Economics

IN CLASS CASE STUDY Sandy is a community health nurse in Big Falls, a midsized town in the upper Midwest. She coordinates maternal-child health and well-elderly clinics. Her clients are largely of low socioeconomic status and diverse ethnic backgrounds. She has been assigned to a task force whose charge is to examine issues of access to health care in the community.

1. Given that Big Falls has similar characteristics to other U.S. communities, which factors can we assume currently stress the local health care system? Select all that apply. A. Increasing number of residents older than 85 years B. Increased cost of prescription drugs C. Decreased funding for preventive health care services D. Decreased demand for high-tech health care services E. Limited access to high-cost services Answer: A, B, E Rationale: The aging population, increased cost of pharmaceuticals, and prospective reimbursement (which results in limited access to high-cost services) are all factors that negatively influence health care costs. There has actually been an increase in funding for preventive health care services (a positive trend) and an increased demand for high-tech services (a further stress on the system). 2. Members of the task force have been assessing the types of insurance reimbursement plans that are available to community residents. It is discovered that the majority of employed, insured adults have plans that include disincentives for use of out-of-plan providers, are relatively expensive, and offer a specific amount of reimbursement to the provider. What type of reimbursement plan is being described? A. Indemnity B. Fee-for-service C. Preferred provider organization (PPO) D. Health maintenance organization (HMO) Answer: C Rationale: PPOs negotiated with health care providers for services at a reduced rate in exchange for a guaranteed increase in consumers. A negotiated reimbursement rate allows the cost of the plan to be somewhat controlled. Plan enrollees are offered cost incentives for choosing health care from within the plan's network of health care providers. Because they receive a specific amount of reimbursement, regardless of the rendered services, providers have an incentive to be conscious of the costs of the services provided (Young & Kroth, 2018). PPOs are more flexible than HMOs, but to receive full benefits, the covered individual must use network providers. PPOs are somewhat more expensive than HMO plans (about $90 month on average), but they are the most common type of insurance plan in the United States. Although down from 60% of all plans in 2009, in 2016, almost half (48%) of private insurance plans were PPOs. As a community health nurse, Sandy understands the importance of her involvement in issues related to the economics of health care. She is committed to doing what she can to ensure increased access for those she serves. Her involvement best demonstrates which of the following roles of the community health nurse? A. Researcher B. Educator C. Provider of care D. Advocate Answer: D Rationale: The role of advocate is exemplified when the nurse works to ensure funding that provides adequate health care services to those in need.

Health Care Alliances

A type of industry reform State-based insurance pools Must cover basic benefits and offer coverage at the same price to consumers without regard to current health or pre-existing conditions Consumer choice would be based on published, simple, standard plan information. Medicare currently participating in health care alliances. Enrollees given choice between traditional Medicare, Parts A and B, and Medicare Advantage.

Trends in Health Financing

Affordable Care Act (ACA) changes *Eligibility for Medicaid *Covered services: Ambulatory care, Emergency services, Hospitalization, Pregnancy/maternity and newborn care, Mental health and substance use disorder services, Preventative measures Despite implementation of the ACA health care costs continue to increase. Major changes are still needed. More Americans have health care but there are concerns over evolving demographics such as *Aging Baby Boomers *Expansion of Medicare costs More policy and interventions need to take place.

Health Savings Accounts and Flexible Spending Accounts

Both HSA and FSA are set up by employee. Employee determines amount to be spent during year and this amount is deducted from his or her paycheck, which is "pretax." When services are incurred the employee pays them from this account.

Cost Containment

Capitated reimbursement: prospective reimbursement for services Access limitation: *Primary care provider as gatekeeper *Managed care plans —preauthorization requirements for additional services Rationing: determining the most appropriate use of health care or directing the health care where it can do the most good

Point-of-Service (POS)

Combine elements of HMO and PPO If individual goes outside the network, he or she will be responsible for most costs unless referred by the PCP

Social Security Act amended in 1965

Created Medicare: Provides care to those over age 65 years Created Medicaid: State-administered health plan Provides source of financing health care for some of the poor and the disabled

Prospective Reimbursement

Derived from HMO method of payment Alternative to cost-based reimbursement No matter what provider's cost is reimbursement to hospitals is from a predetermined amount Introduced by federal government for Medicare in 1983 with an immediate savings noted DRGs, which are represented by International Classification of Diseases, Tenth Edition (ICD-10) Medicare depends on DRG to calculate reimbursement. Amount paid to provided determined by primary and secondary diagnosis's, age, gender, and complications. PPS reduced Medicare costs not overall health care costs. Hospitals developed cost shifting as a means of supplementing the loss of Medicare funding. Hospitals were able to include the loss from caring for Medicare patients in their cost. Actuarial classification ensured adequate premiums were charged for the projected health care needs of those enrolled and other means of cost control emerged. Managed care groups negotiated with health care providers to render care for specified amount of reimbursement based on community ratings modified by group-specific demographics Prospective reimbursement created incentives to control costs but also led to undertreatment and underuse of system. Physician services are given current procedural terminology (CPT) codes, which determines reimbursement from the patient's illness.

