Healthcare Ch. 6
average cost of premiums in 2013
-$5,885/year for single plan -$16,351/year for family plan *if employer-sponsored insurance, the worker pays only 18% and 29% of these costs, respectively*
how do Managed Care Organizations do reimbursement?
-PPOs establish fee schedules based on discounts associated with providers -HMOs either pay doctors a salary or use capitation
how many medicare insurees qualify on the basis of disability?
17%
how is medicaid funded?
50% from federal govt, 50% from states
benefits of part c
-optional program that operates under a managed care plan -may offer extra benefits and/or lower out of pocket costs for some services -privatized
what do DRGs do?
-pay for hospital inpatient services -sets a bundled price based on diagnosis at time of admission -about 750 DRGs -forces hospitals to control their cost (but you can't skimp on quality of care!)
what did the health reform do to medicaid?
-payments increased to PCPs -benefits in some states are expanded to all eligible individuals with incomes unto 138% of the poverty level (only half of the states expanded)
how is medicare financed?
-payroll taxes -beneficiaries pay annual deductibles, copayments, and coinsurance -general tax revenues
three types of cost sharing?
-premiums -deductibles -copayments
ranking of the sources of financing
-private 52.8% -public 32.5% -uninsured 14.7%
why are Medigap insurance policies important?
-private insurance covers remainder of medical bills -only about 30% of beneficiaries have it
financing has 2 intertwined functions:
-purchase of health insurance -payment for delivery of services
Part A skilled nursing facility coverage
-qualified 3 night stay in hospital -fully paid for first 20 days with a copayment from days 21-100
how is medicare part B financed?
-required beneficiaries to pay a monthly premium -annual deductible -coinsurance of 20% for covered services
characteristics of risk:
-unpredictable for the individual -predictable for a group
part A home health coverage
-up to 100 visits following hospital stay -no deductible or copay
benefits of part d
-voluntary program -premiums avg. $40/month with an annual deductible -doughnut hole coverage -privatized
what do both moral hazard and provider-induced demand lead to?
1) increased health expenditures 2) waste resources
what is coinsurance?
a Percent share of costs (the plan pays 80% and we pay 20%)
what is medicare?
a federal program under CMS -poses the greatest future challenge of all govt programs
what is a Moral hazard?
a higher utilization of health care because services are covered by insurance
what is a high-deductible health plan linked to?
a personal savings account used to reimburse the insured for qualified medical expenses -contributions are tax deductible -withdrawals are exempt from federal income taxes
what are national health expenditures?
an estimate of the amount spent for all health services, supplies, research, and construction activates in a year
what does financing mean?
any mechanism that gives people the ability to pay for health care services -in most cases, financing is necessary to have health care
what are emerging in popularity because of low cost premiums?
High-Deductible Health Plans (HDHP) or Consumer-driven plans
benefits of medicare part A
Hospital Insurance *entitlement program* -hospital inpatient -skilled nursing facility (acute) -hospice benefits -limited home health
Medicare part B benefits
Supplementary Medical Insurance -unlimited physician care -outpatient services -ambulance & ER -limited home health care
what comes out of the capitative rate?
any tests that need to be done (the doc may lose some money)
how is price based in individual private insurance?
based on each individual's health status & demographics.. it's usually more expensive than group coverage!
what are some of medicare's limitations?
does NOT cover: -vision care & eyeglasses -hearing aids -dental care -experimental treatments -long term care (it only covers acute stays)
part A hospice coverage
fully paid for the terminally ill patients
what are created to help individuals purchase competitive coverage?
health insurance exchanges
what do managed care plans consist of?
health maintenance organizations (HMOs) or Preferred Provider Organizations (PPOs)
why is group insurance cheap?
it anticipates a large number of people will purchase insurance through the insurer so risk & cost are shared equally among the insured, price is the same for everyone no matter the individual's health
why is there "doughnut hole" coverage for part D?
it's a way to provide covg. for everyone but to also keep costs down
who usually has self insurance?
large employers (5,000+) that have workforces big enough and diversified in risk to self-insure -cheaper for employers
what is stop-loss provision?
maximum out of pocket liability an insured would incur in a year -once you reach it you don't have to pay for the rest of the year
what is part C also called?
medicare advantage
what does CHIP do?
offers additional federal funds to states to expand Medicaid eligibility for children under age 19 who otherwise would not qualify
what is reimbursement?
payment made by third-party payers to providers (insurance companies, managed care organizations, the govt)
what is medicare part D
prescription drug benefit (2006)
what kind of reimbursement uses pre-established criteria to determine in advance the amount of reimbursement?
prospective
what kind of payment system does medicare use?
prospective payment system (PPS)
what kind of reimbursement had no incentive to control costs? Why?
retrospective. it looks at last year to set the reimbursement rate for this year, so doctors won't try to save money because they will end up with lower reimbursement rates the next year
what is a Fee for Service?
services are billed separately as a set of identifiable units of service. Charges are set by providers -*how traditional insurance companies would reimburse the providers*
how can the low income afford insurance?
subsidies are provided for people 133-400% of the federal poverty level
what is a premium?
the amount charged for insurance coverage, usually paid every month
what is a copayment?
the amount the insured has to pay out of pocket each time health services are received
what is a deductible?
the amount the insured must first pay before any benefits are paid by the plan -paid on an annual basis -different for different coverage -preventative care is exempt
what is the basic concept of insurance?
the healthy pay for the sick and it protects against risk -shifts risk from the individual to the group through the pooling of resources ---can't pinpoint who will get breast cancer but we know the statistics
what is provider-induced demand?
the provider's ability to create demand for services based on reimbursement
what do the employers do if they are self insured?
they assume the risk and pay all claims.. it gives them a great deal of control
how do managed care plans work?
they assume the risk in exchange for an insurance premium and contract with a network of providers -they use a variety of mechanisms to monitor utilization and reimburse providers -places limits on care
who buys Individual Private Insurance?
those who do not have group coverage
how is group insurance offered?
through an employer, union, or professional organization -*cheapest plans*
who is CHIP available to?
to families with incomes up to 200% of the poverty level
what is the purpose of cost sharing?
to reduce the misuse of insurance benefits
what is cost sharing?
when the insured assumes at least part of the risk. It lowers utilization without a negative impact on health
what is capitation?
when the provider is paid a set monthly fee per enrollee, regardless of how often the enrollee sees the provider
are all employers and individuals required to have health care coverage?
yes, or else we pay penalties
consequences of fee for service
-no inherent cost control -may create induced demand (docs would do more services to make more money)
five main types of Private Insurance?
-group -self -individual private -managed care plans -high deductible plans
how much does medicare cost?
-adults pay 4x as much -no limit on out of pocket spending
eligibility criteria for medicare:
-age 65+ -disabled individual receiving social security -end-stage renal disease
what does "minimum essential coverage"mean?
-before the ACA you could purchase just ER insurance, but now all plans have to cover what the government labels as essential coverage
what rules did the ACA give to private insurance?
-coverage for young adults until age 26 -coverage for pre-existing conditions -coverage for preventative services (w/ no cost sharing) -no lifetime limits -minimum essential coverage
what is the ACA doing to medicare
-eliminating the doughnut hole by 2020 -no cost sharing for preventative care -reductions in payment to medicare advantage (part C) plans
Part A hospital coverage
-fully paid for the first 60 days after a deductible -copays for days 61-90
why is financing complex?
-many payers -many plans -many programs -many payment options
what is CHIP? Who was it enacted under?
Children's Health Insurance Program -enacted under Clinton
example of medicare PPS
Diagnostic Related Groups (DRGs)