When being a bad patient is good.

There are some scary statistics out there:

• When you see the doctor, the diagnosis will be wrong as many as one out of four times, according to a report by the Agency for Healthcare Research and Quality.

• One out of 14 times you have an abnormal test result, doctors will fail to let you know, according to Archives of Internal Medicine research out last year.

• In 2006 the Institute of Medicine reported that 1.5 million Americans are sickened, injured, or killed each year by medication errors.

It is because of stats like these that it pays to be a 'bad' patient.  One who speaks up and asks questions.  If your doctor says you need a certain procedure, do not be afraid to ask why. Get involved in your decisions about your medical care including prescriptions being prescribed and diagnostic tests being ordered, all which are increasing the costs of health care.

Be an empowered patient. Share in the decision model when it comes to your health. The reality is that a significant number of medical errors can be prevented or even eliminated by taking a proactive role in your health care. 

San Diego Reader | That's ok, sir, I am authorized to offer a 50% discount

An excellent, article appeared in the San Diego Reader by Chad Deal on Wednesday, July 7, 2010

Key points I feel everyone needs to be aware of:

1. When choosing a hospital, get a quote on your visit from the hospital’s billing department
2. Research fair prices ahead of time. www.healthcarebluebook.com
3. Ask what the room price includes, bring your own tissues, prescription drugs, toothbrush and towels
4. Keep a detailed log of every test, treatment, and medication you are given when in the hospital, or ask a family member or friend to do it.
5. When you get the bill, confirm admission and discharge dates.
6. Be aware of charges for items you did not receive (see #4) and double charges on your hospital bill. If you’re not sure, ask.

How can insurance dictate your medication?

Overview
A common feature of all insurance plans whether it's Medicare, a group or an individual policy is to regulate the prescription drugs prescribed for its members. This is done in four ways: requiring a prior authorization, step therapy, maximum dispensing limits or excluding certain medications from its prescription drug list.

Prior Authorization

Some drugs must undergo a criteria-based approval process by your insurance carrier prior to being covered under your health insurance plan. The approval process varies by insurance provider.

Step Therapy

Step therapy protocols require you to utilize medications commonly considered first-line medications prior to being able to using a medication considered second line or third line. You receive benefits for drugs subject to step therapy only after trying alternative medications first.

Prescription Drug List (PDL)

Your insurance carrier creates a prescription drug list (PDL) each year which dictates which medications are or are not covered by your insurance plan. The list can also change during the year depending on your policy guidelines.

Maximum Dispensing Limits

Maximum dispensing limits are based on the product information approved by the Federal Drug Administration (FDA) and recommendations from the drug's manufacturer. Your carrier limits the quantity of medication you are able to receive from your pharmacy at one time.

Restrictions

According to Humana, a health insurance company, the cost of a drug drops in price between 30 percent to 80 percent once the patent expires and it is available as in a generic form. Step therapy, prior authorization and PDL are ways to help control health care costs with maximum dispensing limits in place as a safety measure.

Considerations

You may not like the measures implemented by your insurance company to restrict dispensing specific medications; you can however get an exception made to each of the restrictions. The procedure for doing this will vary depending on your insurance carrier.

Report Medical Insurance Fraud

Medical insurance fraud is committed in a number of ways. For instance, when a consumer files a claim for services or prescription drug he never received or a provider bills for a service it never actually provided, a crime has been committed. Anytime a consumer or provider knowingly presents to her insurance company false information with the intent of receiving health care benefits, medical insurance fraud has occurred. According to Cornell University Law School, "statistics now show that 10 cents of every dollar spent on health care goes toward paying for fraudulent health care claims." Such unscrupulous acts need to be reported.

Step 1

Find the insurance fraud bureau for your state. This can be located on the Coalition Against Insurance Fraud website using the link in Resources. If your state does not have an insurance fraud bureau, search for your state's department of insurance website.

Step 2

Call the hotline number listed for your state insurance fraud bureau or the consumer helpline found on your state's department of insurance website. You will want to provide the agency with the name or any details and information you have about the medical insurance fraud situation.

Step 3

Contact the insurance company you believe the fraudulent activity occurred against. You can locate a company's phone number by finding its corporate homepage on the Internet.

Step 4

Report Medicare or Medicaid fraud by calling the Department of Health and Human Services' Office of Inspector General Fraud Hotline. You can either call 800-447-8477 or email HHSTips@oig.hhs.gov. You will need to provide information such as who committed the fraud and where and how it happened. Plus, according to Medicare, "your identity will be protected to the maximum extent allowed by the law."

 

Step 5

Voice your concerns to the National Insurance Crime Bureau (NICB). You can submit the information via the link in Resources or call the bureau's national hotline at 800-835-6422. If you are using a cell phone, you can send a text by typing the word "FRAUD" and then the fraudulent information you are reporting in the message section. The text is sent to TIP411 (847411). You are allowed to keep your identity anonymous when reporting fraudulent information.

Do you have a medical proxy appointed?

A medical proxy is also known as a health-care proxy or medical power of attorney. It is a legal agreement where you appoint someone to make decisions on your behalf if you become unable to make a medical decision for yourself.

Why Do I Need One?

There are two situations when a medical proxy is needed: when you are temporarily unable to make a health-care decision or if you are permanently unable to make your own decision. For instance, if you were having surgery and something happened while under anesthesia where a choice had to be made, without a medical proxy in place, the surgery would have to stop. You would have to come out from under the anesthesia and then be asked your preference and go through the surgery preparation procedures all over again.

Who Should I Appoint?

