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
How is selective marketing to patient “cherry picking” a way that MCOs do to control costs and improve quality
MCO will try to avoid enrolling “sickest” patients in their plans
They will downplay benefits that appeal to high-cost patients
How is using a gatekeeper or preauths a way that MCOs do to control costs and improve quality
They require someone from the MCO in order to review the request before it is approved and covered by the MCO
*can help stop the use of an expensive drug without maybe trying a cheaper alternative first
How is utilization review a way that MCOs do to control costs and improve quality and what are the ways its done?
Has physicians and RPhs review drug profiles and follow up to change or enhance pt meds or treatment
Retrospective: review RX already dispensed to pt
Concurrent: review RX at time of dispensing
Prospective: establish screening criteria in advance that will be used to review RX dispensed in future
How are formularies, step therapy, practice guidelines, case management a way that MCOs do to control costs and improve quality
Formularies: allow for PBM to get lower prices from manufactures and provide cheaper meds to pts
Step therapy: encourage use of equivalents lower cost meds before going to more expensive ones
EX: allows us H2RA before going to PPI, Use cheaper Atorvastatin before Crestor
Case management: have a provider work with people who are at high risk and have high medication costs to make sure treatment is correct and compliment to help reduce chance of ADR and hospital stays
What is drug Utilization review (DUR) also known as DUE and its effects of managed care tools?
It targeted at contraindicated or inappropriate drugs and results in increased discontinuation rates for the targeted frugs
**not much research done to show if they are actually good and the effects on patient outcomes
What is medication therapy management (MTM) and its effects as a managed care tool?
Associated with improvements in serveal clinical measures such as lowered BP, LDL etc
More studies needs to find the true impact
**is required for Medicare Part D plans
What do employers do to control costs?
Cost-shifting to patients / employees
Employees and patients see higher premiums, deductibles, co-insurance
**increasing these is does not show change in behavior for pts, etc stopping smoking, going on diet
Patient education programs
Patient wellness programs: paid bonus for losing weight, not smoking
Case management and disease state management programs
What are the disadvantages of managed care for pharmacy?
Increased pharmacist workload
Decreased reimbursement for drug product costs
Patients “blame” the pharmacist for changes in coverage
What are the advantages of managed care for pharmacy?
Increasing opportunities for pharmacists to be involved in pt care
Potential growth in reimbursement for pt care services
Increasing application for value of RPhs added to healthcare system
What are the characteristics of a “perfect” market?
- Many buyers and many sellers
- Freedom of entry and exit
- Standardized products
- Full and free info
- No collusion
What is a monopoly in terms of concerns about the health care industry?
Only one seller
**producer of a drug treatment for a rare disease
**only one neurosurgeon within a geographic region
What is a oligopoly in terms of concerns about the health care industry?
Few sellers and many buyers
**new drug class with few products
If you live in a rural place and there are only a few pharmacies available for someone to fill an RX
How is the freedom of entry and exit from the market a concern about the health care industry?
Need extensive education and training for providers
Cost of research and development
Regulatory and legal barriers
**its not easy to enter or leave the health care industry
Why is standardized products a concern about the health care industry?
Not everyone can use the same drugs in order to treat a patient
You must tailor the treatment for the individual patient and cant use a standard
Why is inelastic demand a concern about the health care industry?
This means that even tho you increase the price of drugs or services it does NOT reduce demand
Consumer purchasing behavior is not completely rational or totally based on price
You don’t pick the E/R you go to because of the price they change
Why is unpredictability of illness a concern about the health care industry?
Consumers may not know when they need care
Also they cant negotiate when they do need care
Having full and free information as well as collusion a concern about the health care industry?
Pt and providers don’t get all the information on what PBM or manufactures pay for drugs, on marketing etc
Collusion
Consolidation of the health care industry
Shortage of providers and institution in rural areas (setting prices to get deals done and working with drs to get things approved)
What are the key principles when it comes to health insurance basic concepts in terms of the economics?
Risk is unpredictable for the individual
Risk can be reasonably predicted for a GROUP
Insurance transfers risk from the individual to a group
Loses are shared by group members
EX: If you have 100 people on the insurance who each pay $10 they have a pool of $1000. Now if only 10 people get sick and get a change of $1500, it becomes the groups problem and will increase prices for everyone
Does a person having insurance induce demand for health care?
Do people seek out treatment because they know they have insurance that will pay if they go (even if they don’t really need to)
Will a provider offer more services b/c the patient doesnt have to pay for it
Will a person be prescribed more drugs if they have “good” insurance or bill for more services
Does having insurance cause a mayoral hazard?
Does a person engage in “risky” behavior b/c you don’t have to pay the full cost
You do crazy dirt bike trick because you know if you get hurt you wont have to pay for
Do you eat unhealthy because you know your insurance will pay for the drugs that are needed to lower cholesterol and BP
Does the having health insurance or access to insurance lead to adverse selection?
Do you purchase insurance b/c you expect to sick or wait until you get sick and then try to buy insurance
**waiting to get Medicare part D until you know you will be in need of drugs
What are the four types of insurance?
- Group- provided by company, union, etc
- Self insurance- typically large employer (they assume risk, does not contract with ins. Comp)
- Individual / private insurance ( self-employed, early retiree, no access to government or employer plan)
- Managed care organization
