Module11 Flashcards
Questions to consider when thinking about health care financing
Is the ability to have good health a right or a privilege?
Is the ability to see a Health Care Provider when you are sick a right or a privilege?
Is the ability to have health insurance a right or a privilege?
Should access to good health be dependent upon one’s ability to pay?
What is the individual’s responsibility for one’s health?
What is the government’s responsibility for its citizen’s health?
What is society’s responsibility for its members health?
What barriers are present that prevent people from attaining good health?
What important factors are influencing the demand for health care?
Demographics:
- Baby boomer life expectancy increased w/ more chronic disease as a result
- Foreign born population is growing
- US Household of 2 parent families decreasing, single parent families increasing
- Increased income inequality - urban population has limited incomes
- Limited health workforce
When discussing important resources for insurance, what are the two most importnat?
People
Money
What important factors are influencing resource allocation for insurance?
Public Insurance (Medicare and Medicaid)
Private Insurance (For Profit Health Plans Raise Premiums to increase profit margin)
Consumer Demands for access to health care
New medical technology
Overuse and Misuse of medical services
High administrative costs
Escalating prescription drug costs and utilization
Medical needs and demands of 77 million baby boomers
Uninsured
Populations living in poverty
What important factors are contributing to increasing health care costs?
Increase in chronic illness
People are living longer
Advances in treatments and therapies
Prescription Drugs: Including Direct to Customer marketing
Physician Salaries: Physician as an employee v Physician as self employed
Insurance company mergers: less competition existing
Moral Hazard
Being Uninsured (Ult. taxpayers have to pay through medicare/aid to offset)
Moral Hazard
When people have insurance they tend to use the health care system more frequently
they may engage in higher risk behavior because they have better access to the health care system
The majority of the uninsured are …
people in low-income WORKING families
Who is more insured, adults or children?
Adults are more likely to be uninsured than children, r/t limited availability of public coverage
0-18 get free insurances
Who has a higher risk of being uninsured than non-Hispanic whites?
POC
Hispanic People (insanely high uninsured rate)
Non-white races
Adults making under 21,000 a year have a high chance of being …
uninsured
75% of uninsured people are…
actually WORKING FULL TIME
because of this employment, they cannot get public assistance insurance
What are some reasons why people remain uninsured?
Expensive premiums
No insurance offered through their job
They may be in a state that did not expand medicaid
Undocumented immigrants are ineligible
A shift from supportive manufacturing jobs to non supportive service sector jobs
Shift from full time to part time employment
Decreasing unionization trends
Decline in real wages
What are some important trends in regard to the uninsured/insurance?
- Trend in uninsured relates to the economy. Number of uninsured people increased during recessions when people lose their jobs
- Public programs fill in some loss of coverage (decrease uninsured), but many adults are currently ineligible for them
- As the economy has stabilized recently, coverage losses have slowed
Reasons people state they are uninsured?
Cost is too high
lost job or changed employers
lost medicaid
employer does no offer or ineligible for coverage
family’s status change
no need for it
How does being uninsured affect people?
- 1 in 5 adults go without needed med care
- Deaths among uninsured adults (25-64) is 22,000 a year, while diabetics only have 17,500 in the same age group
- less preventive care –> diagnosed at more advanced disease stages –> tend to get less therapeutic care –> High mortality
- Controlling for age, race, sex, income: uninsured cancer patients are 1.6x more likely to die within 5 years than insured
What are age trends related to uninsured status?
People tend to be insured between 0-18
There is a spike in un-insurance at age 19 to age 30 and may not feel they need insurance
The amount of uninsured decreases slowly to age 64
Medicare kicks in at 65 and people are insured again
What are the financial implications of having high uninsured populations?
- Uninsured face bills they cannot afford
- Medical bills quickly translate into debt, since they have low/mod income with little to no savings
- Hospitals charge the uninsured higher rates than those paid by public programs or private health insurers due to the latter’s negotiations
- Hospitals and other providers raise rates to offset the costs of those that do not pay their bills
What is medical bankruptcy
bankruptcies from unpaid medical bills which effected 2 million people in 2013
This makes health care the #1 cause of such filings, and outpacing bankruptcies due to credit card bills or unpaid mortgages
How much of the population age 19-64 will struggle with health care related bills this year?
more than 20% (56 million)
How many adults with year round health insurance coverage will accumulate medical bills that they cannot pay off this year?
almost 10 million
Ways to pay for health care
- Self Pay
- Private Insurance companies
- Public or Government insurance programs
What kinds of private insurance companies are there?
