Cochran Chapter 8 (Health Care)

Medicare's actuaries

Project that the trust fund (funded by the Medicare payroll tax) will be exhausted by 2030. After that and without changes, payroll taxes will be sufficient to pay for only about 4/5 of expenditures

consolidation

Should improve the ability of providers to meet the needs of patients w/ chronic conditions; yet, that promise is seldom recognized in practice, because patients, physicians, insurance companies, and medical organizations have competing incentives.

ills of the US healthcare system

1. Emphasis on certain kinds of care at the expense of others. Cure of acute conditions (lasting less than 3 months and requiring immediate medical attention/restricted activity) takes priority over care for chronic conditions (illnesses lasting over 3 months). Yet, chronic conditions are much more prevalent and more expensive to treat.

medical malpractice suits

A small % of health cost increases is owed to __________ ________ _________ filed by injured/disgruntled patients. Malpractice insurers raise their premiums to providers, who in turn raise their fees to consumers to cover the costs. Moreover, doctors practice "defensive medicine" by ordering more extensive tests & procedures than strictly necessary in order to guard themselves against possible lawsuits.

administrative costs

The complicated system of multiple insurers means that the US spends more on administration compared to other nations w/ simpler systems. Thousands of people and their associated equipment, offices, and support consume nearly 1/4 of health expenditures selling insurance, processing claims, billing for care, devising forms, and collecting money. None of this expenditure provides actual care for patients.

Insurance Market Reform (2)

Thus, (1) consumers of insurance in an HIM must consider which metallic level to buy and then compare (2) various insurance policies at that level, and (3) each policy's price for coverage at the desired plan tier. Finally, (4) purchasers must determine which doctors and hospitals are part of a plan's network of preferred health providers. Thus, even w/ strict regulation restricting unnecessary variation and forcing insurers to offer comparable products, purchasers are faced w/ complex evaluations that may make choice difficult. Other insurance market reforms that began in 2010 and were fully implemented in '14 include required dependent coverage for children up to age 26 on parents' policies; prohibition of annual or life-time coverage limits; prohibitions on denials of coverage (or cancellation of coverage) for pre-existing conditions, and limits on the ability of insurance companies to charge different rates for different persons (modified community rating).

Co-payment

Fixed amounts due at the point of service

the uninsured

60% of those without insurance live in families with at least 1 full-time worker, but whose employer does not provide insurance or cannot afford the premiums. Many believe that people without insurance do not go without health care because they can receive treatment in a hospital emergency department if they're truly sick. Such care, however, is often too little and too late. Moreover, people treated in this fashion remain ill for longer, have more disability, and experience more obstacles to productive work. In addition, uninsured persons, even when admitted to hospitals, receive less care, fewer tests and other procedures, and are dismissed earlier than insured persons with the same conditions; their death rates are much higher. The "safety net" of public hospitals, clinics, and charity care has become decidedly frayed. Competition, mergers, and financial belt-tightening have reduced the number of beds for the poor and have made it more difficult for clinics providing free/reduced cost care to remain open. Physicians and other health professionals have reduced their levels of charity care. Unemployed persons w/ health problems find difficulty securing employment b/c prospective employers can't afford to carry them on their insurance policies. Indirect costs of this are experienced by businesses in the form of lower productivity and by the government and taxpayers in the form of higher taxes needed to cover charity care and bad debt in public hospitals, and by health insurance policyholders in the form of higher premiums. ACA intends to alleviate these problems.

