Week 12 and 14 Flashcards

Prepare for final exam

1
Q

Congress has ____ to create a form of national health insurance, but partial national health insurance has included

A

Failed! [Medicare, medicaid, medicare inclusion of end stage renal disease (ESRD) patients, SCHIP, Medicare Part D Drug Coverage]

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

In ____, the U.S. congress passed and President Lyndon Johnson signed a law adding Titles XVIII and XIX to the Social Security Act

A

1965

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What did title XVIII do

A

Created medicare, a universal and mandatory health insurance program for the elderly, which was subsequently expanded to include persons permanently disabled for at least two years and persons with otherwise fatal kidney disease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What did Title XIX do

A

Created federal-state partnerships to establish insurance plans for low-income people, broadly called Medicaid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Describe the initial structure of the medicare program

A

original medicare had a standard appearance for the time, hospitals would receive highest priority with “first dollar” coverage. physician care included an initial deductible with a coinsurance provision and a “usual, customary, and reasonable” fee schedule to set provider fees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

describe Part A of medicare

A

Part A paid for services provided by hospitals (enrollment in part A was mandatory for every person receiving social security benefits, the entire cost of Part was paid for by the Medicare Family Trust, a separate government account funded by general (income tax) revenues and earmarked the “medicare tax”)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

describe Part B of medicare

A

Part B (covering physician services) was called the supplemental medical insurance was made voluntary, although the premiums paid by enrollees were so low that enrollment had been nearly 100% from the beginning of the program

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

according to current law, the basic Part B premium is intended to cover [xx] percent of the program’s cost, with the remaining [xx] coming from general tax revenue

A

25%, 75%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Beginning in {xxxx}. Congress established a _______ for _______

A

2010, sliding income scale, Part B premiums

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Assess Medicare Part A from an economic perspective

A

The structure is completely “upside down” because it provides nearly “first-dollar” coverage but offers no serious protection against “catastrophic” financial risks. The part A deductible generally tracks with the CPI.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

compare the medicare Part B deductible to the CPI

A

New law keeps the deductible a constant proportion of average Part B spending into the future, which means that it is increasing faster than the CPI in general

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what would be the economically appropriate deductibles?

A

indexing with the CPI, the proper deductibles should be about $307 for Part A and $383 for Part B

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the economically efficient co-pay for hospital care?

A

Given that the optimal coinsurance for hospital care is approximately C= 0.05, a per-hospitalizing copay of about $750 per hospitalization seems appropriate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Describe the way Medicare Advantage works

A

Through medicare advantage, enrollees continue to pay their appropriate part B premium, and medicare pays the private insurance plans using from Part A and Part B pools which provide insurance coverage to enrollees, usually for no additional charge. These plans commonly cover prescription drug costs as well, matching Part D insurance and obviating the need for an enrollee to purchase a separate Part D plan.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the most commonly chosen plan in Medicare Advantage?

A

Medicare HMO, a “classic” capitation insurance plan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How was Medicare Advantage initially named? How did this change?

A

The 1997 BBA legislation initially named the program Medicare + Choice (commonly M + C), which was eventually incorporated as Part C of medicare. In 2003, it took on the name Medicare Advantage.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Who are tweeners, and how was SCHIP designed to support them? How did SCHIP operate?

A

Tweeners were known as individuals from families who made too much to qualify for medicaid, but had limited access to private health insurance. The Supplemental Children’s Health Insurance Program was designed to support them with an allocation of about 40 billion dollars. Federal-State partnership.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What was a unique feature of the original design for Part D of medicare, and how was this feature addressed through the Affordable Care Act

A

Part D is intended to support individuals who need help with drug expenses. Part D began with an unusual design, employees had strong coverage for initial expenses, there was a “donut hole” where coverage all but vanished, then there was protection from very large annual drug expenses (i.e. catastrophic risk) . The ACA put in place a phasing out of the donut hall by 2020, although this donut hole will close faster for unbranded drugs).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Why do Medigap programs exist? How many Americans are enrolled?

A

Medicare Advantage enrollees are not allowed to purchase Medigap plans, and medicare coverage leaves large gaps and holes in the extent of coverage. 12 million Americans are currently enrolled.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How does Medigap coverage work? Explain the stop-loss feature, and the relation to medicare HMOs

A

Medigap “fills in gaps” through private insurance contracts and often have a private array of choices - two of the plans have initially more limited coverage, but eventually have a “stop-loss” feature (which is also shared in Medicare HMOs). For these reasons, higher Medigap premiums are associated with higher medicare HMO enrollment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

How many people are treated by medicare in the U.S.?