- Managed Care Organizations (3: HMO, PPO, POS)
2. Indemnity Plans (ex: Blue Cross/Blue Shield)
What are important examples of public/government insurance programs?
- medicare
- medicaid
- child health plus
- veterans administration (VA)
- indian health service
- workers comp
Almost half of health insurance of the insured in the US is from …
employer sponsored health insurance
62% of adults with dependent children pay their insurance premium out of …
employer sponsored insurance
Half of children insured (0-18) in the US are covered by…
their parents employer sponsored insurance
Self-Pay
Person is responsible to pay the entire bill for services
Typically you end up paying more than with insurance *
Why may you pay more with self pay?
Providers (hospitals and physician groups) contract with insurance companies normally and agree to charge an insurance companys pre determined and set amount for that particular service that is lower than the standard fee
So you do not get that lower rate
Why can self pay sometimes be less expensive than other insurances?
Providers sometimes have a policy where you get a discount if you pay up front with cash
Private Insurance / Employer Sponsored Insurance
Employers decide which health insurance to offer employees from a private company
What things does employer sponsored insurance affect?
- The cost of health care to the employee
2. Choice of providers and methods for accessing care
What things are causing a decline in employer sponsored insurance?
- Increasing health care costs
- Shift from manufacturing jobs to service sector jobs
- Increase in the number of low income families
Managed Care Organizations
type of private insurance developed because of the escalation of health care costs
It makes the insurance company an intermediary for financing health care, and accountability for cost was removed from provider and patient
How does managed care organization insurance differ from conventional health insurance?
It either provides services directly or contracts with providers
Goal of Managed Care Organizations?
Provide the highest quality of care to a population, efficiently and affordably, within the limits of available funding
What is the impact Managed Care Organizations have on providers?
Providers assume responsibility and accountability for the health of a given population, sharing the financial risk inherent in that responsibility.
If the provider does well, they are given financial incentives for care
Managed Care Organizations emphasize…
Coordinated and comprehensive services
Appropriate use of health care services
evidence based decision making
cost effective diagnosis and treatment
population based planning
health promotion and disease prevention
Managed Care Organization Cost Containment Strategies via the consumer?
Barriers made to reduce use of health care by levying forms of co insurance: deductibles, copays, etc
- Copays lead to a decline in consumer utilization of health services, but poor and sick were disadvantaged by copayments even though co insurance payments are adjusted based on incomes one study showed
Managed Care Organization Cost Containment Strategies via the Provider
Addresses the price that insurance pays for services through PPS and DRGs
PPS
Medicares Prospective Payment System
Medicare no longer reimbursed hospitals for actual costs incurred, but instead reimbursed them for a PRE SET amount per admission (or discharge) based on the type of illness or procedure performed
So they had a limit of cost during treatment
DRGs
Diagnostic Related Groups
470 payment categories of illnesses and procedures that were created from available data that used diagnoses, patient age, and presence of complications as the basis for estimating hospital costs
What data determines DRG?
Diagnoses
Patient Age
Presence of Complications
Health Maintenance Organizations (HMOs)
Type of Managed Care Organization
Provides financing for healthcare and hires providers to deliver the health care
HMO members (patients) pay a fixed monthly fee regardless of how much care they need, BUT the members must use HMO providers and facilities
No lifetime maximum use
Advantages of HMOs
Low out of pocket costs (little to no copay / deductibles)
focus on wellness and prevention
usually no lifetime maximum
Disadvantages of HMOs
tight controls limit access to specialty services
Care from non HMO providers generally not covered
Preferred Provider Organizations (PPOs)
Type of managed care organization
Group of doctors/hospitals that provide medical service only to a specific group or association at a negotiated and discounted rate
The PPO is sponsored by a particular insurance company, by one or more employers, or by some other type of organization (union or association)
Sponsor then has incentives or policyholders to use the physicians and facilities WITHIN the PPO network
How does payment/reimbursement work with a PPO?