Medicaid

A federal-state program with benefits varying among the states. Prior to the ACA, states had to cover certain categories: Supplemental Security Income beneficiaries, persons who would have qualified for AFDC under pre-TANF rules, and certain other poor people, particularly young children and pregnant women. ____________ had to cover all children in families w/ incomes below the poverty line. In addition, states could choose to cover children in families w/ incomes up to 185% of the federal poverty level and other "medically needy" persons as defined by the state law. Prior to 2014, only about 1/2 the poor and near-poor received __________ coverage. ACA expanded the program to include all adults and children living in families below 138% of the poverty line. To receive ____________ matching funds, states must offer basic medical services (inpatient/outpatient hospital services, physicians' services, prenatal care, lab and x-ray services, home health services, skilled nursing, nursing home care, treatment of physical/mental defects in those under 21, family planning services/supplies) without cost to the patient. States may also include other services (dental care, phys. therapy, drugs, eyeglasses, dentures) for which the fed. govt. may reimburse a portion of the costs. Depending on the state's per capita income, the fed. govt. reimburses 50 to 80% of the costs of these services for pre-ACA eligibles and 100% of the costs for post-ACA eligibles (dropping gradually to 90% of costs for after 2020). States can "buy in" to Medicare for elderly _________ recipients by paying part B premiums. The reverse is also true: many poor Medicare recipients are also eligible for ___________, particularly for nursing home care and other services not covered by Medicare. ~20% of Medicare recipients are dually eligible, and _________ costs reflect this, with 2/3 of expenditures covering healthcare for elderly & disabled recipients. _______ supports 60% of all nursing home residents. Although the aged, blind, and disabled are only 25% of _________ recipients, their care accounts for 70% of the program's cost. The remaining 30% of funds care for children, their mothers, and other non-aged, non-disabled recipients.

Electronic health records

A major contributor to quality improvement & cost reduction is enhanced focus on ___________ ________ ________. The 2009 ARRA provided incentives for doctors to install such records in their practices. CMS established similar incentives for hospitals to implement __________ _________ ________. The US lags behind Europe in systems that automatically check for adverse drug interaction, right dosage, and previous medical history, thus helping to reduce both errors and unneeded and duplicative tests and procedures. Hospitals and doctors are allowed to cooperate to create such records, and (as incentive), they'll receive additional Medicare payments if they meet "meaningful use" targets. By 2015, reimbursements from CMS will be reduced if they don't use _____________ ________ ____________.

deductible

A set dollar amount that a patient must pay directly before insurance benefits begin

coinsurance

A percentage of the bill that a patient must pay out of pocket after meeting the deductible

New Revenues

ACA is mostly paid for by new taxes on upper income earners. Individuals w/ taxable incomes of $200,000/ year (couples w/ 250K) now pay a Medicare tax of 2.35% (instead of 1.45%) on income over those amounts. They also pay a 3.8% "contribution" to Medicare on unearned income (capital gains). Beginning in 2018, there will be a tax on "Cadillac" (plans costing over $10,200 per year for individuals and over $27,500 per year for families) insurance plans provided by employers. Penalties for not obtaining insurance also generate revenue. The insurance industry, in return for gaining so many millions of additional subscribers, must pay new fees, as must pharmaceutical companies and medical device makers.

Technology

Advances in tech are the most important part of spending growth. Diagnostic and treatment procedures (e.g., MRIs, neonatal ICUs, chemotherapy, coronary bypass surgery, and fiber-optic surgery) are very expensive because of the equipment and materials themselves and the specialized personnel needed to operate them. Yet there's little scientific assessment of the efficacy of most new treatments in extending life/improving well-being. Some tech does reduce cost (some drugs can treat conditions that formerly required surgery, MRIs replaced exploratory surgeries). However, doctors now perform such procedures more often than the old ones bc they're noninvasive, adding to the total cost of the healthcare system. The system of payment for procedures is also an incentive for service intensity. FFS rewards volume, not quality. Serious cost problems associated w/ tech flow from status competition between hospitals and doctors. Helicopter ambulances, open-heart surgery units, and chemo units have become items of high prestige, and often hospitals in the same area duplicate tech, irrespective of actual need. Each patient entering the hospital helps subsidize the equipment.