It may be difficult to decide whom you should choose to make medical decisions on your behalf. When making your choice, consider if the person will be able to make tough decisions, based on your wishes, when faced with a situation and whether the person can understand the medical information regarding your treatment.

How Do I Appoint Someone?

A medical proxy is a legal document and the requirements vary by state. You can obtain a proxy form from an attorney or some hospitals. Once the form is completed, you will want to share a copy with your primary physician as well as provide the person whom you appointed a copy. You can also register your medical proxy with an online database, OnlineMedicalRegistries.com, which, according to the site, allows “accredited, registered hospitals and healthcare providers access, if needed.”

Health Insurance Claims Processing Issues

Insurance claims are processed in two ways: electronically or via a universal paper claim form. Regardless of which method is used, claims can be delayed or denied for several reasons. If you are aware of a few common billing errors, you might be able to avoid or resolve some issues with processing insurance claims.

History

A national universal claim form was approved by the American Medical Association in April 1975. This universal form allows for a standard format and quicker claims processing by insurance carriers. Before 1990, all claims were processed manually; however, as technology advanced, equipment was developed to optically scan and auto-adjudicate, or digitally process, universal claim forms.

Process

A paper insurance claim form is filled out and mailed or faxed to your insurance company. The insurance company then scans the document and converts it to an electronic format. Alternately, an electronic claim is submitted directly from your physician’s computer to your insurance carrier’s computer as a digital file. This is received in the necessary electronic format for processing. Regardless of how the form is submitted, the digital data ultimately is run through a software program designed to review the claim for all the required information, and the program either approves it or denies it.

Human Error

Human error can cause the processing software to reject an otherwise appropriate claim. For example, if you hurt your finger playing baseball and go to the emergency room, your claim should have a diagnosis code for a finger injury. However, if the claim is submitted with a diagnosis code for a finger injury and a procedure code for a chest X-ray (instead of the code for a finger X-ray), the system won't process the claim because a chest X-ray is not an appropriate procedure for an injured finger.

Other Issues

Each insurance carrier allows a specific amount of time after your date of service for a provider to submit a claim, and claims submitted outside this time frame are denied. Claims also can be denied when the specific information required is missing, recorded incorrectly or illegible. This information can include the patient's name, member identification number, date of birth, diagnosis code, procedure codes, date of service, place of service, amount charged, physician’s identification numbers and physician’s signature.

Solution

After each claim is processed, an explanation of benefits (EOB) is sent to you from your insurance carrier. The EOB details how your claim was processed, how much you owe your provider and how much the insurer paid your provider. If a portion was not covered, the EOB will list a reason code, giving you an explanation. If you do not understand what the code means or you believe there is an error, call your insurance company and ask for assistance. Your insurance company can tell you the reason the claim was not paid. If it is something your provider needs to correct, your insurance carrier will contact the provider regarding the mistake.

COBRA Insurance Requirements

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) created a Federal Law requiring most employers with more than 20 employees who offer group health care coverage to give their employees, spouse and their dependents the option to continue their health care coverage when a loss in coverage occurs. COBRA coverage is the same coverage the employee had when they were actively working for the employer. However, the employee is responsible for 100 percent of the premiums, plus possibly a two percent administration fee.

Qualified beneficiary

You, the employee, your spouse and any dependents who were covered on your health insurance plan the day before you lost health insurance coverage are considered a qualified beneficiary and eligible for COBRA coverage.

Qualifying event

Quitting your place of employment, being let go from your place of employment or having your hours reduced so you are no longer considered a full-time employee are all considered qualifying events. A qualifying event makes you, your spouse and your dependents eligible for COBRA coverage. Additional qualified events for your spouse and dependents include if you pass away, get divorced or have a child reach the maximum age eligible for coverage on your plan.

General notice

When a qualifying event occurs and you lose your insurance coverage, COBRA law requires your employer to notify you of the COBRA law and your potential eligibility for COBRA. The notice sent to advise you of this information is called the general notice. The general notice must be sent to you, your spouse and your dependents within 90 days of the date your coverage ends.

Qualifying event election notice

The qualifying event election notice informs you of your right to continue your health insurance under COBRA. The notice must be sent out within 44 days of your employer being made aware of the qualifying event.

Time frames

Within 60 days after the qualified event notice is mailed or after your coverage ends, whichever is later, you have 60 days to decide whether you want to elect COBRA coverage. If you elect coverage, you have another 45 days to pay all the retroactive premiums due. Going forward, you will then have a 30 day grace period to pay your monthly COBRA premiums.

Embedded vs. Non-Embedded Deductible

Overview:

Health insurance policies typically contain a deductible. A deductible is the amount of money you must pay for your medical expenses before your insurance will cover the costs of your medical care: hospital stays, emergency room visits, doctors visits etc.  Your deductible is met on an annual basis and the annual time frame is either based on the plan year or a calendar year.  There are two different types of deductibles: traditional also called embedded or an aggregate deductible also known as non-embedded. You may have some benefits (ie. preventative care) which the deductible does not have to be satisfied first before your insurance will pay the costs of your visit.

Embedded Deductible

If you are on a family medical plan with an embedded deductible, your plan contains two components, an individual deductible and a family deductible. Having two components to the deductible allows for each member of your family the opportunity to have your insurance policy cover their medical bills prior to the entire dollar amount of the family deductible being met. The individual deductible is embedded in the family deductible.

For example, if you, your wife and daughter are on a family plan with a $3000 family embedded deductible, and the individual deductible is $1000, if your daughter incurs $1000 in medical bills, her deductible is met and any subsequent medical bills for your daughter that year, your insurance will help pay even though the family deductible of $3000 has not been met yet.

