Section 4/Week 4 Flashcards
Why do we need accountable systems of care
- health insurance doesn’t fit the traditional insurance model
- supplier-induced demand
- moral hazard
How did health care insurance originate
During the 1930s Blue Cross and Blue Shield came about as prepaid health cooperative programs
How did employer-based health insurance come about
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.
Are fringe benefits taxable?
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.
What is the effect of the fringe benefit tax exclusion for health insurance on your choice of the type of health insurance you have
It encourages you to buy more health insurance than you would if you were paying for it yourself
What is employer sponsored insurance now referred to as?
Indemnity Insurance
Indemnity Insurance
- 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)
In the 1920s and 1930s, another type of health insurance was trying to be established where
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
How did the AMA feel about the prepaid group medical plans?
thought they were medical soviets, and that they meant the destruction of private practice, thought they were exploiting physicians
What’s the difference between an insurance premium and monthly capitation fees
- 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
In a service plan…
- doctors are paid a salary
- doctors must stay within the global budget
- the AMA is hella opposed
In an insurance plan…
- doctors are paid FFS
- if the cost of care is more than the amount collected, losses can be carried forward
- AMA approves YAASSS
What did prepaid group practices eventually become
Health Maintenance Organizations! HMOs
How did prepaid group practices provide care that cost 30% less than the typical health insurance model
- Younger population
- Probably provided same quality of care for 30% less
What did the RAND health insurance experiment find when it compared HMOs and FFS systems
- 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
Principle lessons learned from RAND
- 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
What 5 things did the HMO Act of 1973 do?
- ) removed pre-existing state laws inhibiting HMOS
- ) subsidized the establishment of new, non-profit HMOs
- ) defined minimum standards to be certified as a “federally qualified HMO”
- ) required all employers who offered health insurance to their employees to also offer an HMO as an option
- ) permitted new models of HMOs to satisfy the AMA
Who assumes the financial risk if the cost of care exceeds the capitated budget
hospitals, doctors, HMO, HMO and doctors
What are 3 variations of managed care
traditional HMO, PPO (preferred provider organization), and the triple option (point of service POS plan)
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
the less the coverage is
Describe the Kaiser Permanente model
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
What are 3 requirements of the HMO Act
- ) HMO had to offer a specified list of benefits to all members
- ) The HMO had to charge all members the same monthly premium, regardless of their health status
- ) The HMO had to be structured as a nonprofit organization
What was the purpose of the RAND Study
to better understand how managed care held down costs by 30% unlike FFS
What was the RAND study
a randomized control trial measuring the quality outcomes, patient satisfaction, physician performance and health care costs among HMOs and traditional FFS models.
RAND results
Favorable selection does not exist in managed care. AKA managed care groups are not cherry picking to keep costs low, found through randimization
What was the Medical Outcomes Study?
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
Results of the Medical Outcomes Study
- 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
Group Model HMO
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
Independent Practice Association HMO
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
How are ACOs different than the original 1990s managed care
- 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)
What is a service plan
plan that depends on a fixed amount of money contributed (either by employers or a group of participants individually)