Accountable Care Organizations (ACO)

And patient-centered medical homes aim to remove current legal barriers to physician-hospital sharing of savings resulting from higher quality, lower cost care. Medicare will save dollars if such experiments are successful, and the _________s would be allowed to distribute bonus payments to members if the benefits are realized. Quality and cost savings are also the aim of various penalties created by Reform. Starting in 2012, Medicare payments were reduced for hospitals for high rates of preventable readmissions and hospital-acquired infections. In the same year, CMS introduced a value based purchasing program in which hospitals will be paid more based on whether they achieve higher quality care, as evidenced by their hitting certain performance measures.

Medical Bills

Are paid through complicated arrangements among govt. agencies, individuals, and private insurers. Governments provide a number of health-related services directly, for example, inoculations, health inspections, vector control, veterans' care, and epidemic control. They also operate some hospitals and other facilities and reimburse private medical providers through direct payments for services. Individuals pay for a variety of services directly, but they also pay indirectly by purchasing health insurance from private insurance companies. These companies reimburse providers for covered services, which vary widely according to the terms of the particular policies. Most private insurance is purchased through employers, with the employers passing their share of premiums to employees in the form of lower wages.

Fee-for-service (FFS)

At the highest level of the health care profession, ______ ____ ______ practice was the norm until recent decades. The professional provider of health services established his/her own office, with perhaps one or two others sharing the same specialty, saw only his/her own patients, and charged a separate fee for each individual service performed. Institutions like hospitals, clinics, and laboratories operated primarily on the same ______ basis. Hospitals were primarily public (city/county owned) or else were nonprofit community hospitals owned and operated by religious groups or nonprofit foundations. Labs, nursing homes, and other providers were mainly for-profit, independent operations. There were many independent health insurance companies offering products to businesses or individuals with some state regulation. Patients were also independent, free to choose among any providers willing to accept them as patients. Medical care in this kind of environment is difficult to coordinate for persons with multiple/serious medical conditions, fragmented, and expensive. In ______, the economic incentives are to provide more services to patients, even if they're of questionable or limited value. This structure is particularly problematic as the population ages and chronic conditions become predominant.

Medicare

Covers 41 million elderly people for hospitalization, physician services, post-acute care, and pharmaceuticals. In addition, 9 million younger persons w/ disabilities also receive support from ____________. 80% of recipients report satisfaction w/ the program and their ability to obtain and afford medical care when needed. Consists of 4 parts: Part A, Part B, Part C, and Part D.

ACA Medicare changes

Doughnut hole: Shrinks and then eliminates entirely by 2020 the Medicare Part D coverage gap. Preventive Care: Beneficiaries entitled to annual wellness visit and to preventive care w/ no co-pays. Reimbursements for primary care physicians and general surgeons increased. Medicare advantage: CMS overpayments to Medicare advantage plans reduced with savings helping pay for added benefits and ACA insurance access expansion. Taxes: Medicare payroll taxes and part B premiums increased for upper income earners. Quality/cost initiatives: Numerous quality improvement and cost reduction programs and experiments, including CMMI, PCORI, payment for value, bundled payments, ACOs, patient-centered medical homes, and penalties for excessive hospital readmissions and failures to follow evidence-based care guidelines.

ACA Medicaid Changes

Eligibility: expanded to individuals under 65 in families w/ incomes lower than 138% of federal poverty level, subject to state acceptance of expansion. State reimbursement: State govts. reimbursed 100% of cost from 2014-2016, then gradually reduced to 90% for 2020 and beyond; state flexibility in design of Medicaid delivery. Physician payment: Reimbursements for primary care physicians increased to Medicare levels

Prospective payment system (PPS)

For inpatient care utilizes a fixed-scale for treating 500+ conditions (diagnosis-related groups, or DRGs). Hospitals have incentives for cutting costs and making sure that only necessary services are given to patients, for if the costs are higher than the set fee for their treatments, they must still accept the DRG-established fee as payment in full and may not charge the patient for the difference. On the other hand, if their costs are below the PPS payment, they keep the difference as profit. CMS has developed similar ___________ __________ _______s for outpatient, skilled nursing, rehabilitative, and home health treatments

Medical technology

Genetic endowment, the physical environment, social class, and behavioral choices have a larger effect on health status and longevity than ____________ _________. __________ _________, however, certainly keeps many persons alive and in good condition. Even though the US has the most advanced _______ _________ in the world, it ranks behind many other countries in life expectancy and infant mortality. Life expectancy for the elderly in the US, however, is slightly above the median, reflecting an emphasis on the elderly in US health care policy.

