Insurance is an agreement between insurance companies, who collect fees or premiums, and individuals, who pay the premiums in return for specific benefits.
Answer: T
If an employer provides insurance to an individual, there is no need for a waiting period.
Answer: F
A renewal allows the individual to pay a premium in order to continue coverage after the initial or subsequent policy periods have expired. In most cases, if the insurance has lapsed, the individual must pay the premium and then the insurance is reinstated.
Answer: T
Insurance companies operate on the principle that most of those who pay premiums will not need services, or that the services they need will cost less than the premiums paid.
Answer: T
Group insurance provides coverage for several people who have a common purpose under one contract, called a master contract.
Answer: T
In a self-funded insurance plan, the risk of loss is assumed by the insured individual and may be increased by purchasing reinsuranceor stop loss insurance.
Answer: F
Electronic Data Interchange (EDI) information defines the tasks involved in the retrieval of information and is an essential part of each claims examiner’s day.
Answer: T
Insurance speculation occurs when someone buys insurance coverage for the purpose of gambling on market trends.
Answer: F
The False Claims Act and the Anti-Kickback Statute are two fraud statutes that significantly narrow the federal government’s ability to prosecute fraud within the healthcare industry.
Answer: F
Embezzlement occurs when employees illegally take funds from a company in which they work.
Answer: T
Multiple Choice Questions
Which of the following is NOT included in a standard health insurance policy?
Provides an outline of benefits
Payment of vitamin supplement expenses
The replacement or repair of personal property
The payment for expenses of others who have been injured by you or on your property
What information appears in all or most insurance policies?
Effective date of coverage
Termination date of life
Maintenance of households
Lapse in coverage as a prerequisite for policy renewal
Which of the following is a restriction that insurance companies place on the amount and type of benefits that will be paid?
Eligibility requirements
Loans
Tax write offs
Proper nutrition and exercise
Which is NOT a reason for rising healthcare costs?
Fewer people are seeking healthcare now compared to 20 years ago.
Medical treatments and equipment employed are more extensive and sophisticated and, therefore, more expensive.
The cost of training healthcare professionals and malpractice insurance expenses are rising.
When a significant part of a person’s medical expenses are paid for by a health plan, the healthcare provider pinches pennies at the expense of the client.
Which element is NOT part of individual insurance coverage?
Coverage is issued to insure the life or health of a named person or persons, rather than the life or health of the members of a group.
Premiums are usually lower because of the higher risks associated with insuring groups.
The number of participants in a plan distinguishes whether the plan is individual or group.
Coverage offers security for self-employed workers.
6. What insurance plan offers no medical benefits?
a. Indemnity Plan
b. Preferred Provider Organization (PPO)
c. Health Maintenance Organization (Closed Access)
d. Prescription Drug Insurance
Which statistics are used most often by an insurance company?
Statistics covering average life span
Predictions of termination of life
Number of house calls
Costs of all automobile and life insurance services
Which does NOT describe differences between the roles of medical billers and claims examiners?
Medical billers are usually responsible for coding a claim and responding to requests for more information from insurance companies.
Claims examiners can either work for a hospital to review claims for accuracy or for an insurance company to evaluate validity of submitted claims and/or process said claims.
Claims personnel are more visible than medical billers because most of the public interfaces with either the customer service representative or directly with claims processing personnel.
Claims examiners are often involved in researching possible cases of fraud.
What are the responsibilities of state insurance regulatory departments?
Licensing agents to sell insurance and revoke licenses when warranted
Issue annual statements of insurance companies
Ensure that policy forms are hand lettered for authenticity
Perform on-site inspections of insurance companies
Which is NOT a definition of disclaimers?
A denial or renunciation of responsibility
One of the most effective ways to protect oneself from possible legal action
Use of phrases such as “it appears that” or “this may be” or “what do you mean?”
A document that all claims examiners should practice in their conversations when confirming a member’s eligibility and benefits
Which issue is addressed by HIPAA?
Portability, or the ability to carry sick patients into the ER
Accountability, generally dealing with the patient’s right to privacy from the medical provider, health insurer, and any other parties required in the healthcare process
Obama’s healthcare plans
Issuing standard malpractice insurance
What is a reason for consumers to worry about the misuse of electronic health records (EHR)?
Improvement of patient care
Increase of patient safety
Simplify compliance of privacy standards
Screening of patients for health issues and then denying them insurance
Who are the main perpetrators of insurance fraud?
