Intro to Healthcare Management Exam 3

self-insurance plan

* employer acts as its own insurer instead of obtaining insurance through an insurance company; employers assume risk by budgeting certain amount to pay medical claims incurred by their employees - large businesses - self-insured employers can protect themselves against any potential risk of high losses by purchasing REINSURANCE (stop-loss coverage) from a private insurance company - costs are contained through a slower rise in premiums during periods of rapid inflation - movement towards self insurance by large employers was spurred by government policies

adverse selection

* high risk individuals (people who are likely to use more healthcare services than others because of their poor health status) enroll in health insurance plans in greater numbers compared to healthy individuals - in effect, premiums must be raised for everyone, which makes health insurance less affordable for those in good health

accountable care organization (ACO)

* integrated group of providers who are willing and able to take responsibility for improving the overall health status, care efficiency, and satisfaction with care for a defined population - motivated to eliminate unnecessary care because their contract payments from insurers cover the entire continuum of care

Medigap (Medicare Supplement Insurance)

* private health insurance that can be purchased only by those enrolled in the original Medicare program (w/ high out-of-pocket costs) - illegal to be sold to someone covered by Medicaid or Medicare Advantage - cover all or portion of Medicare deductibles and copayments/coinsurance

cost sharing

* providers charge extra to payers who do not exercise strict cost controls, especially when faced with reimbursement shortfalls from public payers

covered services (BENEFITS)

* services covered by an insurance plan - each health insurance plan spells out in a contract both the type of medical services it covers and the services it does not cover - vision and dental coverage are generally not included in health insurance

integrated delivery system (IDS)

*A network of organizations that provides or arranges to provide a coordinated continuum of services to a defined population and is willing to be held clinically and fiscally accountable for the outcomes and health status of the population serviced - objective: achieve greater integration of health care services along the continuum of care

insurance

*INSURANCE: mechanism for protection against risk *RISK: possibility of a substantial financial loss from an event of which the probability of occurrence is relatively small 4 principles of insurance (1) risk is unpredictable for the individual insured (2) risk can be predicted with a reasonable degree of accuracy for a large group or a population (3) insurance provides a mechanism for transferring or shifting risk from the individual to the group through the pooling of resources (4) all members of the insured group share actual losses on some equitable basis *INSURER: insuring agency that assumes risk *UNDERWRITING: technique for evaluating, selecting, classifying, and rating risks; takes into account the health status of people to be insured health insurance comes in the form of a PLAN (specifies info pertaining to costs, covered services, and ways to obtain healthcare when needed) *INSURED/BENEFICIARY: person covered by health insurance

Differences between National and Personal Health Expenditures

*NATIONAL HEALTH EXPENDITURES: aggregate of the amount a nation spends for all health services and supplies, public health services, health-related research, administrative costs, and investment in structures and equipment during a calendar year - $2.6 trillion spent in 2010 - $8.402 average per capita - 17.9% of GDP (share of total economic output consumed by health care) - 2020 projections: $4.4 trillion & 19.2% of GDP * PERSONAL HEALTH EXPENDITURES: component of national health expenditures; comprise the total spending for services and goods related directly to patient care - aggregate of all health services, products, and supplies; public health services ; health care research; administrative costs; investments in structures and equipment

Trends in Employment-Based Health Insurance

*PLAY-OR-PAY MANDATE: requires employers of 50 or more full-time employees to either provide them with health insurance (play) or pay a penalty for not doing so

What is Health Policy?

*PUBLIC POLICIES: authoritative decisions made in the legislative, executive, or judicial branch of government intended to direct or influence the actions, behaviors, or decisions of others --> when public policies pertain to or influence the pursuit of health, they become health policies - serve the interest of public (politically active) *HEALTH POLICY: the aggregate of principles, state or unstated, that . . . characterize the distribution of resources, services, and political influences that impact on the health of the population use of policy - regulatory tools: can call on government to prescribe and control the behavior of a particular target group by monitoring the group and imposing sanctions if it fails to comply - allocative tools: direct provision of income, services, or goods to certain groups of individuals or institutions; (1) distributive policies (spend benefits throughout society - i.e. funding of medical research through the NIH, development of medical personnel, the construction of facilities, and the initiation of new institutions) (2) redistributive policies (benefit only certain groups of people by taking money from one group and using it for the benefit of another --> creates visible beneficiaries and payers --> often visible and politically charged --> essential for addressing fundamental causes of health disparities - i.e. Medicaid, CHIP, welfare, and public housing programs )

RISK RATING

*adjusting premiums to reflect health status and making potential high cost enrollees pay more * EXPERIENCE RATING- group's own medical claims experience / premiums can be unaffordable for high-risk groups - premiums differ between groups because different groups have different risks (professor vs military officer) - high-risk groups incur high utilization of medical care services so they are charged higher premiums *COMMUNITY RATING- spreads risk among members of a larger population regardless of age, gender, occupation, or indicator of health risk / good risks subsidize poor risks - costs shift from people in poor health to people in good health and make health insurance less affordable for those who are healthy *ADJUSTED COMMUNITY RATING- middle-of-the-road approach that overcomes main drawbacks of experience ratings and pure community rating / required by the ACA - price differences takes into account demographic factors such as age, gender, geography, and family composition, while ignoring other risk factors

