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Ch. 07

Course 7: Health Insurance Providers

This course will serve as a guide about health insurance providers and what you need to do as a medical billing specialist to file claims with them. You’ll also explore some of the types of health insurance plans you can expect to encounter as you process claims.

Health insurance providers come in many forms, but they can be reduced to two major groups: privately owned companies and programs operated by the government. As a medical billing specialist, you should be well versed in the differences between these providers and the plans that they offer.

Government Insurance Providers

The federal and state governments fund and operate several government insurance providers. Many of the government-operated insurance programs are specifically designed to cover a certain part of the population, such as veterans, the elderly, or low-income persons. Below are some of the government insurance providers that you will encounter when filing claims:

  • Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA): This government program covers certain healthcare costs for dependents of veterans who are permanently disabled due to injuries or conditions suffered during service, as well as dependents of veterans who died during service.
  • Consolidated Omnibus Recollection Act (COBRA): COBRA was a law passed by the federal government to serve as a safety net for individuals recently terminated by a company that provided health insurance. Under COBRA, terminated employees and their dependents can still receive health insurance from their previous company’s healthcare plan for up 18 months, and up to 36 months if they are disabled.
  • Medicare: Medicare is a program started by the federal government to provide healthcare coverage options for persons over 65 years old, as well as younger people with disabilities. The Medicare program itself is broken up into several parts, each of which provides insurance that covers certain aspects of healthcare (such as prescription drug coverage) to eligible individuals.
  • Medicaid: Medicaid is a program started by the federal government to offer healthcare coverage to low-income individuals. The costs of the Medicaid program are divided between the state and federal governments, a complication you will need to be aware of as you file claims. Note that all states have their own version of a Medicaid program, though they all must meet minimum requirements of care as established by the federal government.
  • Children’s Health Insurance Program (CHIP): This program provides health insurance to children of families who can’t afford private coverage and whose incomes are too high to receive Medicaid coverage. CHIP is jointly funded by state and federal governments just like Medicaid, and each state has a different interpretation of its program.
  • TRICARE: This healthcare program provides insurance to active-service members and their families, retired military personnel and their families, and the survivors of deceased service members. TRICARE (formerly known as Civilian Health and Medical Program of the Uniformed Services, or CHAMPUS) is funded and run by the federal government.
  • Worker’s Compensation Insurance: This type of health insurance is available for employees who suffer injuries or illnesses while performing their regular work duties. Worker’s compensation insurance is required by law in most states.

There are other federal and state insurance programs available to those who are eligible, but those mentioned above make up the majority that you will encounter as a medical billing specialist. Check out the federal government’s resource for more information about government insurance providers.

Commercial Insurance Providers

Commercial insurance providers are private insurance companies that contract with businesses or individuals to help cover healthcare costs according to criteria set forth in a formal health plan. Private health insurance plans typically require that the company or the individual receiving coverage pay a predetermined deductible or a monthly premium before benefits take effect.

Commercial health insurance providers offer plans that can be sold individually or collectively as a group plan. Plans offered by commercial insurance providers range in price and in the scope of services covered. Coverage from commercial providers depends on a number of factors, including a patient’s personal medical history, family medical history, and the amount of money the patient (or the sponsoring employer) is willing to spend on premiums, co-pays, and deductibles.

Most Americans who have health insurance have plans with private insurers. According to a recent survey by the Center for Disease Control, nearly 64.2% of insured Americans have private health insurance. Commercial insurance providers include companies like Aetna, United Health Care, and Prudential.

Key Differences Between Government and Commercial Insurance Providers

It is important to keep in mind that commercial insurance providers are for-profit institutions whose success depends on the premiums that they receive from insured businesses and individuals. As such, commercial insurance providers are likely to provide coverage for people who have an uneventful medical history rather than someone with a long history of medical problems. Commercial insurance providers make money by avoiding as much risk as possible in their health plans. If a private insurance company mostly covers people who need constant medical attention for chronic illnesses or conditions, that company would be in danger of offsetting the revenue generated by its premiums.

Government insurance providers are a reliable alternative for certain people denied coverage by commercial insurance providers. Because government insurance providers aren’t interested in generating a profit from premiums, they can afford to cover “riskier” people.

About Blue Cross Blue Shield

Blue Cross Blue Shield is an exception to typical health insurance providers because it is neither a for-profit privately owned company nor a program run by the federal government. Blue Cross Blue Shield is a federation of 38 independent health insurance companies across the U.S. that covers over 100 million Americans. Blue Cross Blue Shield has partnered with a number of government insurance providers like Medicare to help process claims associated with Parts A and B of Medicare coverage. Blue Cross Blue Shield companies also enroll in the Federal Employee Program (FEP), providing private health insurance to over 5 million federal employees. As a medical billing specialist, you should become more familiar with Blue Cross Blue Shield’s role in the American healthcare system.