Non-embedded

On the other hand, if your insurance policy contains a non-embedded family deductible. There is not an individual deductible embedded in the family deductible.In this situation, before your insurance helps you pay for any of your medical bills the entire amount of the deductible must be met first.It can be met by one family member or a combination of family members however there are no benefits until expenses equaling the deductible amount have been incurred.

Embedded warning

There are numerous insurance plan types and each type can have either an embedded or non-embedded deductible. There is one plan type called the high deductible health plan (HDHP), where a minimum annual deductible amount is required by the Internal Revenue Service (IRS).Members on a HDHP are allowed to open a tax free health savings account (HSA), hence the IRS involvement in the plan design.

If your HDHP family plan has an embedded deductible and one person in your family meets their individual deductible amount, but it is lower than the minimum annual family deductible required, then the plan does not qualify as an HDHP and you are not eligible for the tax savings.

For example, if the family annual deductible required by the IRS is $3500, and the plan has an embedded deductible allowing an individual deductible of $1500, the plan does not qualify as a HDHP because the deductible can not be less than the deductible required ($3500) for a family plan.

Having a non-embedded deductible, or no individual deductible within the family deductible would ensure the correct minimum annual deductible amount is met for income tax purposes.

How do I know?
There are 3 ways you may be able to find out what type of deductible your insurance plan has.The first is to obtain a copy of your insurance benefit book and look at the definition section. The deductible definition may detail embedded vs. non-embedded.>If the booklet is not available, and you are on an insurance plan through your employer, you could ask your human resource representative which type of deductible your plan has. Or, if they do not know, or you are not on a group plan, call the member services phone number located on your id card and ask a representative at your insurance company for the details.

Next Blog: Government Health Programs and Social Insurance

More Alphabet Soup - - EOB what is it & why do I need one?

Explanation of Benefits (EOB) is the document you receive from your insurance provider for each medical visit. It explains what services and procedures were performed, and details the dollars paid by your health insurance company towards your medical claim vs. how much you, the patient must pay.

An EOB is not a bill but it shows information that could save you money (more on this when we go over an EOB).

When you visit a medical provider, the office staff uses standard CPT medical codes which are codes updated and distributed by the American Medical Association, to note every service you receive. Then the doctor’s office staff sends your insurance carrier an itemized bill containing service codes and the charges for the service. At that point your medical bill becomes a request for payment based on your insurance policy benefits.

Your insurance provider assigns a unique number to the claim and sends it to their service center for processing. The majority of claims are processed automatically also known as "auto-adjudicated". If there is something unusual about the claim, like a missing code or charge, the claim is “pended” and a processing specialist takes a closer look. The major carriers (UHC, Humana, BCBS) each process over 22 million claims a year.

Definitions 

Standard Medical Codes are the procedural and diagnosis codes published by the American Medical Association Deductions. The purpose of the coding system is to provide uniform language that describes medical, surgical and diagnostic services.

CPT code (current procedural terminology) is a five digit numeric code that is used to describe medical, surgical, radiology, laboratory, anesthesiology etc. There are approximately 7800 CPT codes. 

ICD-9 code (International Classification of Disease, 9th revision)is a coding system used to code signs, symptoms, injuries, diseases and conditions. 

ICD -9 codes are diagnostic, CPT codes are procedural.  The relationship between the two is critical.  The ICD-9 code is the diagnosis that supports the medical necessity of the procedure/CPT code. .

Learn to read your EOB

Charge:  Amount the provider billed for the service 

Excluded amount: The amount not eligible for benefits under your plan.  (Refer to excluded amount remarks for details) 

Provider Discount: If your provider is a participating provider, your insurance company has an agreement with your provider to pay a certain amount for a service, this column shows the reduced amount based on that agreement.  

 

Deductible: the dollar amount you are responsible for paying before your insurance starts to pay 

Copay: the amount you are expected to pay at the time of service

Coinsurance: The percentage of costs you pay after you’ve met the deductible. The plan always pays a higher percentage when you use in-network providers. 

Benefit Amount: Amount insurance company will pay to your provider (within 7-10 days of issuing the EOB)

 

Estimated Member Responsibility: The amount you owe the provider.  This amount includes copayments, deductible and coinsurance and excluded charges if applicable. (ie. OON provider, experimental procedures) 

Amount paid by Health Insurance Company: the benefit amount minus what other insurance paid (if applicable)

The second page of your EOB generally contains a section showing notes & explanations. Such as: 

Service codes/descriptions—short description of the service you received 

Remark codes/descriptions—if part of your providers charge was excluded, this section explains why.  If this section says “letter to follow”, your insurance company sent an Explanation to your provider and you may not receive a copy 

Benefit Information—this section provides your accumulation information for your plan. 

Special Messages: general information   

Why do I need my EOB? You should use the information on your EOB to coordinate your payments to your providers. If a provider charged you more than your EOB states you owe....a flag should go up telling you something is not correct.  If the provider is in the network for the insurance company you use; your EOB tells you the maximum amount you are liable for with the provider.  If they are charging you more, or you paid more than your EOB shows you should have, call the billing office to see if you can get additional information regarding what is going on.  If you are not successful in resolving the issue, or do not feel the issue was handled correctly, you may want to obtain the services of a billing advocate.