A

About 48 million.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Describe the 4 parts of medicare, and if they are mandatory or not

A

Part A: Enrollees’ hospital care (mandatory)
Part B: Outpatient care and physician services (voluntary but highly subsidized)
Part C: option for medicare enrollees to receive health insurance from a private plan rather than through plans A and B (most are built on HMO models)
Part D: pays for an enrollees’ prescription drugs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Describe the DRG as a cost control mechanism in Medicare

A

DRG (diagnosis resource group) pays a fixed amount to hospitals based on the diagnosis (Prospective payment system) rather than length of care or extent of care given

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Describe the effects of the Prospective payment system

A

Has substantially shortened the length of stay (LOS) for patients. Substantial treatment has shifted to “ambulatory surgical centers” (ASCs) and through the substitution of other facilities, such as skilled nursing facilities and home health care.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

How have hospital readmissions and mortality changed since the shift to the prospective payment system?

A

Re-admittance rates remain about the same, mortality rates are also the same. Seems that the implementation of PPS did not create any systematic degradation in patients’ health and safety, despite reduction in LOS.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What prevents a hospital from benefitting financially from discharging patients and then re-admitting them?

A

If the readmission takes place within 7 days, it is counted as the same spell of illness, consequently the hospital receives no new DRG payment

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What are the consequences of the prospective payment system for hospitals?

A

Declining profit margins, decreasing intensity of treatment
- improved profit margins on medicare cases from ‘91 - ‘97 were accompanied by improved operating efficiency at around a 17% margin
- hospitals briefly in the red
Lower occupancy rates, lower admissions rates

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What have been the consequences of the prospective payment system on small hospitals?

A

Ambulatory surgery as an increasingly popular alternative. Small hospitals typically carry out procedures that are relatively uncomplicated and relieve competition from ASC-like organizations. PPS system may have contributed somewhat to the growth of the ASCs, but at least some of the economic hardship facing small hospitals comes from other directions than the PPS.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Describe the changes made and the subsequent response to the Balanced Budget of 1997

A
  • BBA was passed in response to increased hospital profitability and growing medicare costs, payment reductions caused by the BBA greatly increased financial problems of many U.S. hospitals, congress amended with the BBRA which restored about 11 billion dollars in payments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Define the logic behind Resource-Based Relative Values (RBRVS) in medicare payments to physicians

A

The motivating logic is to pay physicians according to the time and complexity of their effort equally whether completing neurosurgery, psychiatric consultation, or removing warts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Describe the overall impact of RBRVs

A

Studies have shown that generalists have done about as well as would have been predicted. Surgeons have declined, but not as much as what would have been expected.

32
Q

Describe how a capitation plan would work

A

In a capitation plan, payments are wholly prospective - the financial risk that a capitation plan provides is considerable

33
Q

is medicare allowed to use Cost-Effective Analysis as a tool?

A

No

34
Q

Challenges in Paying Physicians Based on DRGs

A

Complex Patient Cases: DRGs categorize patients based on their diagnoses, procedures, and other factors. However, patients with similar DRGs can have varying levels of complexity and comorbidities, making it challenging to accurately assess the resources required for their care.
Incentives for Cost Cutting: Paying physicians based on DRGs may create incentives for hospitals and healthcare providers to cut costs rather than focusing on quality of care. This could potentially compromise patient outcomes and lead to inadequate medical services.
Limited Focus on Outcomes: DRGs primarily focus on the diagnosis and treatment provided during a specific episode of care. This may not adequately capture the long-term outcomes and overall health of the patient, which is a crucial aspect of value-based healthcare.
Difficulty in Standardization: Standardizing DRGs across different regions and healthcare settings is challenging due to variations in patient populations, healthcare infrastructure, and resource availability. This can lead to inaccuracies in payment models.
Inability to Account for Individual Variations: DRGs may not fully account for individual patient variations, such as socio-economic factors, patient preferences, and other determinants of health. Physicians may argue that a one-size-fits-all approach does not adequately reflect the complexity of patient care.

35
Q

Pros and Cons of Capitation Model:
Pros:

A

Cost Predictability: Capitation provides cost predictability for payers, as they agree to a fixed payment per patient over a specified period. This helps in budgeting and financial planning.
Incentive for Preventive Care: Physicians under capitation have an incentive to focus on preventive care and manage chronic conditions effectively to avoid costly treatments in the future.
Provider-Patient Relationship: Capitation can strengthen the provider-patient relationship, as physicians have a vested interest in maintaining the health of their patient population.
Encourages Efficiency: Physicians have an incentive to provide cost-effective care, leading to increased efficiency in healthcare delivery.

