Chapter 13Blue Cross Blue Shield

IntroductionBlue Cross and Blue Shield

Perhaps the best known plans of medical insurance in the United States

Blue Cross,1929 ◦ Baylor University hospital in Dallas, Texas◦ Offered teachers in the Dallas school district a

plan of 21 days of hospitalization every year for the holder and their dependents in exchange for $6 annual premium (prepaid health plan)

Origin of Blue Cross Blue Shield

Began as a resolution passed by the House of Delegates at an American Medical Association meeting in 1938

Resolution supported the concept of voluntary health insurance that would encourage physicians to cooperate with prepaid health care plans.

Origin of Blue Shield

First known plan was formed in Palo Alto, California, in 1939.

Stipulated that physicians’ fees for covered medical services would be paid in full by the plan if subscriber earned less than $3,000 a year

Origin of Blue Shield

When subscriber earned more than $3,000 a year, a small percentage of physicians’ fee would be paid by the patient.

Forerunner of today’s industry-wide required patient coinsurance or co-pay.

Origin of Blue Shield

Blue Cross originally covered only hospital bills.

Blue Shield only covered fees for physician services.◦ Over the years Blue Cross and Blue Shield have

increased their coverage to include almost all health care services.

Joint Ventures

Located in Chicago, Illinois, and performs the following functions:◦ Establishes standards for new plans and

programs.◦ Assists local plans with enrollment activities,

national advertising, public education, professional relations, and statistical and research activities.

BCBS Association

◦ Serves as the primary contractor for processing Medicare hospital, hospice, and home health care claims.

◦ Coordinates nationwide BCBS plans

BCBS Association

Mergers occurred among BCBS regional corporations (within a state or with neighboring states) and names no longer had regional designations.

BlueCross BlueShield Association no longer required plans to be nonprofit (as of 1994).

Changing Business Structure

Regional corporations needed additional capital to compete with commercial for-profit insurance carriers and petitioned their respective state legislatures to allow conversion from their nonprofit status to for-profit corporations.

Changing Business Structure

Nonprofit corporations ◦ Charitable, educational, civic, or humanitarian

organizations whose profits are returned to the program of corporation rather than distributed to shareholders and officers of the corporation

Changing Business Structure

For-profit corporations ◦ Pay taxes on profits generated by corporations’

for-profit enterprises and pay dividends to shareholders on after-tax profits.

Changing Business Structure

Maintain negotiated contracts with providers of care.

BCBS Distinctive Features

In exchange, BCBS agrees to perform the following services:

◦ Make prompt, direct payment of claims.◦ Maintain regional professional representatives to

assist participating providers with claim problems.

BCBS Distinctive Features

Provide educational seminars, workshops, billing manuals, and newsletters to keep participating providers up-to-date on BCBS insurance procedures.

BCBS Distinctive Features

BCBS plans, in exchange for tax relief for their nonprofit status, are forbidden by state law from canceling coverage for an individual because he or she is in poor health or BCBS payments to providers have far exceeded the average.

BCBS Distinctive Features

Individuals can only be dis-enrolled for the following reasons:

◦ When premiums are not paid.◦ If the plan can prove that fraudulent statements

were made on the application for coverage

BCBS Distinctive Features

BCBS plans must obtain approval from their respective state insurance commissioners for any rate increases and/or benefit changes that affect BCBS members within the state.

BCBS Distinctive Features

BCBS plans must allow conversion from group to individual coverage and guarantee the transferability of membership from one local plan to another when a change in residency moves a policyholder into an area served by a different BCBS corporation.

BCBS Distinctive Features

Submit insurance claims for all BCBS subscribers.

Provide access to the Provider Relations Department, which assists the PAR provider in resolving claims or payment problems

BCBS Participating Providers

Write off the difference or balance between the amount charged by the provider and approved fee established by the insurer.

Bill patients for only the deductible and co-pay/coinsurance amounts that are based on BCBS-allowed fees.

BCBS Corporation

In return, BCBS corporations agree to◦ Make direct payments to PARs.◦ Conduct regular training sessions for PAR billing

staff.◦ Provide free billing manuals and PAR newsletters.

BCBS Corporation

◦ Maintain a provider representative department to assist with billing/payment problems.

◦ Publish the name, address, and specialty of all PARs in a directory distributed to BCBS subscribers and PARs.

BCBS Corporation

Required to adhere to managed care provisions

Agrees to accept the PPN allowed rate, which is generally 10 percent lower than the PAR allowed rate

Further agrees to abide by all cost-containment, utilization, and quality assurance provisions of the program

Preferred Providers

The “Blues” agree to notify PPN providers in writing of new employer groups and hospitals that have entered into PPN contracts and to maintain a PPN directory.