Medicare costs

Have been prime contributors to healthcare inflation, rising from $215 billion in 2000 to ~$550 billion in 2012. Reasons for growth: inflation in hospital prices, physician's fees, drug prices, and technology. Because the % of the elderly is growing and they're living longer, increases in beneficiaries contribute contribute substantially to cost escalation. In the most recent period, care of recipients w/ chronic conditions such as diabetes, hypertension, and arthritis, has accounted for more of Medicare's growth than hospital-based treatment of acute illnesses such as heart attacks. Congress has worked over many decades to slow Medicare spending growth, and its current growth per beneficiary is lower than private insurance

Prices and labor costs

Health care professionals in the US are paid considerably more than their international counterparts. Drugs and medical equipment are more expensive too. Medical care remains highly labor intensive, despite the tech. American hospitals employ a higher ratio of staff to patients than any other country. B/c its becoming difficult to find RNs and some other medical professionals, salaries and bonuses are rising, an additional cost pressure. Other nations more closely regulate the prices that can be charged for drugs and medical devices, and they limit the number of expensive devices that can be purchased, all without reduction in patient outcomes.

Medicare Part A

Hospital insurance. Covers a broad range of hospital and post-hospital services, subject to some deductibles, coinsurance, and co-payments. Beneficiaries pay a yearly deductible for hospital care set at the approximate cost of one day of care ($1,216 in 2014), after which Medicare pays the first 60 days in the hospital. Patients pay co-insurance for stays beyond 60 days, though Medicare covers the bulk of the cost. To encourage early discharge from expensive hospital care, Medicare covers certain types of post-hospital care, such as skilled nursing facilities and home health service. Beneficiaries have a daily co-pay of $152 from 21 to 100 days in a skilled nursing facility. Thereafter benefits cease. Medicare doesn't pay fore ordinary nursing home or routine home care, but it does cover hospice care for terminally ill patients. A special payroll tax finances Part _____ of Medicare. Both employer and employee pay a tax of 1.45 % of the employee's total wage (2.35% on earned income above $200,000) In addition to the aged, since 1974 Hospital Insurance covers patients with end-stage renal (kidney) disease and disabled persons, if they've been entitled to social security disability payments for at least 2 consecutive years.

HIMs Implementation

In 2013, as customers first began to access the website for purchasing insurance on the federal HIM, the site crashed continually = administrative and political disaster for the most crucial component of the ACA. In states that established their own HIMs, the picture was mixed. Some state HIMs worked as smoothly as intended, while others were no better than the federal HIM. On top of this, millions who previously had individual insurance through commercial insurance markets received notices that their policies were being canceled, the result of 2 factors coming together at the most inconvenient political and administrative time. First, the insurance is highly volatile in normal times with frequent policy cancelations and premium swings. Second, many pre-2014 policies didn't meet the essential benefit levels specified under the ACA for all health insurance (preventive care, limits on cost sharing, no exclusion of preexisting conditions, and so forth). After 2013, these policies could no longer be sold. Some people w/ canceled policies obtained a new policy through their old insurer, though mostly at higher rates. Many others had to go to HIMs (that weren't working) in order to get insurance or apply for subsidies that would help them afford the new policy. In light of these problems, the Obama admin allowed insurers to continue to offer non-compliant policies to prior policyholders and to postpone the fine for such individuals until 2016.

