Health Insurance and Managed Care Fundamentals
What to know
Master the building blocks: premiums, deductibles, coinsurance, copayments, out-of-pocket maximums, and how they interact. Understand plan types-HMO, PPO, POS, EPO-by network rules, referral requirements, and out-of-network coverage. Know managed-care tools: utilization management, prior authorization, case management, disease management, provider networks, and formularies. Distinguish Medicare Parts A–D and Medicare Advantage, Medicaid managed care, and commercial products. Grasp risk pooling, adverse selection, and medical loss ratio as concepts.
Traps
Questions love the deductible/coinsurance sequence: cost-sharing generally applies after the deductible until the out-of-pocket maximum caps member liability. Another trap is assuming HMOs never cover out-of-network care-emergency care is a standard exception. Distinguish coinsurance (a percentage) from copayment (a flat amount). Do not confuse Medicare Part D (drugs) with Medicare Advantage (Part C).
Worked example
A member has a $1,000 deductible, 20% coinsurance, and a $4,000 out-of-pocket maximum. For a $6,000 covered in-network service: member pays the first $1,000, then 20% of the remaining $5,000 ($1,000), totaling $2,000-below the maximum, so no cap applies. Rule of thumb: deductible first, then coinsurance, then stop at the out-of-pocket maximum.
Review how network design and utilization management balance cost control against access, since scenario questions test trade-offs.