Health Insurance and Managed Care
This domain covers payer types and the cost-control structures of managed care. Candidates should distinguish government payers (Medicare Parts A–D, Medicaid, TRICARE, CHAMPVA) from commercial payers, and understand plan models: HMO, PPO, POS, and EPO. Know key managed-care tools - primary care provider (PCP) gatekeeping, referrals, prior authorization, networks, capitation, and utilization review - and the cost-sharing terms: premium, deductible, copay, coinsurance, and out-of-pocket maximum. Understand coordination of benefits when a patient has two plans and the concept of the birthday rule for dependent children.
Traps to watch
- Confusing an HMO (referrals, in-network focus) with a PPO (broader network, no PCP gatekeeping).
- Assuming prior authorization guarantees payment - it does not guarantee coverage of the final claim.
- Mixing up Medicare Part A (hospital) and Part B (outpatient/physician).
- Forgetting that coordination of benefits determines which plan pays primary.
- Treating Medicaid eligibility rules as identical to Medicare's.
Rule of thumb
Primary pays first, secondary pays the remainder up to its allowed amount. The secondary never pays more than the patient's remaining liability.
Worked example
A patient has two plans. The primary allows $100 and pays $80. The secondary plan's allowed amount is $90. The secondary pays the lesser of the remaining $20 or the difference between its allowed amount and the primary payment ($90 − $80 = $10). So the secondary pays $10, and the patient owes $10.