Types of Health Insurance Coverage

There are a number of ways in which health insurance carriers provide coverage. Health insurance coverage can be quite complex, as it involves the coordination between a healthcare provider, the health insurance provider, and the actual person receiving care. As a medical billing specialist, you will need to be especially aware of the role that each party plays in these coverage plans as you process claims. Some of the methods of coverage include managed care, indemnity policies, and high-deductible plans.

Managed care

Managed care is the most common form of health insurance coverage. Managed care coverage is administered by organizations that contract with healthcare providers to create an active network of participating providers. The three main components of managed care are preferred provider organizations, health maintenance organizations, and point of service plans.

  • Preferred provider organizations (PPOs): PPOs operate off a list of preferred healthcare providers that patients can choose from for their coverage. Patients save the most money on their healthcare plans by selecting the preferred providers affiliated with a PPO. Providers on the preferred list are considered “in-network,” while those not on the preferred list are “out-of-network” providers. Sometimes an insurance carrier will not cover a person who receives treatment from an out-of-network provider, though PPOs tend to have more coverage options for out-of-network providers than HMOs.
  • Health maintenance organizations (HMOs): HMOs are groups of physicians, medical facilities, and healthcare services that work to keep patients under the care of providers within their network. Healthcare providers in HMOs coordinate a patient’s healthcare decisions and suggest a suitable hospital for urgent care. Because of the close-knit healthcare community in HMOs, members enrolled with these organizations tend to have limited provider options. The upside to HMO membership is that patients tend to pay less in deductibles and receive higher quality medical care coverage at facilities within the HMO network.
  • Point-of-service Plans: Point-of-service plans form a hybrid between PPOs and HMOs. As with HMOs, point-of-service plans allow you to select physicians and services from within a dedicated network of providers. Unlike HMOs, you have the option of coverage for care received from out-of-network providers. Note that patients in point-of-service plans have to get a referral before being covered by out-of-network providers, and they likely have to pay a deductible. Some HMOs offer point-of-service plans to people who want more options with their healthcare coverage.

Indemnity policies

Indemnity policies, or fee-for-service insurance, allows people the freedom to choose whatever healthcare provider they want and receive some form of coverage for these services. Patients covered by an indemnity policy can go to any healthcare provider and receive care, even when traveling across state lines.

The caveat to indemnity policies is that patients are typically required to pay a deductible or out-of-pocket fee before they start to receive coverage. This means patients with an indemnity policy can able to receive emergency room care at a hospital of their choosing, but they might have to pay a sizable deductible (ranging from a few hundred to several thousand dollars) before insurance carriers will pay for their care. Many indemnity policies allow patients to choose how much they pay for their deductible, and that amount is commensurate with the level of coverage they receive from insurance carriers.

High-deductible plans

High-deductible plans have low premiums and high deductibles, which make them enticing to those who don’t want to pay for health insurance up front. High-deductible plans may be a preferable coverage option for people with a clean bill of health who don’t anticipate requiring any medical services in the near future. Of course, when those with a high-deductible plan do require care, they are responsible for covering the cost of their care until they reach the predetermined deductible. However, people with high-deductible plans don’t have to pay the deductible before receiving coverage for preventive care services. Some people opt to enroll in health savings accounts or health reimbursement arrangements to help mitigate the potential costs of high-deductible plans:

  • Health savings account (HSA): HSAs allow people to pay for certain medical expenses (including expenses incurred before meeting a deductible) using nontaxed funds. Patients build their savings in an HSA by contributing a portion of their paycheck or other earnings on a regular basis. Funds that remain at the end of the year can often be rolled over to the next year. Furthermore, people with an HSA keep their funds once they leave a job and can continue contributing to their HSA with their next employer. However, there is a limit to the amount of earnings that can be contributed to an HSA.
  • Health reimbursement arrangement (HRA): HRAs are different from HSAs in that employers, not the employees, contribute funds to the account that is used to offset healthcare costs. Employees lose their HRA funds if they leave or are terminated from a company, and any funds unused by the end of the year are no longer accessible in the following year.

Wrapping Up Course 7

Health insurance providers are either government, commercial, or more rarely, a combination of the two like Blue Cross Blue Shield. Commercial providers are for-profit organizations who make money from policyholders, while government providers supply health insurance to citizens who are denied commercial insurance policies. Gaining a thorough understanding of how health insurance works is essential to becoming an efficient medical biller and coder.

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