PPO members pay for services when they occur and the PPO sponsor (employer or insurance company) reimburse member for treatment, minus any out of pocket costs like copays
In some cases, provider can submit the bill directly to the insurance company for them to pay the provider directly and just have the patient pay a copay
Advantages of PPOs
Free choice of health care provider (more available choices usually)
Out of pocket costs are capped
Disadvantages of PPOs
less coverage for care received out of the PPO network (will cost much more)
More paperwork and more copays than HMO
Point of Service (POS)
Type of Managed care organization
Has characteristics of HMO and PPO:
Like HMO, no deductible and usually only a minimal copay when you used a provider within the network
You get to choose a primary care physician responsible for all referrals in the POS network
Advantages of POS
Free choice of health care provider; no gatekeeper for non network care
minimal copay, no deductible in network
Disadvantages of POS
high copay for non network
deductible for non network
referrals are needed from primary care provider to see other providers or specialists in network
Pitfalls of Managed Care Organizations
- Loss of customary provider or preferred hospital
- Restricted access to specialty care and tests
- Restricted access to medications
- Managed care has incentive for under service
How does managed care restrict access to specialty care and tests?
It may require patients to see specialists only on the referral of their primary care physician. PCP may be judged on their use of lab testing as well and there will be pressure to avoid them in marginal situations
many managed care programs use clinical protocols to establish norms for ordering tests. Practitioners often complain that they are too restrictive
How does managed care restrict access to medications?
some expensive medications not included on the plans formulary.
less expensive drugs with more known side effects may need to be prescribed before offering drugs with better results
How does managed care have an incentive for under-service?
without clear evidence that a given course of action is indicated, decisions for coverage tend to go to less intensive care under capitation
Indemnity Plans
Type of private health insurance
Allows the GREATEST flexibility and freedom to choose physician, healthcare professional , hospital or service provider
What are Indemnity plans known as and why?
“traditional” fee for service insurance
patient pays first portion of medical costs, until the limit of the patients portion
(the deductible) is reached
a copay or co insurance may also apply
Advantages of Indemnity Plans
Patient has ability to self refer
No geographic or network limitations
Disadvantages of Indemnity Plans
may cost more
usual, customary, and reasonable (UCR) rates usually apply based on region
Medicare
Federal program for people over 65, or are disabled with end stage renal disease or Lou Gehrigs disease
Medicaid
state program for the poor
Child health plus (CHIP) / Family Health Plus
state program for children
Veterans Administration
The VA
federal program for veterans
run under the military budget
Indian Health Services
Federal program for Native Americans
Workers’ Compensation
state program for job related injuries
When was Medicare established?
in 1965 as an amendment to the Social Security Act
Most people age 65 or older who are citizens or permanent US residents are eligible for …
free Medicare hospital insurance (Part A)
What are some sub-requirements for free Medicare post age 65?
You receive or are eligible to receive social security benefits
You receive or are eligible to receive railroad retirement benefits
You or your spouse (living or deceased, including divorced spouses) worked long enough in a government job where Medicare taxes were paid
Over the years, medicare enrollment has …
increased greatly for both elderly and slightly for non elderly disabled under 65
What pays for the majority of Medicare Part A?
payroll taxes
Medicare Enrollment Dashboard
centers for medicare and medicaid interactive site that displays trends in enrollment in the nation, and by state and county for:
Traditional medicare
Other medicare programs
Prescription drug programs
Medicare Part A
(Hospital Insurance)
Inpatient hospital stays, care in skilled nursing facility, hospice care, and some home health care that is free for everyone 65+, ESRD, and ALS
What does Medicare Part A cover exactly?
Hospital Stay: 90 days w/ lifetime reserve of 60 days
Skilled Nursing Facility: If w/in 30 days of hospitalization of 3+ days. Covers up to 100 days
Home Health Services: Covers 80% of the cost for equipment needs
Inpatient Psychiatric Care: 190 days lifetime limit
Medicare Certified hospice: must have recertification every 6 months
How does Medicare A interact with Home Healthcare Agencies (CHHA)?
The agency must be a certified CHHA in order to bill medicare for services
Eligible clients for Medicare A home health care?
Must be homebound
show decreasing acuity
care must be intermittent
Homebound
patient has a taxing effort to leave the home: managing stairs, using assistive devices to ambulate, use of O2
Homebound Allowances
Visiting Health care provider
One day family event (wedding or funeral)
getting hair done
attending church
Homebound Non-Allowances
Grocery shopping
senior center activity
eating out at restaurants
What does Medicare A decreasing acuity mean?
you have a condition where you ARE getting better (Being at best with a chronic issue does not count for medicare)
What does Medicare A intermittent care mean?
not around the care clock (not a live in nurse - family must help out because nurses aren’t there all the time)
Medicare Part B
Medical Insurance
Voluntary coverage
Can only get Part B if eligible for part A. Supported by general tax revenues and a required additional income based premium
What does Part A not cover that Part B can ?