36
Q

Cons of the capitation model

A

Risk of Underprovision of Services: There’s a risk that physicians may underprovide services to control costs, potentially compromising the quality of care or neglecting necessary treatments.
Challenges for High-Cost Patients: Capitation may pose challenges for healthcare providers dealing with high-cost patients, as the fixed payment may not adequately cover the expenses associated with their complex medical needs.
Lack of Incentive for Costly Treatments: In some cases, capitation may discourage physicians from recommending costly but necessary treatments or procedures, as it could negatively impact their financial bottom line.
Difficulty in Adjusting for Patient Complexity: Capitation models may not easily account for variations in patient complexity, making it challenging to allocate appropriate resources for the care of diverse patient populations.

37
Q

Who is considered eligible for medicaid?

A

Anybody within a state who is eligible for income assistance is also eligible for medicaid, about 20% of the population is currently enrolled.

38
Q

How is medicaid financed

A

Medicaid is largely financed through the federal medical assistance percentage (FMAP), states with higher per capita income tend to have more generous programs, but also face higher prices for their medicaid programs because the rules creating FMAP cause the federal share to be lower.

39
Q

Characterize medicaid payments to providers and physicians - what is the impact of that?

A

Medicaid pays most health care providers poorly, with physician compensation even lower. It becomes more difficult access to physicians who accept medicaid for insurance.

40
Q

How does medicaid address the lower payments for providers

A

Disproportionate share payments (DSH) to individuals who treat an unusually large number of patients in the region

41
Q

Outline the shift of medicare

A

Medicare has seen a shift from a poorly compensated structure to Medicaid Managed care organizations (MCOs)

42
Q

how much of LTC does medicaid pay for?

A

Roughly half of all

43
Q

How does medicaid verify people for eligibility

A

Income tests, asset tests

44
Q

Compare and contrast the federal vs state involvement in medicare and medicaid

A

Medicare is run by the U.S. government, but medicaid is run jointly by the state and federal governments

45
Q

Describe the three major parts of the ACA (different from the ways it was expanded)

A
  • medicaid expansion
  • individual insurance mandate
  • cuts to medicare spending
  • health insurance exchanges
  • medicaid expansion
  • coverage through employers
46
Q

elaborate on the medicaid expansion as it pertained to the ACA

A

rapid/dramatic expansion of coverage as states were forced to cover broader classes of people - a 2012 US Supreme Court ruling said that states could opt out of this part of the law

47
Q

Characterize the pattern of drug expenditures in the market

A

The increase in the efficacy of drugs has been generally matched by expenditures on them because of the costs of testing and development, increases in the number of diseases that may be treated, and the needs of an aging population

48
Q

Drugs account for roughly ______ % of healthcare expenditure

A

10-15%, 1/6 depending on how you measure, which constitutes roughly 3% of GDP

49
Q

Characterize the general timeline of drug development

A

Preclinical testing, waiting, and development.
Phase 1, Phase 2, Phase 3, NDA Review,
Postmarket surveillance.

50
Q

Characterize Phase 1 of an FDA trial. What dosage and how many years? What proportion of drugs make it through?

A

Involves a low dose on healthy people, and takes about 2 years.

Initial safety testing after animal testing. Drugs are administered in medical-laboratory conditions to volunteer patients with the goal of ascertaining specific reactions. 70%

51
Q

What proportion of drugs generally pass Phase 1 of an FDA trial

A

Roughly 70%

52
Q

Characterize Phase 2 of an FDA trial
What dosage, to whom and how many years? What proportion of drugs make it through?

A

Drug is dosed to sick individuals over the course of roughly 2 years.

Phase 2 considers a specific drug’s overall efficacy, (effectiveness in treating the disease) typically involving a randomized control trial. Roughly half pass this round

53
Q

What proportion of drugs generally pass both Phase 1 and Phase 2 of an FDA trial

A

(0.5)(.70) = 0.35, or roughly 1/3 of overall drugs make it through to this stage

54
Q

Characterize Phase 3 of an FDA trial. How long does it take?

A

In phase 3, the drug is extensively tested for effectiveness, which takes between 3 and 4 years. Phase 3 includes extensive efficacy and safety testing, generally over a much larger population.

55
Q

What proportion of drugs pass phases 1, 2, and 3

A

About 21.5%

56
Q

Characterize Phase IV of drug development

A

This stage is known as postmarking surveillance. Only about 20% of the original drugs brought for testing receive market approval. FDA analyzes this data and sometimes withdraws drugs at this stage. This serves to evaluate the long-term effects of the treatment.

