11) Health Care Costs and Cost Control

Question 1

What is the biggest issue in healthcare according to Dr. Mairella?

Answer 1

Cost

Question 2

Why is health care cost important?

Answer 2

• It’s how we get paid
• It affects demand and access
• They’re very high

Question 3

What happened to US per capita health care spending btwn 1988 and 2013?

Answer 3

It incr 20x

Question 4

GDP Chart

Question 5

What area of health care had the highest cost distribution of National Healthcare Expenditure?

Answer 5

Hospital Care (31%)

Question 6

True or False: The US has the greatest per capita spending on health care.

Answer 6

True

Question 7

True or False: In the US, govt spending for health care equals out-of-pocket spending?

Answer 7

True

Question 8

True or False: In the US, we spend the most on health care, but our life expectancy is not any higher than other countries w/lower expenditures?

Answer 8

True

Question 9

What things are affected by incr health care costs?

Answer 9

• Affordability of Care → Affects affordability of insurance
• Affordability of Insurance
• Burden on Businesses
• Individuals not getting the care they need
• Incr used of Govt Programs → Affects tax payers

Question 10

Why are health care costs so high?

Answer 10

• Moral Hazard → New discoveries we didn’t have years ago and pt’s want to try them
• Demographic Shift → Aging population
• Decr Consumer Ownership → You can’t get a quote before surgery
• Overutilization

Question 11

Who is to blame for high health care costs?

Answer 11

Everyone in the system

• Insurance Companies
• HCP’s
• Pt’s
• Malpractice → CYA medicine

Question 12

What factors drive incr health care costs?

Answer 12

• Price
  
  • Concentration of Market Power → Less options means higher prices
  • Administrative Costs → Costs associated w/doing business
    
    • If practitioners take time to do this, they won’t have time to see pt’s
• Volume and Intensity
  
  • Fee-for-service
  • Fragmented Care and Care Systems
  • Medical Technology
  • Medical Liability
  • Malpractice Liability
  • Incr Prevalence of Chronic Conditions
  • Demographic Shifts

Question 13

True or False: If you spend more money on health care, you will have better outcomes, but after a certain point, this is no longer the case

Answer 13

True

Question 14

How can price be controlled and what is the problem with this?

Answer 14

Mandated uniform schedule → Bad bc it can cause cost-shifting to other payers, incr utilization, and decr quality/pt satisfaction

Question 15

What are the 3 types of managed care plans?

Answer 15

• Health Maintenance Organization (HMO)
• Preferred Provider Organization (PPO)
• Point of Service (POS)

Question 16

Health Maintenance Organization (HMO)

Answer 16

Only pays for in-network care (unless its an emergency); PCP coordinates care

• Doesn’t pay for out-of-network care
• Most restrictive type of plan

Question 17

Preferred Provider Organization (PPO)

Answer 17

Covers more in-network costs, but will still pay for a portion of out-of-network costs

Question 18

Point of Service (POS)

Answer 18

Allows beneficiaries to chose btwn HMO and PPO each time care is sought

• Kind of a mix btwn HMO and PPO

Question 19

What were the early strategies for managing care costs?

Answer 19

• Selective Provider Networks
• Provider Risk Contracting
• Primary Care Gatekeeping
• Utilization Review → Providers were rewarded for decr utilization but this led to underutilization

Question 20

What is the current strategy for managing care costs?

Answer 20

Disease and Case Management

Question 21

What is the purpose of Choose Wisely ABIM?

Answer 21

To educate consumers about their choices

Question 22

What is the “shifting of the curve”?

Answer 22

Improving outcomes w/out incr cost

• The only way we’re going to change anything

Question 23

What are the “painless” cost control strategies?

Answer 23

• Controlling fees and provider income
• Dropping price of pharma and other supplies
• Decr administrative waste
• Eliminating medical interventions of no benefit → Need to create criteria
• Substituting less costly technologies that are equally effective
• Incr the provision of those preventive services that cost less than the illness

Question 24

Managed Care

Answer 24

An insurance model created to manage costs; Insurance plan will employ/contract w/an organized system of providers who will deliver services and share financial risk

Question 25

Explain how managed care works

Answer 25

• Providers make up the plan’s network
• Amount that the plan will pay depends on the network’s rules
• Restrictive plans cost less and flexible plans cost more

Question 26

What were some general proposals to contain costs?

Answer 26

• Govt Regulation → Ended up being more of an administrative burden
• Adjusting Provider Compensation → Payment cuts to providers
• Investment in IT
• Improved Quality and Efficiency → If we do things better, they’ll cost less
• Prevention → Doing things that cost less sooner to decr need for more expensive care later on
• Incr Consumer Involvement in Purchasing
• Altering Tax Preference for Employer-Sponsored Insurance

Question 27

What services make up the most excess costs in health care?

Answer 27

Unnecessary Services → $210bil in excess

Question 28

What are some ways of improving efficiency to decr costs?

Answer 28

• EMR
• EBP
• Quality-Based Payments
• Consumer-directed health care
• Prevention and Chronic Disease Management
• Eliminating Fraud and Abuse
• Managing devo and diffusion of new tech
• Comparative effectiveness