Here's a link to another very detailed look at reading an EOB from BlueCross BlueShield http://www.bcbst.com/members/eob/eob.pdf

8 out of 10 medical bills contain errors not in the patient's favor. Do not simply pay what the providers bill says you owe.  Make sure to review, or have someone review them for you; comparing your bills with the corresponding EOB first..........it just may save you money. Next  Blog: Embedded vs. Non-embedded deductible

FSA, HRA, HSA.....LMNOP what are they talking about?!

Healthcare alone is confusing much less throw in some more acronyms into the soup. What exactly do FSA, HSA, and HRA mean in the healthcare world?

FSA=Flexible Spending Account

HRA=Healthcare Reimbursement Account

HSA=Healthcare Savings Account

WHAT IS A HEALTHCARE FLEXIBLE SPENDING ACCOUNT (FSA)?

A healthcare FSA is an account that can be used to pay for medical expenses not covered by your insurance. It is a reimbursement account offered by employers that allows you to set money aside from your paycheck before taxes and it is put into an account by your employer, similar to a checking account.

The funds are not portable which means the money can not be taken with you if you should switch jobs or quit (the money is no longer yours) and the money does not accrue interest.  FSA's come with one important rule: if you don't use the money with in the plan year, you will lose it. The money in your FSA account can be spent on health care expenses that are not covered by your health insurance, such as:

• Copay and deductibles (for doctor office visits)
• Eyeglasses, contact lenses and LASIK surgery
• Chiropractic treatment and alternative therapies
• Dental work and orthodontia
• Some over-the-counter medicines such as antacids and cold medicines

IRS publication 502 (http://www.irs.gov/pub/irs-pdf/p502.pdf) is where to locate the entire list of expenses which qualify as a health care expense.

Why would I want to put money into a healthcare FSA?

The advantage of putting money into an healthcare FSA is that when you use the money to pay for qualified medical expenses, you are spending pre-tax dollars, so you end up paying fewer taxes on your salary and end up having more to spend. Plus, from the first day of your company’s benefit plan year (most often 1/1) you can spend the entire amount of money you have elected to put away. 

For instance, let’s say you signed up to put $1200 into an FSA account over the year or $100/month. When the new plan year started, you could go to the doctor that very same day and spend $1200 (if you needed too) even though the entire $1200 had not been taken out of your paycheck yet. It in a sense is a way to “loan” yourself money and then during the year pay the loan back by having money from each paycheck going towards the $1200 you already spent.

Please note: If you have a high deductible health plan that is eligible for a Health Savings Account (HSA), you may have what is known as a Limited-Purpose FSA (LFSA) but you are not allowed to have an FSA. Please see below for HSA information and more about LFSAs.

WHAT IS AN HEALTH REIMBURSEMENT ACCOUNT (HRA)

A Health Reimbursement Arrangement (HRA) allows your employer to set aside money to help you pay for out-of-pocket healthcare expenses. You don't make any contributions to an HRA, and you don't pay taxes on the HRA money you receive.

Each employer decides what type of expenses will be eligible for reimbursement. This may include deductibles, co-pays, prescription medications, dental services, and health-related expenses that may not be covered under the health care plan. Some HRAs even cover over-the-counter medications.

If you don't use all of the money in your HRA during the year, some HRAs are designed to allow you to carry over the remaining HRA dollars to the next year. Again, you should check with your employer to see how unused HRA dollars are treated in your plan.

Unlike the limitation with an FSA account and a HSA account, you can have an HRA and an FSA at the same time. However, if a particular medical expense is covered by both the FSA and the HRA, the money in the HRA account must be used first before any money can be used from the FSA.

WHAT IS AN HEALTH SAVINGS ACCOUNT (HSA)?

A Health Savings Account (HSA) is the newest form of medical savings accounts.  It was first made available in January 2004. If you are enrolled in a qualifying high deductible health plan (check with your employer to find out), you can set aside pre-tax money in an HSA for healthcare costs (as defined in IRS publication 502), the same as an FSA.

A health savings account is a tax free investment account you open through a bank and is allowed only when you are enrolled in a high deductible health plan (HDHP). {See blog 2/23/10 Types of Medical Insurance Plans for HDHP information.) A HSA earns interest like a regular savings account, and the money can also be invested in stocks, bonds, mutual funds, and certificates of deposit.

Unlike the HRAs which are owned by the employer, HSAs are owned by the individual employee and offer the most advantages to the individual. Both employer and employee can make contributions to the HSA account, there is no minimum contribution required, contributions by an employer are not taxable to the employee, and employee contributions may be made on a pre-tax basis. There is a maximum combined amount (total money put in by employer + employee) allowed to be put into an HSA account each year, as determined by the IRS. For 2010, the amount is $3050 for an individual, or $6150 for a family

If you participate in a qualified HDHP (check with your HR department to see if your plan is a qualified HDHP.) you can contribute to an HSA from your paycheck or via tax-deductible payments. When you take money out of your account, it's tax-free as long as you use it for eligible healthcare expenses. Individuals under age 65 who use their accounts for non-medical expenses must pay income tax and a 10% penalty on the amount withdrawn.

Also, unlike the money you set aside in a FSA, the money you put into a HSA receives interest and is portable (the money is yours to keep if you change jobs or quit). Plus, if you do not use all of the money in your account during the year, it carries over to the next year. You never lose the money you elect to put into an HSA account. An HSA account always goes with you, so you can continue to use the money to pay for healthcare expenses in the future—even during retirement—on a pre-tax basis.

Why would I want to put money into a HSA?