HIMs Implementation (2)

In early '14, the magnitude of cost sharing expected of patients w/ new ACA policies began to become apparent. The most popular bronze and silver HIM policies require significant deductibles and copays (the trade-off for keeping premiums low). Moreover, many insurance companies created only narrow networks of providers who agreed to accept lower insurance payments in the bronze and silver policies. Patients were faced w/ changing from familiar to unfamiliar doctors. On the positive side, millions who were uninsured or who had to change insurance discovered that their ACA policies were income-eligible for substantial federal subsidies that lowered their premiums (sometimes to $25 per month) and their deductibles (sometimes as little as $500/year).

sustainable growth rate (SGR)

In order to restrain spending for physician services, Congress periodically changes the way Medicare reimburses doctors. There's now an annual cap on Medicare physician payment increases, the __________ ________ _________. Over time, the primary care specialties, such as family practice and internal medicine, saw reimbursement rates increase, while surgeons anesthesiologists, and other specialists saw their rates rise more slowly or decrease. The intended effect is to encourage more low-cost primary care and use less high cost specialists, as well as to provide incentives for physicians to enter primary care fields. Flaws in the ___________ _________ _________ formula have produced chaos in the physician payment schedules and widespread physician dissatisfaction with Medicare. Over the last decade, the formula, if it had been applied fully, would've reduced Medicare payments to doctors. Physician resistance to reductions and fears that doctors would cease accepting Medicare patients prompted Congress to suspend the formula each year.

FFS shifted

In recent decades towards coordinated care systems, driven by two different, often contending forces: (1) government programs attempting to control spending and to improve quality and (2) organizational consolidation and integration by insurance companies, hospitals, and physicians. These changes began to restrict patient choice of providers. Limited networks of providers emerged as a force in the US healthcare system in the 1980s as a method to hold down the increasing cost of healthcare. At the same time, consolidation in the insurance industry gave these companies leverage in negotiations w/ hospitals, physicians, and other providers. In response, independent hospitals consolidated into systems, many smaller hospitals closed, and physicians joined into larger single- or multi-specialty groups in order to achieve efficiencies of scale and to have bargaining power with insurance companies. Now many healthcare systems combine physician practices, hospitals, specialty care companies, and insurance products into one hierarchically organized structure. The growth of IT in the form of electronic medical records, smartphone health apps, and search engines facilitates such consolidation. Currently, patients are becoming (or asked to become) smarter healthcare "consumers," investigating and testing medical treatments and providers in much the same way they purchase cars, groceries, etc.

Market failure

In the case of healthcare, _________ _________ derives from barriers to entry of competing providers (principally through medical licensure requirements), inequality of information between buyers (patients) and sellers (healthcare providers), the large presence of not-for-profit hospitals, nursing homes, the high degree of uncertainty and fear that surround medical decisions, and other factors related to the presence of insurance.

Insurance market reform

Includes two kinds of Health Insurance Marketplace (HIM), originally called "exchanges" to be established by the states: one for individuals and the other (Small Business Health Options Program, or SHOP) for small businesses (employers that average less than 101 employees). States may combine the 2 exchanges, collaborate w/ other states to form exchanges that serve residents/employers in multiple states, or may establish more than 1 exchange within the state to serve different geographical areas. If a state fails to est. its own marketplace, the law directs the federal government to establish a federally run marketplace for that state. At the end of 2013, there were only 17 state run HIMs (including DC), leaving 27 federally run exchanges and 7 fed-state partnerships. Buyers will use info available in the HIMs to compare insurance options, including quality of care and price. One size of insurance coverage doesn't fit all; therefore, the ACA provides for 4 coverage levels (bronze, silver, gold platinum) based on varying percentages (60%, 70%, 80%, and 90%, respectively) of the actuarial risk that the insurer will assume. (The complement, 40%, 30%, 20%, and 10%, constitutes the purchaser's premium plus the average patient cost-sharing for her rating class). The HIMs also make available "catastrophic" plans to individuals under 30 and those exempt from the mandate. Such plans would be cheaper and cover only major medical costs.

