Day 6: Health care Organizations Flashcards
What is indemnity insurance in a historical perspective?
Insurance companies typically paid. What physicians and hospital billed
Who created hospitals in the historical perspective and what was the physicians role?
They were typically started by a specific religion as set up as non-profit places
Physicians were NOT hospital employees but held most of the power in the hospital
What is a Managed Care Organization (MCO)?
It’s an entity involved in providing a health insurance plan (HMOs, PPOs, PRMs)
Provides health care services, including RX, to defined population such as employer groups
Puts controls on access to service and the provision of care
Offers financial incentives to control costs
What is a Preferred Provider Organization (PPO)?
Group fo providers that seek contracts w/ insurance plans
Physicians may accept lower fees to increase pt volume
Physicians may accept utilization management and/or other cost and quality controls
Can a patient see the provider of their choice when enrolled into a PPO?
Yes, but they have a financial incentive to see providers within the PPO
*Pt will have to pay more if they see a provider outside of the PPO
What is a Health Maintenance Organization (HMO)?
They are responsible for financing and delivery of broad range of comprehensive health services to enrolled population
Can place providers at risk, directly or indirectly
What is a closed-panel HMO Staff model?
Hospitals are on a budget
The physicians are employed by the HMO - on salary (can get bonuses for the work they do)
HMO also employs physicians from most common specialties (pt will get referred to these drs and centers)
Often give financial incentives to use physician extenders - PA, NP and pharmacists
How does the staff model of closed-panel HMO influence provider behavior? And what are the advantages to pts and disadvantage in terms of control?
They use utilization review
Loss of bonus for not meeting goals
Threat to termination
These plans give the MOST payer control and give least patient choice of where to go
What are the three ways providers will get reimbursed?
Salary
Fee-for-service
Capitation
How are providers motivated to “perform” in how much they work and how administrative controls play a role
Have a salary and are payed a FIXED amount for a set period of time of work
Administrative controls are important because without them physicians will do what they believe is important and can run up changes on tests that may not really be needed
**can lead to too much care for an individual pt and too little for a population
What is fee-for-service (FFS) reimbursement?
Provider is paid for every service provided
*can lead to overuse and billing for a ton of services
^^this is up-coding where when a service is considered simple a provider will bill it as complex so that they can get higher reimbursement
What is resource-based, relative value scale? (FFS)
Each physician treatment or visit is assigned a relative value based on:
Physician work (time, skill, intensity)
Practice expenses
Malpractice costs and training of physician
What is capitation reimbursement?
Costs of care for a given population are estimated for a period of time (typically one year)
Providers are paid a set amount of $ per patient (provider keeps $, even if pt doesnt need the care)
*** If many patients are health and need little care the provider profits , but if many patients are sick and need a lot of care the provider could lose $
**this motivates the provider to include as many people in the capitation pool and negotiate a higher dollar amt per patient
DOWNSIDE: if many people are sick the provider could hold services because they wont be reimbursed after hitting max
What is a PBM?
Type of MCO
They Handel the RX component of health plans
Create pharmacy networks
Process pharmacy claims and reimburse pharmacists
Create and manage formularies
Provide mail order
Help to control costs
What is the theme of PBMs in terms of who owns them?
The largest PBM’s are now owned by another sector of the healthcare marketplace - chain pharmacy or health insurance company
Expressed is owned by Cigna
CVS bought Caremark
Walgreens bough Rite aids PBM
The more people a PBM covers, the more influence they have over drug companies and pharmacies
How does a PBM make money?
They negotiate discounts with pharmaceutical companies on drugs (deals that keep drug on the formulary, encourage pharmacists to dispense generic meds)
*****PBM is for profit and doesnt need to disclose discounts so they might not be passed onto consumers
They negotiate discounts with community pharmacies
Charge fees for controlling costs and improving quality
What are the concerns about PBMs?
Is there a conflict of interest when a chain drug store or health insurance company owns the PBM (can force people do go to specific places as well as force what drugs a pharm will dispense or dr will write for)
Are PBMs driving independent pharmacies out of business? (Will not contract with independent pharmacies but rather force patents to going to chain store instead)
Have overly restrictive formularies and other policies to control drug costs
PBM transparency (they are for profit and don’t need to disclose any deals made.
**research is unclear if they actually lower costs or not
What trend in health care costs of resent times?
Heath care spending outpaces overall inflation
We spend more than 50% than the next highest spending country
Minority of patients account for the majority of costs
—> 10% of patients account for 70% of costs
What are some of the reasons for the rise in health care cost?
Aging population
Obesity and other adverse lifestyle rates increasing
Improving medical tech (this stuff costs a lot to implement and develop)
Cost-shifting drives up premiums for the private sector (something like Medicaid only pays for 3 days of hospital say but if pt stays 5 days in order for the hospital to make up for those 2 days they will increase the cost on to private insurance pts)
What is the prescription health care cost and trends?
RX costs and volume is increasing
Drugs account for 10 to 15% of health care costs
US is 4th per capita consumption of drugs
US pts use more drugs that have been on the market for 5 years or less more than any country (name brands and new drugs are very expensive!)
What are the concerns about horizontal integration when it comes to health care cost trends?
5 major health insurance companies
3 major Pharmacy wholesalers
3 Major chains
3 major PBMs
They all control the whole market so less competition and can control prices for everyone and if a new one comes along they will just buy it up
Converse about vertical integration in terms of health care cost trends?
Health insurance and pharmacy chains own PBMs
How is provider profiling and reporting a way that MCOs do to control costs and improve quality
They use date and report cards to track clinical and health care cost performance
** this can cause providers to avoid “high risk” patients because they don’t have a bad report card trying to take care of the patient
How is selective contracting with providers a way that MCOs do to control costs and improve quality
They will choose between better quality - which dr does the best transplants vs lower cost - which dr will accept the biggest discount to join the MCO
**Mail order is also a way of this. Some plans will have pts use mail order and charge them less money