If you use your HSA to pay for healthcare expenses throughout the year, the advantage is that you're spending pre-tax dollars, so you end up paying fewer taxes on your salary and having more money to spend. (However, unlike the FSA account, the money is NOT able to be used until it is actually taken from your paycheck and deposited into your HSA account.)

In addition to the tax savings advantage for putting money into an HSA the money deposited also grows interest free and you never pay interest on it as long as you use the money for medical related expenses

A wonderful resource for all you ever wanted to know and more about HSA accounts can be found at: http://www.treasury.gov/offices/public-affairs/hsa/

Finally, your employer may also offer a Limited-Purpose Flexible Spending Account (LFSA) to use along with your HSA.

A Limited-Purpose Flexible Spending Account (LFSA) is a reimbursement account available through many employers that offer a qualified high deductible health plan (HDHP) where the participants are eligible for a Health Savings Account (HSA). It usually allows you to set aside money from your paycheck for out-of-pocket costs for preventive care, dental, and vision before taxes are taken out. Because LFSA plans vary by employer, it is important that you talk with your LFSA administrator or your Human Resource department to find out what expenses are eligible under your LFSA.

The Limited-Purpose FSA is similar to a "traditional" Healthcare FSA, but it is for people who are enrolled in an HSA-eligible High Deductible Health Plan (HDHP). It works the same way, except the Limited-Purpose FSA usually allows you to pay for eligible out-of-pocket preventive care, dental, and vision expenses only.

Next blog: More alphabet soup, EOB, what is it and how to read one.

Generic vs. Brand Medication

What is a generic drug? A generic drug is a drug product that has the same active ingredients, strength and dosage form as the brand-name counterpart.  It is sold under the chemical or scientific name for the drug instead of the manufacturer's brand name.  Brand name drugs have a twenty-year patent life.  Once that patent expires, other manufacturers are free to make the drug in a generic form.  The cost of a  drug drops between 30-80% once it becomes available as a generic.

Are there differences between a brand-name drug and its generic alternative? Yes.

Generic drugs marketed in the U.S. may differ from their brand-name counterparts in such things as shape, packaging fillers (including colors, flavors, preservatives), expiration time, and, within certain limits, labeling.  However, the federal Food and Drug Administration (FDA) requires that all drugs, both brand-name and generic drugs marketed in the United States, meet the same requirements for quality, strength, purity and potency.  The FDA will only approve generic drugs that have the same active ingredients and works the same in the body as the brand-name counterparts.

Are generics available for all brand-name drugs? No, only after a brand-name drug loses it's patent can other manufactures produce the generic form.  Keep in mind that even after a patent expires, some drugs may not be available in generic form, if no manufacturer makes them.  Today about 1/2 or 8730 of the 11,487 drugs listed in the FDA's Orange Book have generic counterparts. (source FDA, MedAd news)

Do generic drugs take longer to work? No, when a manufacturer wants to produce a drug generically, that manufacturer must provide evidence to the FDA that it works in the body just like the brand-name drug and within the same amount of time as the brand-name drug. 

Are generic drugs as safe as the brand-name drugs? Yes. All medications have risk. The manufacturer of the generic drug must prove to the FDA that the generic drug is as safe as the brand-name drug.  Only a consumer in consultation with their physician can determine if those risks outweigh the benefits in their specific situation. 

Are generic drugs made in the same type of facilities as the brand-name drugs? Yes. Generic manufacturers must meet the same exact standards as brand-name manufacturers. Brand-name manufacturers account for an estimated 50% of generic drug production.  They frequently make copies of their own or other brand-name drugs but sell them without the brand-name designation.  The FDA makes over 3,500 inspections a year to ensure the these standards are met in both brand-name and generic manufacturing facilities. 

Why should I use a generic drug? Generic drugs represent real value.  Generic drugs usually cost from 30-80% less than their brand-name counterparts and, since the FDA is very strict about approving generics, you can be assured that the generic drug you receive is a safe and effective alternative to the brand-name drug.  

Let me give you an example of the savings and power of generics.  Let's say a member's prescription drug plan has copays of $10, $35 & $50 depending on the classification (tier) of the drug as determined by the insurance carrier.  One member of a health insurance plan pays a $35 copayment a month for a 30 day supply of brand name Zocor. Other members use the generic version, simvastatin and pays a $10 copay. Over a full year, that amounts to a $300 savings, just by switching one prescription. 

Also, premiums for an insurance policy are determined based on the dollar amount of claims submitted to your insurance company.  Although your copay is only $35, the drug may cost say $180, so the additional $145 is billed to your insurance provider.  If all members of the plan make similar choices (insisting on a brand-name vs. generic), just think of the true cost to the insurance carrier.  

How do I get a generic drug? Start with your doctor or pharmacist. Questions you should ask include: 

• is there a generic version of my drug available?
• are generics right for me? 
• are there any risks I should know about before I change to a generic?
• how much will I save if I change to a generic?

According to the FDA, generic drugs approved by the FDA are biologically and therapeutically equivalent to their brand-name counterparts.....and people can use them with confidence!

Next blog: HSA, HRA, and FSA explained

Reference:  www.fda.gov/buyonlineguide/generics_q&a.htm, www.fda.gov/cder/ogd, www.fda.gov/buyonlineguide/generic_equivalence.htm, www.gphonline.org/content/navigationmenu/aboutgenerics/statistics/default.htm

Understand Your Health Insurance Policy....before you need it

Don't wait until a medical emergency or illness occurs before you understand your health insurance policy.  Although trying to read your policy may be as interesting as watching paint dry and also confusing, it is important to at least gain enough information about your policy to understand the basic policy terms and what it covers. When you sign up for an insurance policy, you are agreeing to follow the rules of the plan.  Most likely you were given a benefit booklet that you filed away or no longer have a clue where it is located.  The benefit booklet is where you will need to look to understand your health insurance policy.  If it is no where to be found, call the customer service number on your identification card.  Often times they will be able to direct you to where it can be located online.

