Healthcare Economics Flashcards
The study of how individuals and societies make decisions about how to use their limited resources.
Economics
Why is healthcare considered a limited resource?
There is not enough time or money to purchase and provide care to every individual in every conceivable manner.
Financial decisions that affect the entire society as a whole.
Macroeconomics
Financial decisions of businesses and individuals and the effect the financial decisions have on them.
Microeconomics
Broadest measurement of the health of the US economy calculated as the total value of goods and services produced by labor and property in the US.
Gross Domestic Product (GDP)
- HC is 17%
Increased government and personal spending on healthcare results in…
Increased national debt
Decreased funds for other programs
Decreased funds for other things (food, housing, etc)
Employer-paid health insurance results in decreased employee pay
May increase cost of products & services for patients
How does the aging population affect HC economics?
Older adults will make up 20% of population by 2030 which will increase national healthcare costs due to chronic conditions requiring expensive specialty and long-term care.
How does medical technology impact HC economics?
- Evolving tech results in better patient outcomes but viewed as dominant because of its continued escalation of cost
- Accounts for 10-40% of HC expenditures
- Leads to ethical dilemmas, who gets what scarce resources
- Technologies must justify their use in competing cost climate (only adopt new technology if it improves outcomes at a lower cost)
How do prescription costs impact HC economics?
- Retail prices continue to increase 2x
- Makes life-sustaining meds unaffordable
- Increased med prices r/i increased insurance premiums and taxpayer costs for CMS
Mandated employers to provide coverage based on the number of employees and those unemployed or not covered by employers were mandated to seek coverage through the marketplace.
Affordable Care Act of 2010
What are the goals & key provisions of the ACA?
Goals = increase access to coverage and protect from insurance practices that restricted care or increased care
KEY PROVISIONS:
- insurers can no longer deny coverage/care for preexisting conditions
- can remain on parent insurance until 26y/o
- plans cannot place annual/lifetime limits on coverage
- many preventative services MUST be provided (well-child visits, common vax, screenings for DM & HTN, dx screens, counseling)
What are the challenges of ACA?
Increased taxes, increased premiums, and some believe it’s an intrusion of rights to mandate insurance
Federal health insurance for people 65+, younger people with permanent disabilities, and ESRD requiring dialysis or transplant.
Medicare
What is Medicare - Part A?
Hospital Insurance
covers hospital stay, hospice care, some home health, and skilled nursing ONLY in LTC
- free for clients if they or spouse paid medicare taxes
- can be bought with premiums if taxes were not paid
- paid for by the federal government
What is Medicare - Part B?
Medical Insurance
covers provider services, outpatient care, medical supplies/equipment, diagnostic & preventative tests
- voluntary, paid by monthly premium
- supplemental private insurance will pay what part B does not cover
What is Medicare - Part C?
Medicare Advantage Plan
private healthcare plan that can be purchased to provide part A, part B, and most of part D
- may offer extra coverage (vision, dental, hearing, health/wellness)
What is Medicare - Part D?
Prescription Drug Coverage
drug benefits plan that covers prescriptions and vaccinations
- must enroll in medicare-approved plan that offers drug coverage
Largest source of coverage, paid by joint federal and state covering with taxpayer funding. Provides health insurance for low-income families, qualified pregnant women and children, those receiving SSI, and the elderly or disabled.
Medicaid
How is Medicaid paid for and what does it cover?
State-level program that receives federal funding.
Coverage varies state-to-state ~ hospital care, skilled nursing care, preventative, labs & diagnostics, home health, and routine visits.
Insurance either provided by employer by shared expenses through their employers benefit package or through purchasing it via the marketplace.
Private Insurance
Those who go without insurance and pay costs as they arrive, not eligible for CMS and employer doesn’t provide.
- At jeopardy for bankruptcy if debt accrues
- Refer to case manager or social worker
Self-Pay
Health plans that bring together delivery and financing functions to control costs, utilization, and quality of care for optimal outcomes.
Managed Care
What are the components of managed care?
- Policies and procedures that reflect EBP
- Increase positive patient outcomes to increase organization’s money (handwashing, 2 person foley insertion)
- Cost Containment
- Decrease unnecessary costs and increase quality of care
Appropriate and efficient delivery of services so needed revenues are obtained for the sustainability of the organization.
Cost Containment
This form of coverage offers managed care through a primary provider who decides what services the patient uses. (Provider=gate keeper)
Health Maintenence Organizations (HMO)
Which form of insurance coverage is paid on a capitated basis with a focus on prevention and the use of ambulatory care rather than expensive hospital care?
HMO
Which form of insurance coverage has the LOWEST monthly cost, paid by a flat fee?
HMO
Which form of insurance coverage provides a smaller network of providers and hospitals, restricts consumers to only receive in-network care, and may require consumers to see PCP for referral to a specialist?
HMO
- Specialist may/may not be approved by HMO
- Many services require reauthorization by HMO
This form of coverage provides a network of organizations and providers that provide lower-cost services because they are in-network BUT does allow consumers to get out-of-network care for an increased cost.
Preferred Provider Organization (PPO)
- Referrals rarely needed, less restrictive than HMO
How are providers/hospitals contracted in PPO?
Third party payer contracts with group of providers to provide services at lower price in return for prompt payment and guaranteed patient volume.
- Money is based off volume of patients
This form of coverage provides a combination of HMO and PPO but the consumer bears the cost for out of network care.
Point of Service
Classification system that groups patients according to their diagnosis, type of treatment, age, surgery, length of stay, and discharge to determine average costs to guide CMS reimbursement.
Diagnostic Related Groups (DRG)
How are DRGs used to reimburse hospitals? What are some considerations pertaining to DRGs?
Payment is based on pre-determined amount for expected cost that use starting point with number of days for grouping patient is placed in.
- Nursing care NOT explicitly calculated
- Do not reflect variability of patient acuity
- Coding (documentation) important to document needed care and resources
Costs paid by an insured individual that include deductibles and co-pays.
Out-of-pocket Expenses
Amount of money paid by the consumer before the plan pays for anything.
- Generally, apply per person per year
- PPOs increase premiums but decrease deductibles
Deductibles
Flat fee paid by the consumer at the time of health service.
Co-pay
How do HCOs budget?
They estimate the money and resources to be used for planned expenses and revenue over a period of time.