The poor and uninsured
Anyone looking to take advantage of the insurance system to make money
Hospitals, claimants, beneficiaries, and claims handlers
Lawyers
What step should never be taken when building a claim file?
Carefully document all discrepancies, conflicting facts, and omissions.
Make a written record of pertinent points of phone conversations.
Place all documents in the order in which they occurred or were received.
Throw out the envelopes for all documents mailed to the office.
Which indicator may help to isolate situations in identifying fraud?
Claimant is pushy and demanding of a quick claim settlement.
Claimant is unusually familiar with insurance office locations.
Claimant handles business by mail only.
Multiple police reports are filed.
Which of the following is a red flag for a claims examiner?
A minor accident produces major accident costs, lost wages, and so on.
Medical bills indicate routine treatment being provided on weekdays.
Summary medical bills are itemized including office visits or treatments.
Receipts or bills are submitted with the provider’s letterhead and signature.
What is one indication of insurance speculation?
The Dow Jones drops 100 points
Claims reported on time
Pressure from the claimant to make timely payments
Multiple hospital indemnity coverage held by claimant or combined hospital, medical, accident, and hospital indemnity policies
Which indicator points to employee embezzlement?
Payee name and address matches claim form, bills, or other pertinent material.
Excessive accessorizing.
Undocumented claim file actions are found, such as voids, reversals, or reissued payments by employee.
Provider bills and claim forms match explanation of benefits.
Which of the following is NOT a sanction when healthcare providers engage in fraudulent activities?
Exclusion from participation in Medicare
Exclusion from participation in Medicaid
The imposition of civil monetary penalties for each claim deemed improper
Exclusion from insurance providers’ national conferences
What is the responsibility of a claims examiner when a company’s employee is suspected of questionable activity?
Contact his or her supervisor, personnel director, or other superiors
Contact the employee’s pastor
Discuss the matter with the employee’s coworkers
Contact the management of parent companies
Which of the following is NOT a procedure for issuing claims checks?
Any amounts paid out should be clearly notated, including the payee, the amount, the date, the check number, and the reason for payment.
Any discrepancies should be reported immediately to a supervisor.
If embezzlement is suspected, the proper person should be notified.
If poor bookkeeping or inaccurate records that were kept by a previous employee or a current coworker are noticed, this should be kept quiet in case you become a suspect.
Which of the following would the courts look at to determine whether a plan has met the obligation of good faith and fair dealing?
Did the plan give the claimant’s interest equal consideration with that given the company’s interest?
Was the claim lost in the cloakroom?
Was the claim handled with kid gloves?
Are there any typos in the claim?
How are subpoenas meant to be delivered?
The subpoena must be served in person.
The subpoena should be laid on the desk of the person involved.
The subpoena should not be sent through the mail.
If you are absent, your coworkers may accept the subpoena.
Which is an element of subpoena notification?
If a subpoena is served to request claims records, many insurance carriers will notify the member in writing that the records have been requested.
A member’s attorney is not allowed to file papers with the court to block the subpoena.
If there is a lengthy amount of time between the date the subpoena was served and the date the records have been requested, the letter must be faxed or the member may be contacted by phone.
The members must not know that they have the authority to stop you from releasing the records.
Which of the following is an example of good record keeping?
All records should be thrown out at the end of the day.
Records should be placed on microfiche and kept indefinitely.
Records should be kept until the patient dies.
Records should be kept from seven to 25 years.
Short Essay Questions
There are various types of insurance coverage. Employers often offer multiple supplemental benefits in addition to healthcare insurance. The following are the most common types of insurance coverage available. Choose four types from the following list of eight (making sure to choose at least one type from the non-employer-sponsored insurance programs) and define each.
Answer:
Accidental Death and Dismemberment Insurance
Answer: Pays a benefit to the beneficiary in the event of the insured person’s death by accidental means. It also pays a benefit to the insured when an accident causes the loss of a limb.
Disability Insurance
Answer: Covers an employee’s salary, or a percentage of it, while the employee is on disability leave. There is short-term disability insurance, usually up to 12 weeks, and long-term disability insurance that covers you for the length of the disability.
Health Insurance
Answer: Covers medical and hospital services. Such policies are sold as individual or group policies.