Many do not realize that just because you and your neighbor both have a PPO plan with the same carrier, say for instance Blue Cross Blue Shield, what is covered under each plan may be entirely different.  

Where does one start?   A good place to begin is by looking at the policy's definition/glossary section.  Understand the terminology being used in the policy and/or how specific terms are defined.  If your policy does not have a glossary section, here is a good place to look: http://www.medicalclaimsconsultant.com/insurance_definitions.html

After you have a basic understanding of the terms, the next important thing about your plan is finding out whether there is a waiting period.  A waiting period is a specific period of time when you are not covered by your insurance. Some plans have a 30 day wait, others 60 or 90 and some are effective immediately. If you go to a doctor before the waiting period has been met, you will be responsible for the full amount of the medical bill.  

In addition to a possible waiting period, some plans may have a pre-existing condition clause. A pre-existing condition, is a medical condition that is excluded from coverage by an insurance company, because the condition was believed to exist prior to the individual obtaining a policy from the particular insurance company. Some policies will never cover a pre-existing condition, others will cover them after a specific amount of time has gone by and other plans may cover pre-existing conditions from the start. 

How do you know what medical benefits are covered by your insurance plan?  

Your policy will contain a section titled "covered medical services" that describes what conditions are covered by your plan and the amount payable by the insurance company vs. the amount, you, the policy holder is responsible to pay.  There will also be a section called "exclusions" or "medical limitation and exclusions" which outlines conditions that are not covered by your insurance plan.  It is very important to pay attention to this list because you will be responsible for the entire bill if you are treated for a condition your insurance does not cover. 

Keep in mind, in order to receive the greatest discount on the services covered by your plan, most require you to use in-network providers or health care facilities.  (See previous blog for in-network definition).  Some plans allow you to use an out of network provider, however typically the cost you will pay out of your pocket will be higher; while other plans if you use an out of network provider will not cover the services at all. 

Why do I have to know all this? Won't my doctor tell me?

Although doctor's are familiar with insurance plans, there are thousands of plans out there, and they can not possibly know all the details of your plan.  You are responsible for making sure a procedure is covered under your insurance.  If your doctor recommends a procedure that is not covered by your insurance, you can still obtain the treatment, however your insurance will deny the claim and you will have to pay for the service entirely on your own.  When in doubt about what is or is not covered, CALL your insurance carrier (customer service number will be on your medical id card) and ask.  

The same goes for which providers you go to. Let's say you go to your primary care doctor, who is in-network, and he recommends you to see dermatologist Dr. Jenny Smith.  Before you make an appointment with Dr. Smith, you need to check with your insurance carrier to make sure she is in your network.  Just as your provider can not remember every benefit your plan covers, they too can not remember every doctor in your plans network. 

Many plans also require preauthorization for certain procedures/services. Preauthorization approves in advance the medical necessity of certain care and services covered under your plan and whether the treatment being decided on by your doctor will be covered by your insurance plan.  Medical necessity is not the same as a medical benefit.  A medical necessity is medical care your doctor has decided is necessary, it may or may not be a medical benefit your insurance has agreed to cover.  Your insurance company determines what services, drugs and tests they allow.  

Taking PERSONAL RESPONSIBILITY is key in understanding your health insurance and how it works. It may be confusing but it can be rather expensive if you fail to understand your health insurance policy before you need it.  

Next blog: Prescription drugs-- brand name vs. generic

Types of Medical Insurance Plans

When you start a new job, or once a year when it’s “open enrollment” time at work, you are given a mound of materials and have to decide which medical insurance option to sign up for. Where does one begin? How can we make a wise decision when the information is Greek to us?

First there are two broad categories of health care coverage:

• Traditional Plans (Also known as fee for service or Indemnity plan)

• Managed care

There are similarities between the two categories. They both cover a variety of medical, surgical and hospital services and some also include coverage for prescription drugs.

It is important however to know the differences between the two categories in order to make the best decision on which coverage type is right for you.

Traditional Plans: Fee for Service/Indemnity Plans

This type of coverage allows you to go to any provider you choose. After you meet your annual deductible, the plan pays a certain percentage of your health care services – typically 80% – and you pay the remaining amount. What you pay depends on what medical costs are covered by your plan and what your providers charge for the services.

A covered service does not mean the insurance will be paying the entire cost of the doctor’s visit. Rather the amount you will be reimbursed will depend on your deductible and coinsurance provisions of your plan.

(See previous blog, Understanding Health Insurance for definition of deductible and coinsurance ,or use the link at right, Common Insurance Terms and Definition)

Under a Traditional plan, health insurance companies, reimburse providers based on a fee scale called the “reasonable and customary charge”. If your deductible has been met, you are responsible for a % of the bill (coinsurance) plus the balance not covered by insurance,above the reasonable and customary amount.

Reasonable & Customary The average fee charged by a particular type of health care practitioner within a geographic area. The term is often used by medical plans as the amount of money they will approve for a specific test or procedure. If the fees are higher than the approved amount, the individual receiving the service is responsible for paying the difference. Sometimes, however, if an individual questions his or her physician about the fee, the provider will reduce the charge to the amount that the insurance company has defined as reasonable and customary.

These policies generally have an out of pocket maximum.