Preferred Providers

Have not signed participating provider contracts, and they expect to be paid the full fee charged for services rendered

Non Participating Providers

◦ Patient may be asked to pay the provider in full and then be reimbursed by BCBS the allowed fee for each service minus the patient’s deductible and co-payment obligations.

Non Participating Providers

Even when the provider agrees to file the claim for the patient, insurance company sends payment for claim directly to the patient and not to provider.

Non Participating Providers

Cross Blue Shield coverage includes the following programs:◦ Fee-for-service◦ Indemnity

Plans

Managed care plans ◦ Coordinated home health and hospice care◦ Exclusive provider organization ◦ Health maintenance organization ◦ Outpatient pretreatment authorization plan◦ Point-of-services plan◦ Preferred provider opinion ◦ Second surgical opinion

Plans

Federal Employee Program Medicare supplemental plans Healthcare Anywhere

Plans

Fee-for-service is selected by two different kinds of people:

◦ Individuals who do not have access to a group plan

◦ Small business employers

Fee-for-Service

Those two contracts have two types of different coverage within one policy:

◦ Basic coverage◦ Major medical benefits

Fee-for-Service

– Assistant surgeon fees– Obstetric care– Intensive care– Newborn care– Chemotherapy for cancer

Fee-for-Service

BCBS major medical coverage includes the following in addition to the basic: ◦ Office visits ◦ Outpatient nonsurgical treatment◦ Physical and occupational therapy

Fee-for-Service

– Purchase of durable medical equipment – Mental health visits – Allergy testing and injections – Prescription drugs – Private duty nursing

– Dental care required as a result of a covered accidental injury

Fee-for-Service

Covers 100 percent of nonsurgical care sought and rendered within 24 to 72 hours of the accidental injury

Special Accidental Injury Rider

Covers immediate treatment sought and received for sudden, severe, and unexpected conditions that if not treated would place patient’s health in permanent jeopardy or cause permanent impairment or dysfunction of an organ or body part

Medical Emergency Care Rider

Chronic or subacute conditions do not qualify for treatment under the medical emergency rider unless the symptoms suddenly become acute and require immediate medical attention.

Medical Emergency Care Rider

Choice and flexibility to receive full range of benefits

Freedom to use any licensed provider Coverage includes hospital-only or

comprehensive hospital and medical coverage.

Indemnity Coverage

Outpatient code editor (OCE) software is used in conjunction with the APC grouper to identify Medicare claims edits and assign APC groups to reported codes

Indemnity Coverage

Health care delivery system that provides health care and controls costs through a network of physicians, hospitals, and other health care providers

Managed Care Plans

Coordinated home health and hospice care program allow patients with this option to elect an alternative to the acute care setting.◦ Patients’ physician must file a treatment plan with

the case manager assigned to review and coordinate the case.

Managed Care Plans

◦ All authorized services must be rendered by personnel from a licensed home health agency or approved hospice facility.

Managed Care Plans

An EPO (exclusive provider organization) organization that provides health care services through a network of doctors, hospitals, and other health care providers◦ Members are not required to select a primary care

provider (PCP).

Managed Care Plans

◦ Members do not need a referral to see a specialist.

◦ All services must be obtained from EPO providers only.

◦ If care received from providers not part of the EPO, patient must pay charges in full

Managed Care Plans

Health maintenance organization (HMO) ◦ Plan that assumes or shares the financial and

health care delivery risks associated with providing comprehensive medical services to subscribers in return for a fixed, prepaid fee.

Managed Care Plans

Outpatient pretreatment authorization plan (OPAP) ◦ Requires preauthorization of outpatient physical,

occupational, and speech therapy services◦ Requires periodic treatment/progress plans to be

filed

Managed Care Plans

Requirement for the delivery of certain health care services and is issued prior to the provision of services

Managed Care Plans

Point-of-service plan (POS)◦ Allows subscribers to choose, at the time medical

services are needed, whether they will go to a provider within the plan’s network or outside the network

◦ When subscribers go outside the network to seek care, out-of-pocket expenses and co-payments generally increase.

Managed Care Plans

Provide a full range of inpatient and outpatient services, and subscribers choose a primary care provider (PCP) from the payer’s PCP list

Managed Care Plans

Preferred Provider Organization (PPO)◦ Offers discounted health care services to

subscribers who use designated health care providers (who contract with the PPO)

◦ Also provides coverage for services rendered by health care providers who are not part of the PPO network

Managed Care Plans

◦ Subscriber (member) is responsible for remaining within the network of PPO providers and must request referrals to PPO specialists whenever possible.