Government Grants

Directed toward funding large populations and different aggregates Historically for health promotion and disease prevention measures Administered by DHHS "Block grants" provided to states to impact the health of the public as a whole Health care providers and programs compete for funds through grant proposals and applications Closely related to Healthy People 2020 objectives

Cost Sharing

Employees willing to pay increase covered services not provided by basic plan Can pay greater portion of bill for covered services in return for lower premiums, or Employee may opt to pay higher premium for freedom to choose provider or eliminate gatekeeper.

High Deductible Health Plans (HDHP)

Encourage employees to select plans with lower premiums but more pronounced up-front cost sharing Had health care consumer shop around for lower costs Health savings account (HSAs)

Health Care Fraud and Abuse

Federal Bureau of Investigation (FBI) estimates health care fraud costs the United States tens of billions of dollars annually. False Claims Act Amendments of 1986 allowed private citizens to collect a percentage of recovered funds if they reported fraudulent Medicare claims and monies are recovered as a result.

Medicare

Federal entitlement program to provide health care to the growing population of those 65 years of age or older, people who are disabled or have end stage renal disease.

Private Health Care Insurance

First established in 1930s Blue Cross/Blue Shield *Enrollees paid monthly fee for health care Throughout the depression and World War II *Prices and wages frozen *Industries began to offer health insurance as "fringe benefit" to employees 1953 money spent on health care was declared tax-exempt. Union groups negotiated for health care insurance Private employer-based insurance became the model in the United States

Lifestyle and Health Behaviors

Five leading causes of death and illness can be positively affected by changes in lifestyle. To prevent many chronic diseases *Low-fat diet *Exercise *Maintaining optimal body weight *Smoking cessation *Stress reduction

Differences between HSA and FSA accounts

HSA: *associated with higher deductible health plans (HDHP) and funds are owned by the employee *both employer and employee contribute to the fund and the balance does not expire *2017 limited to $6,750.00 FSA: *set up by employer through any health insurance plan and is owned by the employer *employee continues to pay into account until estimated amount is reached *2017 limited to $2,600.00

Aging of Society

Health care expenditures rise with age dramatically as people live longer. Baby boomers living longer

Societal Perceptions

Health care should be available to all regardless of cost. Efforts to provide universal coverage failed because of many factors such as: *Rejection of much higher taxes *Objection to paying for care for noncitizens *Concerns over access and availability *Fears of rationing Dilemma is still how to provide health care to all Americans in a way that is acceptable and affordable. United States already spends more of our resources on health care than any country. Waiting several months for nonemergency treatment, lack of choice of treatment, and inaccessibility or unavailability of diagnostic and treatment modalities are not acceptable to Americans.

Private Insurance

High costs Costs of plans vary based on cost-sharing levels selected and other actuarial factors. Plans are subsidized through tax credits or other mechanisms.

Prospective Payment System (PPS)

Hospital reimbursement for Medicare patients based on diagnosis-related groups (DRGs) Classification system that identified cost according to diagnosis and client characteristics Despite containment efforts, costs of health care and health insurance have continued to rise.

Access to Health Care

Inadequate access to health care leads to unnecessary illness. Private insurance coverage or participation in government programs is largely responsible for accessibility. Physical and geographic barriers *Rural areas and transportation issues Sociological barriers among the poor and ethnic Americans *Language barriers and fear of reprisals for being in country illegally

Types of Health Care Plans

Indemnity plan Health Maintenance Organization (HMO) Preferred Provider Organization (PPO) Point-of-Service (POS) High Deductible Health Plans (HDHP)

Pharmaceuticals

Influence health care with both prescription and over the counter medications New drugs improve health care outcomes and quality of life. Medicare Part D alleviates the costs of prescriptions for seniors. *Eligible to purchase insurance coverage to offset costs of prescription drugs

Medicare Part D

Initiated in 2006 to help defray costs of prescription drugs Optional; must enroll in an approved prescription drug plan Monthly premium, deductibles, and co-payments Must pay 100% of costs when costs reach "coverage gap" or "donut hole"

Health Care Financing Reform

Lack of insurance is a major factor associated with lack of access to medical care. Uninsured adults more than 3× as likely as insured adults to go without needed medical care 40% of overall decline in number of uninsured, resulted from ACA allowing young adults until age 26 to remain on their parent's health plan Health literacy and communication will be key factors in success as consumers try to figure out the key elements in the ACA and to use exchanges to obtain insurance if not provided by employer.