Out-Of-Pocket Maximum: A predetermined limited amount of money, a “cap” dollar amount that an individual must pay out of their own pocket, before an insurance company will pay 100% for an individual's health care expenses.

However if the provider you are seeing charges more than the reasonable and customary charges allowed, these amounts you are paying above what the insurance company agrees is an acceptable fee do not accumulate towards your out of pocket maximum.

Finally, most plans have lifetime limits on benefits paid under the policy. You should look for a policy with at least a lifetime maximum of $1 million. Traditional plans are no longer a common insurance plan used.

Managed Care

Managed care plans generally provide a large scope of health services to their members and offer financial incentives for patients to use the providers who belong to the plan

There are three major types of managed care plans:

• Health Maintenance Organizations (HMOs)

• Preferred Provider Organizations (PPOs)

            o Traditional

            o High Deductible with personal care account (PCA)

• Point-of-Service (POS)

            o Traditional

            o Consumer Driven/Consumer Choice (also called High Deductible Health Plan or
                HDHP)

Health Maintenance Organization (HMO)

If you belong to an HMO, typically you must receive all your medical care through the plan. Generally, you will select a primary care physician (PCP) who coordinates your care. The primary care physician is responsible for referring you to specialists when needed An HMO plan is a good choice if you are willing to use certain providers in exchange for lower out-of-pocket costs.

How an HMO works

With an HMO you’re responsible for copayments – fixed fees you pay when you see a doctor, have a prescription filled, or are admitted to the hospital.  Plus you:

• You select a primary care physician (PCP) who tends to the majority of your health needs and refers you to other in-network providers, if necessary. Each family member can choose his or her own PCP.

• You seek guidance from your PCP when you need specialty care. Referrals to specialists may be required. A PCP is usually a general, family, or internal medicine doctor (internist), or a pediatrician.

• Take advantage of in-network savings. An HMO pays benefits only when you use doctors and hospitals in the plan’s network. For covered services at in-network providers, you pay a copayment and the plan pays the rest.

• Use out-of-network providers wisely. Coverage for services from out-of-network providers is only provided for true life threatening emergencies or when your insurance provider has given prior authorization.

Network: A group of doctors, hospitals and other health care providers contracted to provide services to insurance company’s customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider.

Out-of-Network: This phrase usually refers to physicians, hospitals or other health care providers who are considered nonparticipants in an insurance plan. Depending on an individual's health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part by an individual's insurance company.

Preferred Provider Organization (PPO)

With a Preferred Provider Organization (PPO), you typically pay less for care when you use in-network providers – doctors, hospitals, and pharmacies that are part of the PPO network.

Network. Depending on an individual's health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part by an individual's insurance company. The plan does not require referrals. The PPO plan is a good choice for people who are willing to have larger paycheck deductions in exchange for lower out-of-pocket costs.

How a PPO Works

• Your deductible might be lower. With a traditional PPO plan, the deductible is usually lower than a PPO with a spending account.

• You can choose any provider. With a PPO plan, you decide whether you want to use in-network doctors or not. If you "step outside the network," your copayment, deductible, and coinsurance costs will be higher – sometimes significantly higher.

• The out-of-pocket limit gives you peace of mind. A PPO plan limits the amount of money you'll spend within the plan year. If you reach this limit, called the "out-of-pocket maximum," the plan pays 100 percent of additional covered expenses during the plan year. You continue to pay copayments.

PPO out-of-pocket costs

With all PPO plans, your out-of-pocket costs may include: co-payments, deductible & coinsurance

Copayments – A fixed fee you pay when you see a doctor, have a prescription filled, or are admitted to the hospital. Copayments are generally lower for services from primary care doctors than for specialists.

PPO High Deductible with Personal Care Account

Personal Care Account (PCA) also called a Healthcare Reimbursement Arrangement (HRA) plans combine a low-premium, high-deductible Preferred Provider Organization (PPO) plan with a spending account funded by your employer. A PCA is like an “expense account” your employer puts money into. You can use the funds for qualified medical expenses like doctor's office visits, as well as other eligible healthcare costs. The funds in this account do not go with you if you leave your job or retire. These plans are based on the IRS's approved Health Reimbursement Arrangement (HRA) guidelines.

How a Personal Care Account PPO Works

The PCA PPO plan gives you choice and flexibility in how you pay for healthcare:

• You use PCA funds for eligible medical expenses, including the deductible, prescription drugs, vision, and dental care. (Your employer determines the kinds of expenses that are eligible.)

• You have access to the full amount of your employer's contribution on the first day of the plan year.

• Depending on your plan design, you may receive a Debit Card. At many healthcare provider locations, you can use your Debit Card to pay directly from your account. Because of IRS regulations, you should make sure to keep a receipt in case you need to prove your expense was qualified.

• No copayments for medical services. PCA plans don’t require copayments for doctor’s office visits, preventive care, and hospital services. Ask your in-network provider to bill you after your insurance provider processes the claim and calculates your member discount. Then give the doctor’s office your Debit Card number to pay directly from your PCA.

• Use it for costs beyond your health plan. Besides using your PCA for out-of-pocket costs specified in your plan, like medical and pharmacy copayments, some employers allow you to spend PCA funds on other qualified medical expenses, including:

o Orthodontia, dental cleanings, and fillings

o Prescription drugs

o Physical therapy, speech therapy, and chiropractic expenses

• Once PCA funds are gone, you have to meet the remaining deductible and coinsurance requirements of the PPO plan.