◦ Subscriber must also adhere to the managed care requirements of the PPO policy.

Managed Care Plans

◦ Failure to adhere to requirements will result in denial of the surgical claim or reduced payment to the provider.

◦ Patient is responsible for the difference or balance between the reduced payment and the normal PPO allowed rate.

Managed Care Plans

Second Surgical Opinion◦ Necessary when a patient is considering elective,

nonemergency surgical care◦ Initial surgical recommendation must be made by

a physician qualified to perform the anticipated surgery.

◦ If a second surgical opinion is not obtained prior to surgery, patients’ out-of-pocket expenses may be greatly increased.

Managed Care Plans

An employer-sponsored health benefits program established by an Act of Congress in 1959

FEP is underwritten and administered by participating insurance plans (e.g., Blue Cross and Blue Shield plans) that are called local plans.

Federal Employee Program

FEP cards contain the phrase Government-Wide Service Benefit Plan under the BCBS trademark.

Federal Employee Program

Four enrollment options◦ 101—Individual, High Option Plan◦ 102—Family, High Option Plan◦ 104—Individual Standard (Low) Option Plan◦ 105—Family Standard (Low) Option Plan

Federal Employee Program

Considered a managed fee-for-service program and has generally operated as a PPO plan

Federal Employee Program

Enhance the Medicare program by paying for Medicare deductibles and co-payments.

Also known as Medigap plans

Medicare Supplemental Plans

BlueCard® Program enables such members obtaining health care services while traveling or living in another BCBS plan’s service area to receive the benefits of their home plan contract and access local provider networks.

Health Care Anywhere

The insurance claim is submitted to the BC/BS plan in the state where services were rendered. That local plan forwards the claim to the home plan for adjudication.

Health Care Anywhere

Away From Home Care® Program allows the participating BCBS plan members who are temporarily residing outside of their home HMO service area for at least 90 days to temporarily enroll with a local HMO.

Health Care Anywhere

BlueWorldwide Expat provides global medical coverage for active employees and their dependents who spend more than six months outside the United States.

Health Care Anywhere

Claims processing ◦ BCBS plans process their own claims.

Deadline for filing claims ◦ Customarily one year from the date of service,

unless specified in subscriber’s or provider’s contract

Forms used ◦ Most BCBS currently accept CMS-1500 claim.

Billing Notes

Inpatient and outpatient coverage ◦ Many plans require second surgical opinions and

prior authorization for elective hospitalizations.

Billing Notes

Deductible ◦ Look up in the billing manual or call the

computerized phone bank for eligibility for that patient.

Billing Notes

Co-payment/Coinsurance ◦ Most common coinsurance amounts are 20

percent and 25 percent.◦ Some may go as high as 50 percent for mental

health services.

Billing Notes

Allowable fee determination◦ Many use the physician fee schedule to determine

the allowed fees for each procedure.◦ Others use a usual, customary, and reasonable

(UCR) basis.

Amount commonly charged for a particular medical service by providers within a particular geographic region

Billing Notes

◦ Participating providers must accept the allowable rate on all covered services and write off or adjust the difference or balance between the plan determined allowed amount and the amount billed.

◦ Patients are responsible for any deductible and co-pay/coinsurance as well as for full charges for uncovered services.

Billing Notes

Assignment of benefits◦ Payment is made directly to the provider by BCBS.

Billing Notes

Make a habit and priority to have a current copy of the front and back of all patient ID cards in the patient’s file.

Patients with Blue Cross who have more than one insurance policy◦ Must be billed directly to the plan from which

the program originated

Special Handing

Non-PARs must bill the patient’s plan for all non-national account patients with BlueCards.

Rebill claims not paid within 30 days. Some mental health claims are forwarded to

a third-party administrator.

Special Handing

Covered by only one BCBS policy. Covered by both a government-sponsored

plan and employer-sponsored BCBS plan. Covered by a non-BCBS plan that is not

employer-sponsored.

Primary Claim Status is determined when:

Designated as the policyholder of one employer-sponsored plan and also listed as a dependent on another employer-sponsored plan.

Primary Claim Status Is Determined When

Modifications are made to the CMS-1500 claim when patients are covered by primary and secondary or supplemental health plans.

When the same BCBS payer issues the primary and secondary or supplemental policies, submit just one CMS-1500 claim.

Secondary Coverage

If BCBS payers for the primary and secondary or supplemental policies are different◦ Submit a CMS-1500 claim to the primary payer.

Secondary Coverage

After the primary payer processes the claim, generate a second CMS-1500 claim to send to the secondary or supplemental payer and include a copy of the primary payer’s remittance advice.

Secondary Coverage