M9 Lectures (Healthcare Financing)
Medicare Eligibility
*1965: open only to older adults *Designed to help older adults pay for needed healthcare after they were no longer covered by employer supported healthcare insurance *1970s (during Nixon administration) *Expanded to include several groups of young disabled persons who could not obtain insurance any other way *Today *About two thirds of enrollees are older adults *About one third are disabled young people
1. Government Program: Medicaid (financing health)
*Enacted in 1965 and based on best insurance plans of that time *CRITICAL DIFFERENCE (w/ Medicare): Partially federally supported and partially state supported (sometimes 50-50) --50-50: Florida --some states may have a different split arrangements with federal government (the state has an incentive to try to shift people off of Medicaid and onto Medicare +If a Medicaid enrollee meets requirements for Medicare eligibility -> state might actually pay the Medicare premiums for that person in order to shift the costs to the federal government
1. Government Program: Medicare (financing health)
*Enacted in 1965 and based on best insurance plans of that time -Unfortunately -> hasn't evolved quickly over time as some other private types of insurance --thus -> may not be the best structure to provide health insurance anymore -Millions of Americans receive healthcare that is paid for by Medicare *CRITICAL: 100% federally supported -state -> do not share in the cost of Medicare -federal government -> has the burden to provide all the funding for the program
4. Disability and other insurance (private insurance)
*Private disability insurance: can typically be purchased through employer benefit plans & can be a critical supplement to Social Security disability plans available to all US citizens
2. Managed Care: Health Maintenance Organization (HMO) (delivery structures)
*Provided whatever care the individual enrollee needed from outpatient visits to hospital care *Hitch -> the individual enrollee needed to go to the HMOs healthcare providers and only in emergencies could they go outside HMOs network of providers *When sick & enrollee couldn't go see a specialist or have any medical treatment without the consent of the HMO *HMO primary care physician -> monitored the patient's health and serve as a gatekeeper for other service providers *Incentive for physicians in HMO ->actually to make sure the enrollees did not use services or rather were healthy *The HMO or managed care organization -> often provide funding for services beyond medical care (i.e. gym memberships or other wellness programs)
Out of Pocket
*Those without insurance pay out of pocket (essentially "self-insure" through a variety of tax-free savings options). Some ways to plan for medical care without insurance: 1. Flexible Spending Accounts (through employer) -can be set up through an employer to allow pretax money to be saved for antitcipated healthcare costs -money deposited in these accounts must be spent by the end of each year (however) 2. Health Savings Accounts -money can be saved for future healthcare needs *both of these -> kind of self-insurance approach +if an emergency or other health care need occurs -> individual must pay for it out of these accounts
2. Managed Care: Preferred Provider Organization (PPO) (delivery structures)
*a provider is listed with the PPO where patients can go seek medical help and pay a lower amount as a co-pay **if they go outside the network -> PPO still cover most of the cost but the enrollee would have to pay more -Gives more options for the enrollee, but at a cost
Medicaid structure
*complete FFS or managed care insurance plans -range from complete fee-for-service to more controlled managed-care insurance plans --most states -> shifting away from FFS to almost exclusively to manage care plans as costs skyrocket
2. Medigap insurance (private insurance)
*covers procedures and costs not covered by Medicare -include those by Blue Cross, Blue Shield, and AARP
2. National Health Insurance (run/finance health)
*hospitals and physicians are privately run; however, the government provides a national insurance plan that covers its citizens & pays for their healthcare Example (countries) - Canada, Israel, and some European nations Example (US) - Medicare and Medicaid programs -Government -> doesn't own the hospitals nor employee and physicians --gov does pay the bills for the citizens enrolled in the program
Kissick's "iron triangle" of healthcare (med mal)
*involves the balancing of the quality of healthcare, with access to health care, and the cost of healthcare -changes in any one of these three can directly impact the other two -ex. an increase in the quality of healthcare (putting more resources into improving healthcare) -> increase cost and decrease access for some people -ex. increase the access to healthcare (giving more people the opportunity to receive healthcare) -> increase cost, decrease the quality (only limited healthcare resources) -ex. decreasing costs (rather removing resources) -> result in decreased access and poorer quality of services *Key -> recognizing these three factors are greatly interrelated --when politicians discuss modifications to our healthcare system -> useful way of trying to understand the potential impact of those modifications
Medicaid Eligibility
*requires a couple of things 1. the program is "mean tested" -> the person needs to be indigent or economically poor -the person must be at or below the federal poverty level -poverty level determined by various factors (e.g. person's income and size of their family household) --currently about $12,000 for individuals and $25,000 for a family of four 2. the person meet the requirements of another program (e.g. being disabled) or eligible for back to work programs of the federal government +also covers care for other specially defined groups like children in foster care and other citizens with special needs
1. Nationalized Medicine (run/finance health)