Point of Service (POS)

Many people call POS plans "an HMO with a point-of-service option." From the consumer’s point of view, these plans combine features of a Traditional plan with an HMO.They offer more flexibility than HMOs, but premiums are likely to be somewhat higher. 

What is the difference between a PPO and a POS plan? A POS plan has primary care physicians who coordinate patient care; and in most cases, PPO plans do not. But there are exceptions! With Point of Service (POS) plans, you can reduce your out-of-pocket costs by choosing providers in the network – or you can seek services outside the network and pay more. It's your choice.

POS plans can be "traditional" or "consumer-driven."

How a POS Plan Works

POS plans combine the advantages of a Health Maintenance Organization (HMO) plan with the flexibility of a Preferred Provider Organization (PPO) plan. When you receive services from in-network providers, the plan covers more of your costs. You also have the choice to go outside the network – but you'll pay more.

• You have access to in-network savings with the HMO providers in your network

• The plan also pays benefits for covered services from out-of-network providers

• Depending on your plan design, you may or may not need a primary care physician (PCP);

• With most plans, referrals aren't necessary for out-of-network services

• Traditional plan designs have copayments for most services

Traditional and Consumer-Driven POS Plans

The difference between "traditional" or "consumer-driven" plans is how you pay out-of-pocket costs. Traditional plans usually have copayments and coinsurance. Consumer-driven plans usually have a higher deductible can not have copayments but may have coinsurance.  Consumer-driven plans can be paired with a Health Savings Account (HSA) or Health Care Reimbursement (HRA) to help you pay healthcare costs.

Consumer Driven/Consumer Choice/High Deductible Health Plan (HDHP)

Consumer choice products are the newest type of insurance plans on the market, These plans feature lower premiums and can be paired with a Health Savings Account (HSA) or an HRA (same benefits as HRA discussed above with the High Deductible PPO plan). A HSA allows you, your employer, or both to contribute tax-free money to set aside tax-free money for current-year healthcare expenses and build savings for the future. Unused money stays in your account from year to year and earns tax-free interest. The HSA also gives you an investment opportunity and you do not pay taxes on contributions or earnings. The funds belong to you and go with you if you change jobs or retire. The goal of these types of health insurance plans is to provide financial incentives for consumers to consider the cost of services and the value of alternatives. 

With a consumer driven health plan, the consumer is responsible for lower-cost services (like check-ups), and the insurance plan is responsible for higher-cost care that is frequently not discretionary (like a necessary surgical procedure) after the deductible has been met.

The minimum deductible amount is set by the IRS. The following table shows the limits for annual deductibles and the maximum out-of-pocket expenses for HDHPs for 2010.

                                                                                         Self-only coverage     Family coverage

Minimum annual deductible                                                   $1,200                      $2,400

Maximum annual deductible and
     other out-of-pocket expenses *                                        $5,950                       $11,900

* This limit does not apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies.

How an HDHP Works

A High Deductible Health Plan gives you solid healthcare coverage and greater control over healthcare spending:

• No copayments - When you have medical and prescription costs, they apply to your deductible.

• Specified out-of-pocket maximum - The plan has a built-in cap on annual healthcare expenses; your deductible applies to the maximum.

• Lower premiums - High Deductible Health Plans usually have lower premiums than other kinds of health plans.

Next blog…..how to understand the “rules” to your health plan and common health plan terms.

What is Health Insurance?

Health insurance as defined by the dictionary:   insurance that compensates the insured for expenses or loss incurred for medical reasons, as through illness or hospitalization. There are 3 general types of health insurance: medical insurance, dental insurance & vision insurance. Like car insurance, health insurance provides coverage for certain health care situations.

Health insurance can either be group insurance (through your employer) or individual insurance (purchased by an individual to cover themselves and/or family members).  The cost of health insurance is called a "premium". Premiums for group health insurance generally are paid monthly.  Individual insurance can be monthly, bi-monthly, quarterly, semi-annually or annually.  Employers often pay a portion of each employees health insurance premium, with the balance due deducted from the employees pay check before taxes.  

The amount of the health insurance premium can vary for a number of reasons.  One's age, sex, current/previous health conditions, type of plan chosen, number of employees (if group insurance) and coverage options to name a few all contribute to the cost of the premium.  Similar to purchasing insurance for your car, there are variables that determine the premium amount for your car insurance. The age of the car, the number of miles driven too/from work, the age/sex of the driver, the deductible (the amount of damage you pay for first, before your insurance company pays) if you have collision or comprehensive damage, the options (ie. towing, rental car) you put on your policy etc.

Similar to car insurance, having health insurance does not mean you won’t have to pay for health care.  When you get "minor" work done on your car--oil change, new tires, muffler, small door ding removed---your car insurance does not cover these "maintenance" costs.  Health insurance often has "maintenance" costs one must cover as well.  Depending on the type of plan you have, there are: deductibles, co-payments and co-insurance that are expenses paid by the individual before insurance pays.  

Deductible: The amount an individual must pay for health care expenses before insurance covers the costs. Often, insurance plans are based on yearly deductible amounts.

Co-Payment: Co-payment is a predetermined (flat) fee that an individual pays for health care services, in addition to what the insurance covers. For example, a plan may require a $10 "co-payment" for each office visit, regardless of the type or level of services provided during the visit. 

Co-Insurance: Co-insurance refers to money that an individual is required to pay for services, after a deductible has been paid. Co-insurance is often specified by a percentage. For example, the employee pays 20 percent toward the charges for a service and the employer or insurance company pays 80 percent.

Next blog.....different types of health insurance medical plans.

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