Medicare Part C

Medicare Advantage Plans Optional "gap" coverage Provided by private insurance companies approved by, and under contract with, Medicare May include HMOs and PPOs May include vision, hearing, dental care, and other services not covered by Medicare Parts A, B, or D

Retrospective Reimbursement

Method of reimbursement was a fee for services rendered which encouraged inflated prices and fraud. Fee based on cost of providing service: Salaries Supplies Equipment Building depreciation Utilities Taxes

Health Maintenance Organization (HMO)

More comprehensive care Lacked enrollees freedom of choice Preventative care covered Specialty care restricted Encouraged to reduce costs by only providing most necessary services

Preferred Provider Organization (PPO)

Negotiated with health care providers for services at reduced rate in exchange for guaranteed increase in consumers Negotiated reimbursement rate allows cost of plan to be somewhat controlled. Enrollees offered incentives for choosing health care from within the plan's network. More flexible than HMOs

Philanthropic Financing of Health Care

Oriented toward research, treatment/interventions related to a specific disease, and population aggregates Limited eligibility for services through: *American Heart Association *March of Dimes *Susan Komen Foundation Example of specific population group: Shriners Hospital for Children Examples of private, nonprofit entities or associations: American Medical Association, American Dental Association, American Nurses Association Key groups that support research related health care, health care delivery, and policy making are: Robert Wood Johnson Foundation Kaiser Family Foundation Pew Charitable Trusts Examples of disease-specific organizations that provide patient-focused education, information, and other resources; American Cancer Society Alzheimer's Association American Diabetes Association

Societal Beliefs

People still expect the health care system to cure them when ill, but now there is an increase in: *Preventive care interest *Health education *Health promotion *Behavioral changes

Types of hospitals

Public hospitals—received public funds and served health care needs of entire population Private hospitals—cared mainly for those whose ability to pay was greater than the general population For-profit hospitals—limited in numbers, received funds from investors, and cared for those who could definitely pay

Medicare Part B

Purchased by monthly fee Helps pay for out-of-pocket costs for physician services, hospital outpatient care, durable medical equipment, and other services, including some home health care Premiums prorated based on income Enrollees must pay deductibles and coinsurance

Roles of the Public Health Nurse in the Economics of Health Care

Researcher: *Nurses need to be engaged in research about provision of efficient, cost-effective health care. *Investigate, develop, and evaluate the effectiveness of health promotion and disease prevention. Educator: *Health education is foundation of public health nursing practice. *In the area of health care economics the nurse needs to demonstrate the value of patient education. *Outcome measures for health education need to be established. Provider of Care: *Services delivered by nurses need to be appropriate, necessary, and cost-effective. *Accurate foundation for an appropriate nursing diagnosis *Goals for care should jointly be established between members of the community and community health nurse, which will guide the choice of intervention. *Evaluations from previously developed outcome measures will guide appropriate modifications to plan. Advocate: *Nurses need to become more involved in economics of health care. *Large number of nurses gives our occupation potential political clout. *Advocate for health promotion/disease prevention funding from both public/private sectors *Need to plan programs, seek funding, and evaluate program effectiveness *Constantly seek sources of funding for heath programs through any available sources

Self Insurance

Self-insured status organizations administer their own health care plan and purchase health care services from an established plan. Organizations and businesses that use self-insurance take a risk and need to ensure that it can cover any major costs.

Indemnity plans

Significant majority of population was protected by these various sources. Lacked incentive to limit resource use Had few or no provisions for health promotion Emphasis on illness care Providers received fees only when a service was rendered All costs of services reimbursed Major driving force in rising health care costs

Medicaid

Title XIX of the Social Security Act—a public welfare assistance program Provides universal health care coverage for the indigent, children, women, the disabled, and impoverished elders and adults below poverty line in some states A joint state and federal venture Eligibility for this program depends on the size and income of the family. Federal government sets baseline services, but state governments may provide more services. *Must include inpatient and outpatient hospital care, pregnancy-related care, Vaccines For Children, family planning services, rural health clinics, home health care, laboratory and x-ray services, and EPSDT Care by pediatric and family nurse practitioners is covered. Children under 18 also eligible for Children's Health Insurance Program (CHIP)

Technological Advances

United States exceeds other industrialized countries in availability and use technological advances: *Saves lives *Expensive

Historical Perspective

Until 1930s individual health care financing in the United States was self-pay. Health care providers charged a fee, patients paid fees out of pocket. Public financing of health care for specific aggregate restricted and varied from geographic area to area until the term public health came into use.

Reimbursement for Health Promotion and Disease Prevention

Until recent years reimbursement for health promotion and disease prevention has been limited. ACA mandated preventative services such as: *Counseling for management of obesity *Prevention of sexually transmitted diseases *Tobacco cessation

Lack of Preventive Care

Until recently little to no incentive existed to prevent illness or promote health. Soaring health care costs result in people demanding preventative health care from providers and health care contractors.

Covered Services

When employee fringe benefits included health care coverage, expanded benefit packages were developed. *Covered services expanded to physician visits, medication, and dental costs. As health care costs increased so did enrollments. Costs increased and employers passed cost to employees. Insurance companies limited covered services to curtail escalating costs. Ambulatory care clinics opened. Patients responsible for "uncovered" services Providers modified delivery of health care to accommodate changes. Hospitalization rates declined and outpatient services increased.

Medicare Part A

basically hospital insurance Includes inpatient care in hospitals/skilled nursing facilities, hospice care, some home health care Must pay a deductible for health services Does not pay for all health care costs of enrollees Co-payments required after 60 days

Indemnity plan

e.g., Blue Cross/Blue Shield Paid all costs of covered services Free choice of provider and services Allowed persons to manage own health care Became costly, no incentives for cost containment

1980s federal government

made first efforts to curtail health care costs PPS