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Managed Care Update. Anthony N. Akosa, M.D. Types of Health Plans. Medicare : managed by Centers for Medicare & Medicaid Services (CMS). Products offered include traditional, Medicare Advantage (Part C) & Part D. Medicaid : administered by the states.

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Managed care update

Managed Care Update

Anthony N. Akosa, M.D.

Types of health plans
Types of Health Plans

  • Medicare: managed by Centers for Medicare & Medicaid Services (CMS). Products offered include traditional, Medicare Advantage (Part C) & Part D.

  • Medicaid: administered by the states.

  • Commercial: offered by managed care organizations (MCO) - private (MPlan, ADVANTAGE) and publicly traded (Anthem, Aetna).

Managed care organizations
Managed Care Organizations

Types of managed care plans

  • HMO: Oldest form, least flexible, lowest premiums. Must choose PCP to coordinate care.

  • PPO: Less restrictive. Services offered on a FFS basis. Financial incentive to stay within PPO network.

  • POS: A blend of HMO and PPO models. Selects PCP but can self refer, use OON providers.

Common terminology
Common Terminology

  • Co-payment: a specified flat amount paid for a specific service e.g. $10 for PCP office visits.

  • Coinsurance: % of the charge the plan and the patient share.

  • Out-of-Pocket Maximum: the maximum amount of coinsurance you will pay before the plan begins to cover 100% of the charges.

Common terminology1
Common Terminology

  • Deductible: amount required to be paid by the insured before benefits become payable.

  • Spend-down: The medical expense relative to income that qualifies an individual for Medicaid. Similar to deductible as the amount is the member’s responsibility.

Commercial plan market share
Commercial Plan: Market Share

  • PPO – 60%

  • HMO – 20%

  • POS - 13%

  • HDHP – 4%

  • Others – 3%

    About 155 million Americans are covered by employer-sponsored health insurance

    Source: Employer Health Benefits 2006 Annual Survey


  • Of the 40 million Medicare beneficiaries, 89% were covered by traditional FFS plans in 2003.

  • The Medicare managed care product (Medicare Advantage) accounts for the remaining 11%.

  • Medicare Advantage offers additional benefits like prescription drugs, routine physicals, hearing aids, etc.


  • Premium: Most beneficiaries do not pay Part A (hospital insurance). Part B (medical insurance) monthly premium for 2007 is $93.50.

  • Deductible: $131 annually for Part B. Beneficiaries pay 20% of Medicare approved amount for services after the deductible is met.

Medicare drug benefit
Medicare Drug Benefit

  • The voluntary outpatient prescription drug benefit (Part D) began January 1, 2006.

  • Standard Benefit: Estimated monthly premium of $37; deductible of $265; up to an initial coverage limit of $2,400.

  • Beneficiary pays 100% during coverage gap (“donut hole”).

  • Catastrophic coverage kicks in above stop-loss of $3,850.


  • In addition to the Medicare part B premium, Medicare Advantage beneficiaries have to also pay a monthly premium to the MCO.

  • Medicare Advantage premiums are lower than the Medigap (supplemental insurance) plans.

  • Medigap is sold by private insurers to fill the “gaps” in the original Medicare plan.


  • Indiana Health Coverage Programs (IHCP)

  • Hoosier Healthwise Risk Based Managed Care (RBMC) and Medicaid Select.

  • Approximately 535,000 Hoosiers.

  • Hoosier Healthwise was created in 1994 for low income Hoosiers with children, pregnant women and children.


  • MDwise is the only locally owned and operated, non-profit Hoosier Healthwise plan in the state.

  • The other MCOs are Anthem and Managed Health Services (MHS).

  • Medicaid Select (now called Care Select ) was created in Jan 2003 to take care of the aged (65 and over), blind and disabled.

Medicaid reimbursement
Medicaid Reimbursement

  • RBMC – MCOs paid capitated monthly premiums.

  • Medicaid Select – Fee-for-service and $4 PMPM administrative fee to providers.

  • Administration fee to be increased to $15 PMPM in Nov 2007 when Care Select program is phased- in.

  • Additional $40 twice a year for communication.

High deductible health plans hdhp
High Deductible Health Plans (HDHP)

  • Features higher annual deductible than other traditional health plans.

  • Maximum limit of the sum of annual deductible and out-of-pocket medical expenses for covered expenses.

  • Usually includes an HSA (Health Savings Account) or an HRA (Health Reimbursement Account).

Hsa health savings account
HSA (Health Savings Account)

  • A tax-exempt trust or custodial account created exclusively to pay for qualified medical expenses of the employee, spouse or dependents.

  • Employer usually contributes at least $500 for individuals or $1,000 for families.

  • Maximum contribution for 2007 as determined by IRS is $2,850 for individuals and $5,650 for families.

Hdhp enrollment
HDHP Enrollment

  • 2005 – 1 million members

  • 2006 - 3.2 million members

  • 1/2007 – 4.5 million members

    Source: America’s Health Insurance Plans (AHIP)