PREMIUMS

*amount charged by the insurer to insure against specified risks - premiums vary depending on plan selected by employee - employer-employee cost sharing

High-deductible health plans (HDHPs)

*combine a savings option with a health insurance plan carrying a high deductible - because of their high deductibles, premiums for HDHPs are lower than other health plans - saving options give consumers greater control over how to use funds --> referred to as CONSUMER-DIRECTED HEALTH PLANS

patient activation

*patient's skills, confidence, ability, and motivation to become actively engaged in his or her own health care - differs from compliance (emphasis is on getting patients to follow medical advice given by providers)

Cost Control in Managed Care

- MCOs uses methods to control utilization and deliver cost-effective care which emanates from the fact that in the US, approx. 10% of patients account for 70% of overall healthcare spending *methods used for utilization monitoring and control choice restriction - closed panel (in-network access)- no access outside the panel - open access (out-of-network access)- outside option is allowed, but a higher out-of-pocket cost - there is a greater willingness among enrollees to reduce out-of-pocket costs gatekeeping - primary care physician (PCP) as portal of entry -PCP delivers basic and routine care -PCP refers and coordinates when secondary care is needed - gatekeeping achieves modest cost savings care coordination: ex) CASE MANAGEMENT - coordination of care for complex and potentially costly cases - variety of services from multiple providers are needed over an extended period - secondary and tertiary services are needed more often than primary care (AIDS, spinal cord injury, transplants, severe injuries, etc. cases) - (client-centered approach for evaluating and coordinating care, particularly for patients who have complex, potentially costly problems that require a variety of services from multiple providers over an extended period) disease management: -population-oriented strategy for people with chronic conditions (diabetes, asthma, depression, and coronary artery disease) --> improves quality of care and disease control - evidence-based treatment guidelines - focus on education, self-management training, monitoring of the disease process, and follow-up to ensure compliance- self-care with professional support - goal: prevent or delay complications - although cost savings are uncertain, better quality and disease control are achieved pharmaceutical management: (1) FORMULARY- list of prescription drugs approved by health plan (2) use of tiered cost sharing (3) use of pharmacy benefits managers utilization review: process of evaluating the appropriateness of services provided - review each case - determine appropriateness of services - to ensure cost-efficiency - to plan subsequent care - quality of care is an important component - 3 types: (1) prospective UR - decision to refer or not - preauthorization (precertification) - second opinions inform concurrent review about the case - for pharmaceuticals: formularies are first step & preauthorization for certain drugs and biologics (2) concurrent UR - length of stay and when to discharge - optimal drug therapy and management reduces length of stay and reduce drug utilization and cost (3) discharge planning - purpose: post-discharge continuity of care - expected inpatient stay - anticipated outcomes - subsequent appropriate setting - special needs (4) retrospective UR - examination of medical records - analysis of utilization (overutilization or underutilization) - billing accuracy - review of practice patterns and feedback to physicians - drug review: inappropriate use of controlled substances practice profiling: monitoring of physician-specific practice patterns and comparison of individual practice patterns to some norm - evaluate provider-specific practice patterns - compare to a norm - feedback to change behavior - goal: improve quality and efficiency - somewhat controversial need for cost control - 10% patients with chronic/complex conditions account for 70% of health care spending - utilization management requires: expert evaluation of what services are needed (determination of how to provide services inexpensively without compromising quality) - review of the process of care

Asian Americans

- One of the fastest growing segments of U.S. population - 86.2% had at least graduated from high school compared to 87.6% of non-Hispanic whites - 51.3% had bachelor's degree compared to 30.3% of non-Hispanic whites

Preferred Provider Organization (PPO)

- PPO establishes contracts with a select group of physicians and hospitals (preferred providers) - PPO allows an open-panel option in which the enrollee can use out-of-networking providers, but incurs higher cost sharing (If a PPO does not provide an out-of-network option = EXCLUSIVE PROVIDER PLAN) - PPOs make discounted fee arrangements with providers --> no direct risk sharing with providers is involved - PPOs apply fewer restrictions to the care-seeking behavior of enrollees - both in-network (preferred providers) and out-of-network access (exclusive provider plan does not permit out-of-network use) - discounted fees are used to pay providers (no direct risk sharing) - generally, no gatekeeping and other controls - PPOs enjoy higher enrollment of all managed care plans

social and demographic forces

- US is getting bigger, older, and more ethnically diverse - expanding government programs (Medicaid & Medicare) are currently on an unstainable financial path: elderly population continues to grow & growth in size of working age population is moderating --> larger number of beneficiaries must be supported by fewer taxpayers - population shifts affect the composition of healthcare workforce because healthcare delivery is a labor-intensive enterprise --> in a free society, people choose their professions and where they work --> determines the number of healthcare professionals and their geographic location