Life Insurance
Answer: Coverage on a person’s life. In the event of the insured person’s death, a benefit is paid to the named beneficiary.
Workers’ Compensation
Answer:A medical and disability reimbursement program that provides 100% medical coverage and a scheduled weekly disability benefit for job-related injuries, illnesses, or conditions arising out of or in the course of employment.
Medicaid
Answer: A federal program established under Title XIX of the Social Security Act of 1965. Its purpose is to provide the needy with access to medical care.
Medicare
Answer: The Federal Health Insurance Benefit Plan for the Aged and Disabled under Title XVIII of Public Law 89-97 of the Social Security Act. This program is for people 65 years of age and older and certain individuals who are disabled.
TRICARE
Answer: Health insurance benefit provided to active and retired military personnel and their beneficiaries.
Identify and describe the responsibilities of aThird-Party Administrator (TPA).
Answer:
A third-party administrator (TPA) is a professional firm that is under contract by the insurance company to deal solely with administering the eligibility and claim payment services including all of the paperwork (and various other administrative services) for self-funded benefit plans. The administrator provides all of the equipment and personnel required to meet the plan’s needs. In turn, the plan supplies the funds or monies needed for payment of the administrator’s services and for amounts paid out for claims. In contrast, the insurance company handles all plan administration, provides all of the equipment and personnel required, and supplies the funds for claim payments.
Fraud can be perpetrated by anyone and can involve every type of claim. Describe five or six scenarios helpful in identifying fraudulent situations.
Possible Answers:
A member is covered under two policies for group hospital benefits. This fact is concealed to avoid reduced payments by one or both of the insurers.
A prospective insured has been receiving medical treatment for hypertension. This question is answered negatively on an application for life insurance in an effort to obtain coverage not otherwise available or at a more favorable rate.
A member has a condition that requires prescription medication. Dates on the bills are altered and photocopies plus the originals are filed to receive multiple payments for the same charges.
An employee copies another claimant’s bills, replacing the actual claim data with his own. The bills are marked “paid” and the fake claims are submitted as his own.
The insured’s attending physician signs a return to work release. Discarding this, the insured shops for another doctor who will extend disability.
The insured stages an intentional injury to appear accidental.
A worker strains his back lifting a TV set at home. The next day, coworkers find the insured lying at the bottom of a flight of stairs complaining of back pain. A workers’ compensation claim for loss of wages and medical expenses is filed.
The member’s spouse sustains a stroke and requires constant custodial care at home. The member’s stable, chronic condition suddenly becomes acute, thus rendering the member unable to continue working and enabling the member to remain home and care for the spouse.
Explain the importance of preserving patient privacy while meeting the needs of an insurance company.
Answer:
The very nature of health benefits administration requires a great deal of personal information to be gathered and maintained about many individuals. Therefore, the needs of the company must be carefully weighed against the person’s right to privacy so as to avoid unwarranted invasions of that right. In particular, claims information is considered to be privileged and confidential in the context of the administrator-member relationship. Unauthorized disclosure of information may represent a violation of that confidentiality and may be prosecuted under the Health Information Portability and Accountability Act (HIPAA).
40. Identify and explain the differences between various kinds of damages including compensatory and punitive damages and bad faith awards.
Answer:
Compensatory damages are designed to compensate an insured for all of the actual losses or damages to make that person whole again. For example, if a person has not been able to pay his home mortgage or car payment because he did not receive a monthly disability check and, therefore, his home and car are repossessed, he may be able to recover equity for the home and car, attorney fees, and damages for emotional stress.
Punitive damages are often the larger of the two awards and are intended primarily to punish wrongdoing by the defendant and make an example of them to help deter such actions in the future. Unlike compensatory damages, punitive damages are not automatically recoverable if bad faith is found. In addition to bad faith, a plan member in California, for example, must prove the insurance plan to be the cause of fraud, oppression, or malice.
Bad Faith Awards
The dollar amount of a bad faith award is based on two concepts: (1) the degree of wrongfulness and (2) the wealth of the defendant. All lawsuits are expensive not only in the dollar cost of the damages, but in other costs as well. These costs remain even if the case is settled out of court. If the case is settled out of court, the plaintiff’s attorney costs, miscellaneous costs, the attorney costs for the plan, and the benefit not originally paid must be paid. Additionally, substantial pain and suffering costs may be included. The value of the claim usually has no correlation to the amount of restitution (award) sought.