ACA Insurance Reform/Access to Care

Individual mandate, subsidies (fed. subsidies available to persons w/ incomes up to 400% of federal poverty level to help make insurance affordable). Exchanges/marketplaces: Federal or state web-based insurance marketplaces designed to make purchase of individual and small-group insurance transparent and efficient. Minimum essential benefits: Fed. standards to guarantee all employer-based and individual insurance policies include a minimum package of benefits. Preventive care: ACA-qualified insurance plans must cover certain preventive-care services w/ no copays. Mandatory issue: Pre-existing condition ban, health insurance plans barred from dropping persons from coverage after expensive illnesses/injuries. Maximum deductibles: yearly deductibles in qualified health plans can't exceed a maximum amount. Modified community rating: Insurance plans may charge older persons no more than 3 times what they charge younger persons. Elimination of caps: Requires that insurance plans eliminate all annual and lifetime maximum payments.

Health Savings Account (HSA)

Individual tax-free savings plans and high deductible insurance used to cover medical expenses.

abortion

Insurance plans on the exchanges are forbidden from using federal subsidy funds to cover ____________. Instead, persons who wish to purchase insurance w/ __________ coverage must use their own funds to pay the difference between a plan w/ coverage and a plan without it. Insurance companies must keep federal funding and monies to cover abortion strictly segregated.

Half of Medicare beneficiaries

Live on less than $22K/year, 1/4 on less than $14K. Recipients bear the burden of rising costs. These low income patients often pay out-of-pocket substantial deductibles and co-payments. In recent years, 1/2 of Medicare recipients spent over 15% of their income on premiums, deductibles, and co-pays. 1/3 spent 20% or more.

Maldistribution

Medical care is maldistributed; the areas with the greatest needs for healthcare are not the areas with the greatest access to it. Hospitals, clinics, doctors, and dentists are disproportionately located in well-to-do urban and suburban areas. This phenomenon is particularly true for access to specialized institutions and personnel, but it is also true, to a lesser extent, for general care practitioners and basic care institutions. Ability to pay determined who receives care.

Medicare Part B

Medical insurance. A voluntary insurance program for persons aged 65+ Monthly premiums were $104.90 in 2014 (Recipients w/ taxable incomes over $85K single or $170K joint return pay higher premiums of up to $335 per month for the highest income groups). These premiums cover 25% of the cost of Part ______; general tax revenues pay for the remaining 75%. 93% of the elderly elect to buy coverage. Part _____ covers physicians' services, outpatient hospital services, some home health, and various other medical services. After a yearly deductible, Medicare pays 80% of allowed charges (the maximum fees set by the government) for most covered services. (Under the ACA, Medicare will pay 100% for preventive services). Parts A and ______ constitute "original" Medicare.

Medicare Part C

Medicare Advantage. Private insurance companies contract with CMS to offer Part ____, which combines Parts A and B, plus other services that the company may offer. Funded by recipient premiums and by per capita government payments to the insurance companies for Part A and B services. Recipients may choose to enroll in Medicare Advantage or to remain in traditional Medicare. Many of the elderly in traditional Medicare retain private coverage from previous employers or choose to purchase private insurance to cover those parts of their care not covered by Part A or B. This insurance is called medigap. Federal law regulates coverage and rules for these policies. Medicare Advantage takes the place of medigap policies for those with Part C. Elderly persons whose low income makes them eligible for Medicaid are automatically covered by Medicare in most states, which have elected to "buy in" by paying the recipient's premiums, deductibles, and coinsurance. Persons w/ both Medicare and Medicaid are called "dual eligibles."

spending reductions

Medicare Advtg. payments to insurance companies will be reduced by ~$140 billion by 2020. In addition, hospitals and other providers of patient care agreed to Medicare fee schedule reductions of nearly $200 billion during the same period, as a trade-off for a major decrease in their charity care and bad debt costs, since so many more patients will have insurance. The ACA projects as well that medical cost increases will be reduced by the quality and delivery system changes. Finally, the ACA provided for an Independent Payment Advisory Board to begin 2014. It would submit recommendations for fee schedule reductions and other cost-saving changes if Medicare spending targets aren't hit. This board, however, proved so controversial that Congress reduced its available funding and members were not appointed; thus, this ACA provision likely will never be implemented.

