Section 4/Week 4

Question 1

Why do we need accountable systems of care

Answer 1

• health insurance doesn’t fit the traditional insurance model
• supplier-induced demand
• moral hazard

Question 2

How did health care insurance originate

Answer 2

During the 1930s Blue Cross and Blue Shield came about as prepaid health cooperative programs

Question 3

How did employer-based health insurance come about

Answer 3

During WWII there was a freeze on wages to prevent inflation, so labor unions could only bargain for better fringe benefits, which were not frozen.

They chose to bargain for better health care.

Question 4

Are fringe benefits taxable?

Answer 4

Nope!In 1954 government decided that fringe benefits did not count as taxable income.

This lead to health care insurance becoming somewhat of an indirect subsidy from the government.

Question 5

What is the effect of the fringe benefit tax exclusion for health insurance on your choice of the type of health insurance you have

Answer 5

It encourages you to buy more health insurance than you would if you were paying for it yourself

Question 6

What is employer sponsored insurance now referred to as?

Answer 6

Indemnity Insurance

Question 7

Indemnity Insurance

Answer 7

• you go to the doctor, and he charges you a fee
• you pay the fee to the doctor
• the insurance pays you back (it indemnifies you)

Question 8

In the 1920s and 1930s, another type of health insurance was trying to be established where

Answer 8

each patient paid a monthly membership fee, the money is pooled and used to hire doctors and pay for hospitals, each member is guaranteed care when needed

Question 9

How did the AMA feel about the prepaid group medical plans?

Answer 9

thought they were medical soviets, and that they meant the destruction of private practice, thought they were exploiting physicians

Question 10

What’s the difference between an insurance premium and monthly capitation fees

Answer 10

• insurance plans can be adjusted upward after the fact if costs rise
• capitation fees can not be increased, it has to live within a global budget

Question 11

In a service plan…

Answer 11

• doctors are paid a salary
• doctors must stay within the global budget
• the AMA is hella opposed

Question 12

In an insurance plan…

Answer 12

• doctors are paid FFS
• if the cost of care is more than the amount collected, losses can be carried forward
• AMA approves YAASSS

Question 13

What did prepaid group practices eventually become

Answer 13

Health Maintenance Organizations! HMOs

Question 14

How did prepaid group practices provide care that cost 30% less than the typical health insurance model

Answer 14

• Younger population

- Probably provided same quality of care for 30% less

Question 15

What did the RAND health insurance experiment find when it compared HMOs and FFS systems

Answer 15

• Quality of care and health outcomes were the same (except for low-income people with hbp or glaucoma)
• Patients found the experience of getting care from the HMO to be substantially less satisfactory than from the FFS system

Question 16

Principle lessons learned from RAND

Answer 16

• certain types of HMOs provide care that is substantially less expensive than FFS care
• health outcomes between the two systems are about the same
• process of obtaining care from HMO is less satisfactory from patient perspective

Question 17

What 5 things did the HMO Act of 1973 do?

Answer 17

1. ) removed pre-existing state laws inhibiting HMOS
2. ) subsidized the establishment of new, non-profit HMOs
3. ) defined minimum standards to be certified as a “federally qualified HMO”
4. ) required all employers who offered health insurance to their employees to also offer an HMO as an option
5. ) permitted new models of HMOs to satisfy the AMA

Question 18

Who assumes the financial risk if the cost of care exceeds the capitated budget

Answer 18

hospitals, doctors, HMO, HMO and doctors

Question 19

What are 3 variations of managed care

Answer 19

traditional HMO, PPO (preferred provider organization), and the triple option (point of service POS plan)

Question 20

the more freedom a patient has to choose which doctor or hospital to use and the fewer constraints there are on the use of care

Answer 20

the less the coverage is

Question 21

Describe the Kaiser Permanente model

Answer 21

Mr. Kaiser oversaw the health plan and the hospitals

Mr. Garfield oversaw the private medical group of physicians

The Permanente medical group and the Kaiser hospital group agree to work exclusively with each other, creating a mutual dependence

Question 22

What are 3 requirements of the HMO Act

Answer 22

1. ) HMO had to offer a specified list of benefits to all members
2. ) The HMO had to charge all members the same monthly premium, regardless of their health status
3. ) The HMO had to be structured as a nonprofit organization

Question 23

What was the purpose of the RAND Study

Answer 23

to better understand how managed care held down costs by 30% unlike FFS

Question 24

What was the RAND study

Answer 24

a randomized control trial measuring the quality outcomes, patient satisfaction, physician performance and health care costs among HMOs and traditional FFS models.

Question 25

RAND results

Answer 25

Favorable selection does not exist in managed care. AKA managed care groups are not cherry picking to keep costs low, found through randimization

Question 26

What was the Medical Outcomes Study?

Answer 26

The Medical Outcomes Study involved a comparison of three types of plans—a large group model HMO, an IPA HMO, and a traditional fee for service indemnity plan—regarding primary care quality and patient’s health status

Question 27

Results of the Medical Outcomes Study

Answer 27

• group HMO had the lowest cost of care and the best coordination of care among specialists and primary docs
• group HMO had lower access to care, continuity of care, and comprehensiveness of care ratings
• all plans fared the same in terms of health status of the patients

Question 28

Group Model HMO

Answer 28

HMO contracts with groups of physicians to provide care for members with a chain of hospitals or an individual series of hospitals

• physicians paid through subcapitation (salary, annual fee, or FFS)
• hospitals paid by either fixed amounts per year or separately for each hospital admission

Question 29

Independent Practice Association HMO

Answer 29

corporation usually formed and managed by physicians in smaller offices who aren’t part of large medical groups

• HMO accepts capitation payments for enrolled members and in turn contracts with individual physicians who have signed a contract with the IPA
• physicians treat patients on a discounted FFS or fixed amount per patient per year
• hospitals are paid same as group HMO

Question 30

How are ACOs different than the original 1990s managed care

Answer 30

• More knowledge
• More Data
• More Guidelines and Quality Metrics
• More Collaboration
• More Physician Control-ACA’s rules for ACOs (physicians decide together instead of insurance making all the decisions)

Question 31

What is a service plan

Answer 31

plan that depends on a fixed amount of money contributed (either by employers or a group of participants individually)