Recap of Chapter Nine

Service areas are defined by geographical boundaries and are used by HMOs and PPOs to determine the usual, customary, and reasonable charges for health care expenses. 9.1
A subscriber is a person who applies for health coverage through a service provider, such as an HMO, and becomes enrolled under the plan. 9.1
Indemnity plans pay stated benefits directly to the insured for reimbursement of expenses that have been incurred. 9.2
Service plans pay benefits directly to health care providers, including hospitals, doctors, therapists, laboratories, and radiology centers, and most service plans today are structured as managed care plans. 9.2
Self-insured plans are typically used by large employers with healthier workforces to reduce the cost of providing health care benefits by paying actual claims expenses instead of insurance premiums. 9.2
Commercial insurers generally offer traditional reimbursement, or shared expense, health insurance plans where the insured pays a portion of costs and the insurer reimburses the remainder according to the plan. 9.2
An HMO is considered a comprehensive managed health care system available to voluntarily enrolled individuals residing within a defined geographic area. HMOs typically limit the number of providers from which subscribers can choose. 9.5
HMOs place strong emphasis on preventive medicine and early intervention through prepaid routine exams, stress management programs, and diagnostic screening procedures. 9.5
Subscribers in an HMO are generally required to receive care from a Primary Care Physician, often called a Gatekeeper, who provides referrals to Specialty Physicians when necessary. 9.5
PPO plans operate on a discounted fee-for-service basis, with physicians receiving prenegotiated payments for office visits and related patient services only when provided. Subscribers are responsible for copayments and/or coinsurance in addition to a relatively small annual deductible. 9.6
HMOs may be structured as either open or closed panels. In an open panel, doctors may treat any patient, whereas in a closed panel, doctors provide care exclusively to HMO members enrolled through the organization. 9.5
PPO plans allow subscribers to receive care from both network and non-network providers. While subscribers may choose any provider, using network providers generally results in lower out-of-pocket costs. 9.6
Usual, customary, and reasonable (UCR) refers to the standard used to determine the amount reimbursed for covered medical expenses. 9.9
Blue Cross (BC) plans provide benefits for inpatient hospitalization, while Blue Shield (BS) plans cover physician and outpatient services. Each operates under a service contract, and in many states, the two organizations function jointly as BCBS, operating as not-for-profit entities. 9.4
HMOs serve as both a health care financing and service delivery system, with the primary goal of reducing overall medical expenses. 9.5
Managed care plans emphasize preventive medicine and wellness, reflecting the principle that it is more cost-effective to maintain health than to treat illness after it occurs. By limiting out-of-pocket costs for physician visits, these plans encourage subscribers to regularly consult their Primary Care Physician. 9.5
HMO subscribers benefit from paying only service copays for most health care needs but are generally required to use network providers, except in emergencies or when receiving care outside the plan's service area. 9.5
The main reason individuals select PPO coverage over an HMO is the broader choice of providers. PPO subscribers may obtain health care services from any properly licensed provider, whether inside or outside the PPO network. 9.6
When using out-of-network PPO providers, subscribers typically face higher deductibles, increased copayments, and greater coinsurance, and benefits are generally limited to the usual, customary, and reasonable (UCR) charges for similar services within the network. 9.6
A combined Basic Hospital, Medical, and Surgical Expense plan provides specified annual benefit payments for both inpatient and outpatient hospital services. Coverage includes physician and surgeon fees, as well as laboratory and other diagnostic services, whether care is provided in or out of the hospital. 9.8
These combined basic plans are usually written on a first-dollar basis, meaning no annual deductible must be satisfied before benefits are paid. They may also specify a scheduled benefit, stating the maximum amount payable for covered services. Any charges exceeding the stated maximum are the responsibility of the insured. 9.8
A Basic Hospital Expense plan provides coverage for inpatient hospital costs, including room and board, laboratory tests, and diagnostic services associated with surgical procedures. It does not cover physician or surgeon fees separately. Emergency Room services are included only if the insured is admitted to the hospital through the ER. Some plans may impose a daily maximum benefit. 9.8
A Basic Medical Expense plan covers non-surgical physician services when the insured is not hospitalized and also includes most outpatient hospital expenses, such as Emergency Room visits, ambulance services, and outpatient laboratory and diagnostic tests. 9.8
The primary reason individuals choose PPO coverage over an HMO is the broader choice of service providers. PPO subscribers can receive covered health care services from any properly licensed provider, whether inside or outside the PPO network. 9.6
