Post a 200- to 300-word response to the following: Compare cost control strategies of employer-sponsored health plans, in which employers buy from insurance companies, to self-funded health plans, in which employers cover costs of benefits. Include the following factors:
o Riders
o Enrollment periods
o Provider networks
o Third party administrators
Discuss how the following affect cost control within group health plans:
o Portability
o Creditable coverage
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HCR/230 - CLAIMS PREPARATION II: FOOTING THE BILLS (AXIA)
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When comparing cost control strategies of employer-sponsored health plans, it's important to understand the differences between plans that are bought from insurance companies and self-funded health plans where employers cover the costs of benefits.
First, let's discuss the concept of riders. In employer-sponsored health plans bought from insurance companies, riders refer to additional benefits or coverage options that can be added to the plan. Riders can be tailored to meet the specific needs of the employer or employees. Alternatively, self-funded health plans have more flexibility in designing their benefits and do not typically require the use of riders.
Next, enrollment periods differ between these two types of plans. In employer-sponsored health plans purchased from insurance companies, there are usually set open enrollment periods during which employees can enroll or make changes to their coverage. This helps the insurance company manage risk and control costs. On the other hand, self-funded health plans may not have strict enrollment periods as the employer has more control over the plan design and can make changes or add employees throughout the year.
Provider networks also play a role in cost control. Insurance companies often negotiate contracts with specific providers and healthcare facilities to form a network for their plans. Employers who purchase from insurance companies have limited choice of providers within these networks, which can help control costs. In contrast, self-funded health plans allow employers more flexibility in selecting providers and negotiating costs directly, potentially resulting in lower expenses.
Lastly, both types of plans may have third-party administrators (TPAs) involved. TPAs help manage claims processing, provider payments, and other administrative tasks. In plans purchased from insurance companies, the insurance company itself often acts as the TPA. For self-funded health plans, employers may contract with a separate TPA to handle these tasks.
Moving on to the impact of portability and creditable coverage on cost control within group health plans, portability refers to the ability of individuals to maintain continuous health insurance coverage when changing jobs or transitioning between different health plans. It ensures that individuals do not face gaps in coverage and typically applies to both types of employer-sponsored plans. This helps control costs by reducing the risk of individuals experiencing significant health issues without coverage.
Creditable coverage usually applies to employer-sponsored plans that offer prescription drug coverage. It refers to having a prior health insurance coverage that is deemed comparable in terms of prescription drug benefits. Creditable coverage may influence cost control by allowing individuals to avoid penalties or waiting periods when joining a new plan, thus promoting continuous coverage and managing costs.
In summary, comparing cost control strategies between employer-sponsored health plans purchased from insurance companies and self-funded health plans highlights differences in riders, enrollment periods, provider networks, and third-party administrators. Additionally, the concepts of portability and creditable coverage impact cost control within group health plans by promoting continuous coverage and managing risk.