Outpatient services (non hospital; like to the doctors)
What things does Part B Medicare cover?
MD Services: annual physicals, prevention and screening services
Outpatient Hospital Services (outpatient surgery, diagnostic tests, radiology and pathology)
ER visits
Ambulance Fees
Outpatient rehab Services
radiation Therapies
Renal dialysis
Tissue transplants
Prosthetics
Medical equipment and supplies
Medicare Part C
Medicare Advantage Plans
Similar to HMO (Home Maintenance Organizations)
Auth by the Balanced Budget Act of 1997 “Medicare + Choice program” and renamed to Medicare Advantage with passage of Medicare Prescription Drug, Improvement, and Modernization act of 2003
Benefits and Offerings of Part C
Similar to HMO
VOLUNTARY
Most offer some prescription (drug) coverage
Lower out of pocket expenses
Medicare Part D
Prescription Drug
Voluntary Prescription Drug Program
Must have part A or B and requires a monthly premium and deductible
Fully implemented in 2006 but added to MMA of 2003
2 Options for Medicare Part D
- standalone for those who want to remain in original medicare (A or B)
- for those who have part C
Medicare Part D adds prescription drug coverage to …
Traditional Medicare
Some Medicare cost plans
Some medicare private-fee-for-service plans
Medicare medical savings account plans
Coverage Gap and Medicare Part D?
The drugs obtained must be under a manufacturer discount agreement while in a coverage gap to be phased out in 2020
the coverage gap is the amount of money the insurance company will pay per year for drugs before you have to do it yourself for a while until it reaches an excessive amount and returns again
50% brand drugs; 70% generic drugs
What other medicare part may offer prescription drug coverage that follows the same rules as Medicare Prescription Drug Plans?
C
Medicaid
insurance for the poor
Vital Roles of Medicaid?
Health Insurance Coverage - for the 31 mil children, 16 mil adults in low income families
Assistance to Medicare Beneficiaries - 20% of all medicare beneficiaries
Long Term Care Assistance - 1.6 million institutional residents, and 2.8 million community based residents
Support for Health Care System and Safety net - 16% of national health spending and 40% of long care services
State capacity for Health Coverage - federal share can range from 50-83%
People on medicaid tend to be more what than those on private insurance?
Disabled
Poor or Near Poor
Poor Health
Unable to work or limited in working
have a physical and mental chronic condition
Premium
when you pay a company to have a policy (insurance)
could be deducted from pay or paid directly
Deductible
set amount determined in your policy that will need to be paid first for healthcare services before the insurance company pays any bills
Co-payment
Set amount determined in policy that you need to pay the provider each visit
Co-insurance
similar to copay, but not a set amount
It is a percentage determined by the insurance company you have to pay the provider (ex: 20% of total bill), but the insurance company sets the allowable amount for this bill (So if they only allow 500 dollar bills but yours is 800, they will pay 80% of 500 and you have to pay 20% of 500 plus another 300).
Capitation
The limit on the amount the provider and insurance company have negotiated and agree to charge and pay for services that are provided regardless of the # of office visits
ex: NP works with a heart patient, regardless of amount of visits that provider will get the same payment - so they are pressured to do a good job
Formulary
List of medications that the insurance company will cover, usually at a lower cost
Each company has their own formulary
Benefits
Services that the insurance company covers - may not provide everything but there is a list they will cover
Fee-For-Service
The payment that the insurance company has given to the health care provider for services the health care provider determines is needed and bills for (Paying for what you get)
Retrospective Payment
payment determined after services are provided - similar to fee for service
ex: I did this, and this is the cost of it
Diagnostic Related Groups
Payments predetermined by the insurance company for care that is provided by healthcare organizations based on the diagnosis at the time of admission
Prospective Payment
Predetermined / Pre agreed amount the insurance company will reimburse to the healthcare provider for specific types of services provided
(Similar to DRG- many agencies have switched to this)
(Schedule has to be well managed or you will lose money)
Incrementalism
Term that says you are rolling out a policy or new change incrementally (slowly) - applying changes in policy more slowly (certain groups first and then expand)
Can be grandfathered in
Moral Hazard
when people have insurance they tend to use the healthcare system more frequently, and they engage in higher risk behavior because of access to the healthcare system