When receiving services from out-of-network PPO providers, subscribers typically face higher deductibles, increased copayments, and larger coinsurance percentages, and benefits are generally limited to the usual, customary, and reasonable (UCR) charges for similar services within the network. 9.6
A combined Basic Hospital, Medical, and Surgical Expense plan provides a specified amount of annual benefits for both inpatient and outpatient hospital services, including physician and surgeon fees, as well as laboratory and other diagnostic services, whether care is provided inside or outside the hospital. 9.8
Benefits under these combined basic plans are often written on a first-dollar basis, meaning there is no annual deductible that must be met before benefits are paid. Coverage may also follow a scheduled benefit structure, which specifies the maximum amount payable for each covered service. Any charges that exceed the stated maximum are the responsibility of the insured. 9.8
A Basic Hospital Expense plan covers only inpatient hospital costs, including room and board, laboratory tests, and diagnostic services associated with surgical procedures. It does not provide separate coverage for physician or surgeon fees. Emergency Room services are included only if the insured is admitted to the hospital through the ER. Some plans may include a daily maximum benefit. 9.8
A Basic Medical Expense plan covers non-surgical physician services when the insured is not hospitalized and also includes most outpatient hospital services, such as Emergency Room visits, ambulance services, and outpatient laboratory and diagnostic tests. 9.8
A Basic Surgical Expense plan provides benefits for services performed by a surgeon. If a specific surgery is not listed in the policy, the plan will reimburse based on the coverage for a comparable procedure. The plan also covers operating room and anesthesiology charges when these are not included under a Basic Hospital Expense plan. 9.8
Major Medical insurance is distinguished by the use of deductibles and coinsurance. A deductible is a specified dollar amount the insured must pay, typically before benefits are payable. Coinsurance represents the percentage of costs shared between the insured and the insurer once the deductible has been satisfied. 9.9
Most health insurance policies require a deductible to be satisfied before benefits are paid. Policies must also include a stop-loss provision that defines an out-of-pocket maximum. Once this limit is reached, the insurer pays 100% of covered claims for the remainder of the policy period. 9.9
A deductible carryover provision allows expenses incurred during the last three or four months of the policy year to be applied toward the deductible for the next policy year if the current year's deductible has not yet been met. 9.9
All health insurance plans are required to provide coverage for newborn children from the moment of birth, and for adopted children from the date of placement. Parents or subscribers must formally request coverage for the newborn or adopted child and pay any required additional premium within 31 days of the birth or placement. The child cannot be denied coverage. 9.10
Limited benefit plans are also available, including Accidental Death and Dismemberment, Critical Illness or Dread Disease plans (e.g., cancer, HIV/AIDS, heart attack), Hospital Income (Indemnity) plans, and blanket health plans. These plans do not necessarily reimburse actual medical expenses. Blanket health plans are typically written as excess coverage, paying only for expenses not covered by other primary insurance. 9.12
Credit disability insurance provides payment of a borrower's minimum monthly debt obligation if the insured becomes disabled under the terms of the policy. Coverage is limited to the total outstanding debt or the monthly payment amount. 9.12
Dental expense plans may be issued on an individual or group basis. Policy documents must clearly outline the benefits, exclusions, and any annual limits on coverage to ensure the insured understands the scope of protection. 9.14
Dental plans may provide coverage differently depending on the specific dental specialty. These specialties include endodontics (treatment of tooth decay, including pulp and root canal therapy), orthodontics (correction of teeth alignment and bite), periodontics (prevention and treatment of gum disease), prosthodontics (replacement or repair of missing or damaged teeth, including implants, bridges, crowns, and dentures), restorative care for natural teeth (treatment of cavities and tooth repair), and oral surgery (treatment of oral disease, injury, or congenital malformations). 9.14
Common exclusions in dental expense plans include cosmetic procedures (such as teeth whitening, veneers, or protective coatings, unless medically necessary), replacement of prosthetic appliances, claims covered under Workers' Compensation, and treatments that began prior to the effective date of coverage (with the exception of replacement policies in group plans). 9.14
In many dental plans, deductibles are waived for preventive care services, including diagnostic exams, x-rays, and routine cleanings. Some plans may also require copayments and/or coinsurance for other covered services. 9.14