the subscriber pays a monthly fee for services, regardless of the type or amount of services provided. The primary care physician (PCP) acts as a gatekeeper to coordinate the individual’s care and to make decisions regarding specialty referral and care. In a “group model” HMO, referrals for care outside of the large independent physician group must be arranged, care for emergency services must be preauthorized, and information about care provided in a life-threatening situation must be communicated to the plan within a specified period of time. On the other hand, the managed choice model HMO allows individuals to access care via the PCP or to go outside of the network to receive care without permission of the PCP, but at a lower level of benefits.
Preferred Provider Organizations (PPOs)
Preferred provider organizations (PPOs), are generally contracted by an employer group or other plans to provide hospital and physician services at reduced rates. Although coverage is higher for preferred or participating providers, individuals have the option to seek services provided by non-participating providers. A variation of the PPO is the exclusive provider organization (EPO,) where enrollees must receive care within the network and must assume responsibility for all out-of-network costs.
Point-of-Service Plans (POS)
Point-of-service plans permit covered individuals to receive services from participating or nonparticipating providers, but with a higher level of benefits when participating providers are used.
Independent Practice Association (IPA)
This type of organization comprises physicians that maintain separate practices and participate in the IPA as a means to contract with HMOs or other health plans. The physicians also generally treat patients who are not members of the HMO or other plans.
Under indemnity plans, the payer provides payment directly to the provider of service when benefits have been assigned by the patient. Many carriers now include PPO attributes to help reduce costs.
Third-Party Administrators (TPAs) and Administrative Services Organizations (ASOs)
Although neither insurers or health plans, TPAs and ASOs manage and pay claims for clients such as self-insured groups. The self-insured group then assumes the risk of providing the services and may contract directly with providers or use the services of a PPO.
Physician Hospital Organization (PHO)
Hospitals and physician organizations may create a PHO to assist in managed care contracts on behalf of the parties. Degrees of management, common ownership, and oversight vary depending on the model of the arrangement.
We hope that this article has provided a basic idea about payer types. If you are looking for overall billing and coding services you can refer to E2E Medical Billing Services. Our accurate and affordable billing services will eliminate billing and coding errors and will increase your practice collection. To know more about our medical billing and coding services, call us at 888-552-1290 or write to us at [email protected]