Medicare Part D

Prescription drug coverage (voluntary). Created by Medicare Modernization Act of 2003. Funds outpatient prescriptions. It has a monthly premium and a complex set of co-pays, as well as a coverage gap (beginning at ~$2,900 combining drug spending by patient and insurance) often referred to as the "doughnut hole." At this point, coverage decreases substantially until another limit is reached (approximately $4,500), when full coverage begins again

Overspecialization

Primary care physicians make up a small percentage of American doctors. Serious consequences flow from the predominance of specialists. Poor performance on measures of infant mortality and life expectancy is more sensitive to high quality routine care than to sophisticated, exceptional procedures. _____________ contributes to the high costs of medical care because specialists charge more and use hospitals more than general practitioners. It also leads to poor coordination of care and confusion about prescriptions.

Employer mandate

Some employers must provide insurance to their employees or pay a fine if they do not. Small businesses are eligible for subsidies to assist them in providing insurance. Businesses w/ less than 100 employees are eligible to access SHOP marketplace insurance as a source of affordable employment-based insurance. Firms w/ 50+ employees will have to pay a penalty of $2,000 per employee if they don't offer insurance and if some of their employees enter the exchanges to receive subsidies. Firms that do offer insurance will have to pay a $3,000 fine for any employee who refuses to take the firms' insurance, but instead uses a federal subsidy to purchase individual insurance on the exchange. Firms w/ less than 50 employees don't have a mandate, but they're eligible for a complex set of subsidies if they do offer insurance. Because of the HIMs' rocky rollout in '13 and bc of the complexity of compliance for small and medium employers, the Obama admin decided on a series of delays to these requirements, postponing penalties until '16 to allow a smoother, less disruptive implementation.

Individual Mandate

Some persons aren't subject to the ________ ________. these are people for whom the insurance premium (even with a subsidy) is still too expensive (over 8% of their income), or whose income is below the federal tax filing threshold of ~$10K for an individual. The ________ ________ penalty begins at $95 per person or 1% of income (whichever is larger) and rises to $695 or 2.5% of income by 2016. People in the US illegally aren't allowed to purchase insurance on the exchanges or receive subsidies, so the vast majority won't be covered.

Center for Medicare and Medicaid Innovation (CMMI)

The ACA created the _________ to fund and evaluate experiments and pilot programs to address quality and build upon earlier delivery system reform efforts. Most measures aim to persuade hospitals and specialists to reduce the use of high cost care focused on episodes of illness. The goal is to reduce the # of such episodes by better coordinating care for chronic illnesses before, during, and after a hospital stay. One goal is to decrease admissions and readmissions; another is to shift as much care to primary physicians as possible.

Delivery System Reform

The FFS system contains incentives to over-treat patients bc it rewards the quantity of visits and procedures. Every time a physician/other provider does something, a fee is generated for that service. The systems also rewards sickness care rather than wellness or health promotion. Illnesses guarantee visits and procedures that generate income. Promoting wellness receives no reimbursement. With the ACA, private and public payers began to move away from FFS and toward capitation and employment models. In such systems, providers have financial incentives to keep patients well and out of expensive hospital care. In these models, services create expenses to the provider instead of income. This change is especially important as chronic conditions dominate in the patient population. These conditions require prevention, wellness initiatives, and continuity of care in the right setting.

service intensity

The focus of US medicine on new technologies in drugs, diagnostic tests, and surgical procedures produces a __________ _________ that not only increases cost, but also a greater likelihood of medical errors that hurt patients. Even though the % of errors is low, the large number of procedures per patient produces a high number of errors.