*the government actually runs and owns the hospitals and pays the doctors, who are government employees Example (country) - United Kingdom -British health service -> owns the hospitals and pays the physicians and nurses and other staff to provide healthcare to their citizens Example (US) - Virginia system -US Government -> owns the VA hospitals and pays the VA physicians as government employees
4. Unregulated FFS/MC Medicine (run/finance health)
+fee-for-service or managed care medicine *Fully free market-based system -> individuals, insurance companies, and health care providers can pretty much do whatever they want to -prior to ACA (2010) -> most of the US fell under this type of structure *Very few countries (except some resource poor or smaller third-world countries) -> use this approach
3. Regulated FFS/MC Medicine (run/finance health)
+fee-for-service or managed care medicine *Healthcare and funding for the healthcare is entirely private *Government's role -> largely to set the ground rules and make sure that they are enforced *Minimum standards of care and benefit plan structures may be required and regulated **Again -> insurers are private and the healthcare provided is private Examples (countries) - other countries in Europe and many countries in the world Example (US) - Affordable Care Act or Obamacare -ACA -> dictates certain standards and structures that private insurance companies need to offer --entirely up to the private insurance carriers to decide whether they want to participate and how much they charge *In competition for enrollees; thus they have incentive to have lower premiums
Should we be more formal about rationing healthcare by certain characteristics? (De Facto)
-Ex. Should we limit healthcare options for older adults? -They're in their declining years --Thus: "bang for the buck" in carrying out an extraordinary medical procedure (e.g. heart surgery or hip surgery) may be much lower than shifting those resources to a younger person who has more life years ahead of them -OR is this inappropriately discriminatory towards older adults? -We could also limited access to health care resources based upon behavior -Ex. Certain diseases that are clearly the result of a person's bad behavior (e.g. lung cancer resulting from smoking or cirrhosis of the liver resulting from extreme alcohol use) could be eliminated from priority surgery lists or charged at twice the rate of other surgeries
De Facto Rationing of Healthcare
-Healthcare resources are not unlimited (rationed every single day) -Sometimes (rationing) -> based on whether a service is paid for by an insurance carrier or not *Many studies are showing that there is de facto rationing occurring on the basis of bedside decisions/actions by nurses and physicians -professionals are deciding with patients and families: --whether extraordinary treatments should be started or continued --given the probability of the success --the increased costs involved --the perceived need of resources for other people and in other healthcare areas +This type of rationing -> not systematic and oftentimes not fair ++some privileged individuals might receive special care and have access to things that most other people don't have access to
Wickline case (med mal)
-Ms. Wickline was hospitalized for circulatory problems and needed extra surgery -Surgery approved by insurer (Medicaid) -> physicians request for eight postoperative days in the hospital was not approved --Instead-> Medicaid nurse reviewer, allowed only four postoperative days in the hospital -Wickline discharged to home after four days and later (due to complications) -> physician had to amputate her leg -Wickline sued the state of California, Medicaid, and her physician -Ultimately -> appeals court found that responsibility resided with the physician because he did not challenge the decision by Medicaid --Thus, the physician was the liable party and not the managed care organization (Medicaid)
Wickline case -> changing? (med mal)
-Trend to hold providers responsible instead of insurers -> may be shifting -Recent state legislation and even federal patients will of rights -> may allow lawsuits against insurers and managed care organizations to be more successful
Disability Programs
-Very important sources of funding for important services for some of the most vulnerable people in our society --Unfortunately -> also have the potential to be abused by individuals who falsely claim that they have a disability 1. SSDI (Social Security Disability Income) 2. SSI (Social Security Income) *Payments to support disabled persons who cannot support themselves through employment *Must show: 1. They have worked at a job that has paid SSA payments (payroll deductions) for a certain amount of time 2. They are totally disabled for performing any work for a time that has lasted, or is predicted to last, at least 12 months 3. The inability to work is caused by a medical condition
Medicare Structure: Part C (Medicare + choice program)
-added in 1997 and is called the Medicare advantage program *Creates an option for Medicare enrollees to join an HMO or other managed care organization -Idea -> give Medicare enrollees options as to what type of delivery structure they wanted -Medicare HMOs -> limit what providers and enrollee can go to, but may also have a broader array of wellness benefits -Again: the idea is to give options and choice to Medicare enrollees
3. Long-term care insurance (private insurance)
-another growing sector *cover care that is not acute medical care, but rather services chronic conditions -> nursing home care and home healthcare for ongoing chronic illnesses would be covered by this -currently biggest provider of long-term care -> Medicaid -"spending down": when an older adult or other enrollee spends down their assets to become eligible for long-term Medicaid coverage --not ideal approach to long-term care but only option for many people who have no purchased private long-term care insurance
Medicare Structure: Part A (hospital benefits)
