CBCS Health Insurance 2 — Questions and Answers

Question 1: What is a deductible in a health insurance plan?

The monthly premium the insured pays for coverage
The fixed amount paid per visit regardless of total cost
The amount the insured must pay out-of-pocket before the insurance begins paying (Correct answer)
The maximum amount insurance will pay in a year

Correct answer: The amount the insured must pay out-of-pocket before the insurance begins paying

A deductible is the amount a patient must pay for covered services before the insurance company begins sharing costs. Most preventive care services are exempt from deductibles under the ACA.

Deductibles reset annually (usually January 1 or the plan anniversary date). Individual and family deductibles differ — once the family deductible is met, the plan typically pays for all family members. High-Deductible Health Plans (HDHPs) have higher deductibles but lower premiums and are paired with Health Savings Accounts (HSAs). Billers must check the patient's current deductible status during eligibility verification to accurately estimate patient financial responsibility.

Question 2: What is the difference between HMO and PPO insurance plans?

HMOs cover only preventive care; PPOs cover only specialist services
HMOs require a primary care physician and referrals and limit care to network providers; PPOs allow more flexibility with higher out-of-pocket costs for out-of-network care (Correct answer)
HMOs are government plans; PPOs are private employer plans
HMOs have no premiums; PPOs have no deductibles

Correct answer: HMOs require a primary care physician and referrals and limit care to network providers; PPOs allow more flexibility with higher out-of-pocket costs for out-of-network care

HMOs (Health Maintenance Organizations) coordinate care through a PCP and require referrals to specialists, with coverage limited to the network. PPOs (Preferred Provider Organizations) offer more flexibility, allowing patients to see any provider but with higher costs for out-of-network care.

HMO features: lower premiums, network-only coverage (except emergencies), PCP required, referrals needed for specialists. PPO features: higher premiums, in-network and out-of-network coverage, no PCP requirement, no referrals needed. EPO (Exclusive Provider Organization) is like a PPO but with no out-of-network coverage. POS (Point of Service) combines HMO and PPO features. Understanding plan types is essential for verifying benefits and estimating patient costs.

Question 3: What is Medicare Part B primarily designed to cover?

Inpatient hospital stays
Prescription drugs
Medical insurance for outpatient services, physician visits, and preventive care (Correct answer)
Hospice and home health care

Correct answer: Medical insurance for outpatient services, physician visits, and preventive care

Medicare Part B is the medical insurance component that covers outpatient services, physician services, preventive care, durable medical equipment, and some home health services.

Medicare consists of four parts: Part A (hospital insurance — inpatient, SNF, hospice, some home health), Part B (medical insurance — outpatient, physician, preventive, DME), Part C (Medicare Advantage — managed care alternative), and Part D (prescription drug coverage). Part B is financed by monthly premiums (income-adjusted) plus general revenue. For 2024, the standard Part B premium is $174.70/month. Part B has an annual deductible ($240 in 2024) and 20% coinsurance after deductible.

Question 4: What is the purpose of the Medicare Summary Notice (MSN)?

To bill the patient for services not covered by Medicare
To inform Medicare beneficiaries of claims processed on their behalf, amounts billed, Medicare payment, and patient responsibility (Correct answer)
To notify providers of audit findings
To authorize prior approval for Medicare-covered services

Correct answer: To inform Medicare beneficiaries of claims processed on their behalf, amounts billed, Medicare payment, and patient responsibility

The Medicare Summary Notice is a statement sent to beneficiaries summarizing claims processed during a given period, including what was billed, what Medicare paid, and what the beneficiary may owe.

Medicare beneficiaries receive the MSN quarterly (or can view it online via MyMedicare.gov). It shows: date of service, provider name, service description, amount charged, Medicare-approved amount, Medicare paid, and amount owed by the beneficiary. The MSN also informs beneficiaries of their right to appeal if they disagree with how a claim was processed. Providers receive the Remittance Advice (RA), not the MSN.

Question 5: What does 'prior authorization' (pre-authorization) mean in insurance billing?

Retroactive approval for services already rendered
Advance approval from an insurance company required before certain services can be provided (Correct answer)
A physician's order for a specific test or procedure
Pre-certification that a provider is in-network

Correct answer: Advance approval from an insurance company required before certain services can be provided

Prior authorization is advance approval required by some insurance plans before certain services, medications, or procedures can be performed. Without it, coverage may be denied.

Prior authorization (PA) is required for many services including elective surgeries, specialist referrals (in some plans), high-cost imaging (MRI, CT), certain medications, and durable medical equipment. The provider submits a PA request with clinical documentation supporting medical necessity. The insurer approves, denies, or requests more information. If PA is denied, providers can appeal. Failing to obtain required PA is a common cause of claim denials and can shift financial responsibility to the provider.

Question 6: What is Medicaid?

A federal health insurance program for individuals age 65 and older
A joint federal-state program providing health coverage to low-income individuals and families (Correct answer)
A private insurance option for small businesses
A supplemental coverage plan for Medicare beneficiaries

Correct answer: A joint federal-state program providing health coverage to low-income individuals and families

Medicaid is a joint federal-state program that provides health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.

Medicaid is administered by individual states within federal guidelines set by CMS. Eligibility varies by state. The ACA expanded Medicaid to cover adults with incomes up to 138% of the federal poverty level (FPL) in participating states. Medicaid typically covers a broad range of services with little or no cost to beneficiaries. Billing for Medicaid requires enrollment as a Medicaid provider. When a patient has both Medicare and Medicaid, Medicare pays first (Medicaid is always payer of last resort).

CBCS Health Insurance 2

What is a deductible in a health insurance plan?