high cost

US spends $9,000/year per capita on healthcare. By the mid-2000s, nearly 1/3 of uninsured Americans had major financial burdens from health costs. Public sources now pay about half the bill, households pay 28% (premiums, copays, deductibles), and businesses pay 21% (mainly by funding employment-based insurance). These percentages, however, vary greatly w/ the type of service. Out-of-pocket payments by individuals for hospitalization is generally a small portion of the bill, but direct payment for dental care represents a high percentage. For the average American, any wage increases in the last decade and a half have been more than consumed by the cost of health insurance or health care itself, crowding out other life necessities. Moreover, the expense of insurance has risen so fast as to become unaffordable for many workers, thus contributing to the growth of the uninsured population. Businesses, in response to these trends, have either increased the premiums and co-pays for employer-based insurance or have reduced the level of benefits. Because federal and state govts. fund nearly half of all health care spending, the rising cost of healthcare has placed tremendous pressure on federal and state government budgets. The ACA was designed to respond to these financial pressures.

Federal subsidies

Under the ACA are available to persons w/ incomes up to 400% of the federal poverty level (2014: $95K for a family of four)

promoting prevention

Under the ACA, Medicare and private insurance plans must cover the entire costs of preventive services rated by the US Preventive Services Task Force as highly effective based on scientific evidence. These include vaccinations, and certain age- and behavior-related screenings (e.g., colorectal cancer, cervical cancer, type 2 diabetes, and high blood pressure). Primary care doctors will receive higher reimbursements from Medicare and Medicaid to encourage them to do such screenings and to encourage more medical students to choose primary care specialties. The ACA authorizes employers to develop employee health & wellness programs and to reduce premiums for employees who participate.

ACA SCHIP changes

Under the ACA, the federal government will more heavily subsidize _________, and states must maintain ________ eligibility levels until 2019.

disparities

Unjustified inequalities in the receipt of health care and differences in health outcomes according to race, income, education, and occupation. Limited access contributes to poor health and lower life expectancy for poor/rural people. Black infant and maternal mortality rates are nearly twice those of whites and comparable to many countries in the 3rd world. 30% of Hispanics, 20% of Blacks are uninsured, compared with 11% of whites. Poor children tend to be inadequately immunized. The poor suffer higher rates of mental illness, and they have many more days of restricted activity, bed disability, and lost work than those who aren't poor.

Payment for value

Years ago, CMS instituted a major pay for performance program, which became _________ _____ _______ under the ACA. The idea is to give financial incentives or bonuses to providers that employ (or payment reductions if they fail to employ) proven, evidence-based medicine to improve the quality of care. Initially, incentives were created for publicly documenting use of such measures, but gradually the incentives (and disincentives) moved toward use of best practices and toward improvement of health outcomes.

primary care physicians

and nurses, radiology technicians, surgical technicians, and other auxiliary providers are in short supply, leading to understaffing, long hours, low morale, and difficult working conditions that endanger quality. Both ACOs and medical homes, along w/ millions of newly insured patients, will depend on the ability of primary care physicians to take the lead in their evaluation and care. Therefore, the model of one patient seeking one doctor at a time on each visit can't be the future of medicine. Rather, a team-based, medical home approach must evolve in which patients see the right person (sometimes the primary care physician, but sometimes a nurse, PA, social worker, or care coordinator). Reform appropriates addt'l funding to train nurses, nurse practitioners, and PAs to staff the new care models contemplated by the legislation.

as advances in medicine

reduce admissions and length of stay, hospitals are closing or are redirecting their missions. Outpatient surgeries and freestanding surgical units, or specialty hospitals, as well as minor care clinics (which are often located within pharmacies or grocery stores) direct care away from physician offices and hospitals. These changes have occurred without overall strategy or design, resulting in disjointed and wasteful delivery of medical care. Proponents of healthcare reform hope that the ACA will rationalize healthcare delivery.