-covers major medical hospital costs -1960s: most Americans received the bulk of their healthcare in facilities like hospital --thus -> structured to primarily cover those costs -Funding comes from designated payroll taxes -When you receive a paycheck -> might see a tax called FICA (essentially the Medicare tax for Part A) -Medicare enrollees do not pay any premium for Part A benefits
Medicare Structure: Part B (outpatient, physician, home health)
-covers most other medical services (i.e. outpatient, physician visits, home healthcare, and other non-facility-based care) -Medicare enrollees -> pay a premium to enroll in Part B that can fluctuate from year to year -1965: most healthcare costs occurred in facilities --creators of Medicare did not anticipate large Part B costs for the government -> because of this, did not create a special tax for Part B government obligations -> instead funded Part B from federal general revenue -Outpatient procedures developed -> become more important for the care of enrollees and costs to the federal government have increased tremendously *Again: costs come straight from federal general revenue (income and other taxes from all citizens)
1. Affordable Care Act/"Obamacare" (private insurance)
-passed in 2010 and implementation in the years following -> several changes have structured the private insurance market in the US *regulates for profit and nonprofit insurance carriers, many of whom are contracted to provide healthcare by a person's employer -requires transparency in plans offered on healthcare exchanges -> potential enrollees can compare plans of different insurers Also requires these private insurance plans: -put no annual or lifetime limits on coverage -have no exclusions for pre-exisiting conditions -allowing millions of individuals with chronic conditions to have flexibility in insurance carriers -to allow children to remain on their parents health insurance up to age 26 -provide limited variations in price to make comparisons easier -> premiums can be vary based only on age, geographic area, tobacco use, and number of family members -allow for limited out-of-pocket expenses -to not discontinue coverage (recission) -> except in cases of fraud -to cover certain defined preventive services with no cost-sharing -spend at least 80-85% of premiums on medical costs -> the insurance carriers are limited to 15-20% profit -brought millions of US citiziens into private insurance market --certainly could be improved on -unclear -> whether current political forces in Congress will allow that
1. Fee-for-service (delivery structures)
-payment method is straightforward *When a particular medical service is performed by a physician or other health-care provider -> patient or their insurance pays a fee for that service *The more services that are provided -> the more the patient and insurance must pay -> more revenue the physician receives -Services may include lab tests, medical procedures, and visits *Incentive for the physician -> simply to provide more services and bill for them **Traditional FFS arrangements have been phased out
Medicare Structure: Part D (Pharmacy program)
-started in 2005 -Up to that point: no pharmacy benefits (medication or drugs) were covered by Medicare --many older adults had to "spend down" in order to be eligible for Medicaid pharmacy coverage -program is evolving -several complaints about the implementation of part D (including "part D donut hole") -> addressed by the ACA passed in 2010
Private Insurance
1. Affordable Care Act/"Obamacare" 2. Medigap insurance (covers procedures and costs not covered by Medicare) 3. Long-term care insurance 4. Disability and other insurance
Typical Delivery Structures for Health Care
1. Fee-for-service 2. Managed Care (replacing FFS) *Health Maintenance Organization (HMO) *Point of Service (POS) *Preferred Provider Organization (PPO) *Exclusive Provider Organization (EPO)
Sources of Financing Healthcare in US
1. Government programs *Medicare *Medicaid 2. Private insurance 3. Out-of-pocket payments
Four ways to run/finance healthcare systems
1. Nationalized Medicine 2. National Health Insurance 3. Regulated FFS/MC Medicine 4. Unregulated FFS/MC Medicine +organize a national healthcare system
Issues in Healthcare Cost Containment - Med Mal
Medical Malpractice *Cost containment not always compatible with quality care *Kissick's "iron triangle" of healthcare *Courts have typically placed responsibility on physicians providing care (not MCOs) -Wickline case -Changing? -State legislation -Federal patients' rights bill
Legal Issues in Healthcare Cost Containment - UR
Utilization Review *"Evaluation of the necessity, appropriateness, and efficiency of the use of medical services and facilities" -almost entirely a record review of what type of services were provided, for what cost, and it -> *Assumes that patients are not able to judge the appropriateness of services provided themselves -goes back to the old paternalistic or therapeutic privilege idea where healthcare professionals know better than the patient what is needed *Used extensively under Medicare -Medicare started (1965) -> patients just did what the doctor said, and thus Medicare (the insurer who paid for the services) wanted to make sure that the physicians providing the appropriate services -Bottom line (Stiles discussing record-keeping) -> as a professional, you need to maintain good documentation and records --Poor record-keeping suggests poor care
The private insurance market is the primary source of
financial support for acute and long-term care in the US +ACA and other regulations -> not only promote the use of private markets, but provide structure so that US citizens can make more informed decisions about which plan to select
2. Managed Care: Exclusive Provider Organization (EPO) (delivery structures)
just different structures for an enrollees care to be managed
2. Managed Care: Point of Service (POS) (delivery structures)
just different structures for an enrollees care to be managed
Nevertheless, if you are a service provider (med mal)
you should provide the services you feel are necessary, regardless of payment -otherwise, you could be liable