57
Q

How to drugs get FDA approval

A

New drugs have to submit a New Drug Application. These typically take a review time of about 24 months.

58
Q

For some drugs, the FDA requires additional studies. What phase is this grouped under and what’s the purpose?

A

These are represented in Phase 4 (Post-Market Surveillance). The goal of Phase 4 is to evaluate the long-term effects of a particular drug.

59
Q

Define a patent on a drug

A

A patent is defined as a legal monopoly on a drug, in which the company may recoup the millions of dollars it spent on testing.

Patents - and the monopoly profits they provide, motivate companies to move through the costly investments associated with drug production.

After that time elapses, other companies are able to produce the same drug cheaply and profits decrease sharply.

60
Q

If the null hypothesis H0 is that the drug is bad, define Type 1 and Type 2 error

A

Type 1 error: rejecting a true H0, approving an unsafe drug (False Positive)
Type 2 error: rejecting a drug that is actually safe, rejecting a safe drug (False Negative)

61
Q

If the null hypothesis H0 is that the drug is good, define Type 1 and Type 2 error

A

Type 1 error: rejecting a drug that is safe, rejecting a safe drug (False Positive)
Type 2 error: approving a bad drug, a false negative (False Negative)

62
Q

Describe Direct-to-Consumer advertising specifically as it pertains to the U.S.

A

DTC advertising is banned in most countries excluding the U.S. Bans on DTC prevent moral hazard and reduce strain on doctor-patient relationships, the cost is that customers may not find out about drugs that would benefit them

63
Q

The CMS has a Medicare coverage center—National Coverage Decisions (NCDs)—that makes the coverage determinations. Do NCDs employ formal cost-effectiveness (CE) analysis?

A

No, they do not employ formal cost effective analysis. Their decision to include the drug under medicare coverage is based on the scientific evidence of a product’s efficacy.

64
Q

Do foreign countries perform Cost-Effective analysis?

A

Yes, in Great Britain and must of Continental Europe, Cost-Effective Analysis is performed

65
Q

Are consumers in the U.S. able to purchase prescription drugs

A

No, they generally require a prescription and are not able to directly purchase any drugs.

66
Q

How costly is it to produce a new drug?

A

It can cost around 500 million dollars to produce a new drug (Routledge book estimates between 250 and 400 million)

67
Q

What %age of drugs actually “pay for themselves?”

A

In practice, only the top 30%

68
Q

Outline the downsides of stronger patents

A
  • less incentive to further innovate
  • legal barriers to further innovation from other companies
  • customers have to pay monopoly drug price for longer
69
Q

Outline the downsides of weaker patents

A
  • if patents remain weak, there is no incentive to develop new drugs
70
Q

What does the pricing of drugs vary on

A

The pricing of drugs varies on the incremental value of the drugs in the market

71
Q

Compare the price of drugs produced in the U.S. to drugs in other countries (like Canada)

A

Drugs produced in the U.S. tend to be more expensive, which is attributed to higher legal costs in the U.S. and increasing coverage of prescription drugs in health insurance programs.

This is in contrast to Canada, where the centralized nature of the healthcare system allows for more “bulk buying.”

72
Q

How are drugs able to extent their patent monopoly period? How many drugs generally follow this pattern?

A

Extensions are available through the 1983 Orphan Drug Act, extends up to 7 years, and about 40%

73
Q

Characterize the price of branded prescription drugs even after patent monopolies have elapsed.

Compare and contrast this to market share and overall profitability.

A

Studies have shown that branded prescription drugs tend to retain higher prices than generic competition.

However, they maintain decreased market share leading to reduced profits.

74
Q

Describe how pharmaceutical drugs are advertised to the public

A
  • Direct-to-Consumer marketing
  • Advertising to doctors (in person, or print)
    Total costs are represented at roughly 40 billion dollars/year
75
Q

Describe the role of copay coupons and their direct implications for Medicare Part D.

A
  • Co-pay coupons reduce or eliminate higher premiums charged by prescription drug plans. Recent analysis showed that these coupons were massively profitable for drug pharmaceutical companies, increased prescription usage, etc.
    -Due to their association with higher premiums, they were deemed illegal for Medicare Part D
76
Q

Describe the role of key privacy features for Electronic Medical Records

A

HIPPA’s key privacy features require health care providers give copies of medical records to individuals upon request and that identified errors are corrected.
Patient privacy –cannot access EMR from outsiders