4 - Risk considerations + Retro/Prospective Payment Systems Flashcards
Risk Spreading
Fundamental underpinning to health insurance (esp private)
POOL many people together to spread/share COSTS
generated by a small # of people
Sickest 5% account for 50% of healtchcare costs
Healthiest = 3% of costs
Adverse Selection
People with HIGH PERCEIVED NEED for health insurance are
More likely to want COMPREHENSIVE coverage than people with a lower percieved need for health coverage.
“Sicker-than-average” risk pool & higher costs
Favorable Risk Selection
CHERRY PICKING
Insurers include medical underwriting provisions.
Incentives to enroll “HEALTHIER-than average” risk pool
added benefits = gym etc
Moral Hazard
Individual behavior CHANGES when people are INSURED AGAINST LOSS
Consumer behavior leads to a HIGHER UTILIZATION of HEALTHCARE services
when the services are COVERED
RETROspective Payment Systems
Pay actual charges for services rendered by providers.
- *MORE RISK TO PAYERS**
- Less risk to Doctors*
FEE-FOR-SERVICE
INCREASE IN:
Admission / LOS / Intensity
FFS
Fee-For-Service Health Plan
Payment mechanism where seperate fee is paid for
EACH covered expense or service rendered
lab tests / exams / consult / office visit / fluids / supply
MORE RISK to the PAYER
DISCOUNTED FFS = based on a percentage of the UCR charges
(usual / customary / reasonable charges)
PROSPECTIVE Payment Systems
PPS
PPS, negotiated payment RATES** are determined **BEFORE serves are rendered
Negotiated preset payment amounts
Contracted Rates set in ADVANCE for units of service
MORE RISK FOR THE PROVIDER
less risk for the payer
- *3 types:**
- *Episode of Illness = DRGs / Per Diem / Capitation**
Reimbursement by EPISODE OF ILLNESS
type of PROSPECTIVE Payment Systems (PPS)
Physician/hospital pays ONE SUM for ALL SERVICES delivered during one illness episode
Global Surgical Fees for physicians & diagnosis related groups (DRGs) for hospital
Diagnosis-Related Groups (DRG) SYSTEM
type of PROSPECTIVE Payment Systems (PPS)
Hospital inpatient admission/stays are classified
not only according to clinical factors
but also RESOURCE CONSUMPTION
way to classify inpatients and measuring case mix
- *INCREASE**
- *Admissions**
- Decrease*
- LOS / Service Intensity*
PER DIEM payments
type of PROSPECTIVE Payment Systems (PPS)
Hospital/provider paid pre-established FLAT RATE for
- *all services** delivered to a patient during
- *ONE DAY OF INPATIENT STAY**
- or per each day of OUTpatient service*
- *INCREASE**
- *ADMISSIONS + LOS**
Decrease
Intensity of services
CAPITATION payments
type of PROSPECTIVE Payment Systems (PPS)
Negotiated, flat-rate payment to cover a person’s medical care for a SPECIFIC PERIOD
PER MEMBER-PER MONTH
regardless of whether services are utilized
LIKE CAMPUS CARE
- Decrease All*
- Admissions / LOS / Service Intensity*