Bundled Payments

- a bundled fee (package pricing) includes a number of related services in one price - reduces the incentive for providing nonessential services - reduces provider-induced demand because fees are inclusive of all bundled services - there is evidence that prospectively set bundled fees reduce health care spending without compromising quality of care - bundled payments for care improvement (BPCI) initiative

rural health

- access to heath care may be affected by poverty, long distances to service providers, rural topography, weather conditions, lack of transportation, and being uninsured --> less likely to utilize health services & have poorer health outcomes - geographic maldistribution creates a shortage of health care professionals in rural settings --> National Health Service Corps created to recruit and retain physicians to provide needed services in areas with physician shortages

group insurance

- can be obtained through an employer, a union, or a professional organization * anticipates that a substantial number of people in the group will purchase insurance through its sponsor - because risk is spread out among the many insured, group insurance provides the advantage of lower costs than if the same type of coverage was purchased in the individual insurance market - health insurance benefits provided through an employer are not subject to income tax --> incentive to obtain health insurance as a benefit paid by the employer

certain special populations in US face greater challenges accessing timely and needed health care services e--> greater risk of poor physical, psychological, and/or social health

- causes are largely attributed to unequal social, economic, heath, and geographic conditions - populations groups: racial and ethnic minorities, uninsured children, women, persons living in rural areas , homeless individuals and families, mentally ill individuals, chronically ill and disabled individuals, and person with human immunodeficiency virus (HIV)/acquired immunodeficiency syndrome (AIDS)

economic forces

- economic growth, employment, household incomes, and national debt will determine the availability of health care services, their cost, and their affordability

the uninsured

- ethnic minorities are more likely than whites to lack health insurance - mostly comprised of young workers - lack of coverage prevalent in southern and western regions of US - generally have poorer health than general population (uses fewer health services, decreased utilization of lower-cost preventative services result in an increased need for more expensive emergency health care

migrant workers

- farm workers who travel long distances from their primary residence or lack of a primary residence entirely, either due to seasonal crop changes or work availability (largely composed of racial minorities) -greater risk of obesity, contracting TB, and HIV/AIDS - Community and Migrant Health Centers: provide services to low-income populations on sliding fee-scale, thereby addressing both geographic and financial barriers to access - Rural Health Clinics Act: developed to respond to the concern that isolated rural communities could not generate sufficient revenue to support the services of a physician

What is Managed Care?

- firmly entrenched in the US health care system - other countries have adopted some of its features - became successful because of failures of fee-for-service, mainly uncontrolled costs - earlier tighter controls were relinquished in face of backlash against managed care - did not evolve as intended and had limiting success in controlling costs *organized approach to delivering a comprehensive array of health care services to a group of enrolled members through efficient management of services needed by members, and negotiation of prices or payment arrangements with providers (1) integration of the financing, insurance, delivery, and payment functions within 1 organizational setting (2) formal control over utilization evolution of managed care - Baylor plan (1926) was based on capitation - contract practice - prepaid group practice - managed care- added utilization control to the other features growth of managed care - flaws in fee for service - weakened economic position of providers financing - premiums based on negotiated contracts between employers and the MCO - fixed premium per enrollee includes all health care services provided for in the contract, and premiums cannot be raised during the term of the contract insurance - MCO assumes all the risk (takes financial responsibility if the total cost of services provided exceeds the revenue from fixed premiums) delivery - most MCOs arrange the delivery of medical services through contracts with physicians, clinics, and hospitals operating independently payment - uses 3 main types of payment arrangements with providers: capitation (payment of a fixed monthly fee per member to a healthcare provider), discounted fees (modified form of fee for service & paid according to a prenegotiated schedule called a FEE SCHEDULE) , and salaries ( --> allow risk sharing in varying degrees between the MCO and providers

Homeless

- homeless women face major difficulties: economic and housing needs and special gender-related issues (pregnancy, childcare responsibilities, family violence, fragmented family support, job discrimination, and wage discrepancies) - shortage of adequate low-income housing: unemployment, personal or family life crises, rent increases, reduction in public benefits - high prevalence of untreated acute and chronic medical, mental health, and substance abuse problems - greater risk of assault and victimization regardless of whether they live in a shelter or outdoors - barriers to health care: individual factors: competing needs, substance dependence, and mental illness system factors: availability, cost, convenience, and appropriateness of care other: lack of accessible transportation to medical care providers, competing needs for basic food, shelter, and income

resource-based relative value scale

- incorporates RELATIVE VALUE UNITS (RVUs) based on the time, skill, and intensity (physician work) it takes to provide a service --> reflect resource inputs- time, effort, and expertise- to deliver a service - separate RVUs are included for cost of practice, malpractice insurance, and geographic cost variations --> establish a MEDICARE PHYSICIAN FEE SCHEDULE (MPFS): price list for physician services, based on which individual payments are made when physicians file their claims to reimburse physicians - RVUs are established for each CPY coded physician service - RVUs reflect time, skill, intensity - separate RVUs are assigned for overhead costs and malpractice insurance costs

Payment Function

- insurance companies, MCOs, Blue Cross/Blue Shield, and the government = THIRD-PARTY PAYERS (with the other 2 parties being the patient and the provider) * 2 facets of payment function - determination of the methods and amounts of reimbursement for the delivery of services - the actual payment after services have been rendered *CHARGE: fee set by the provider * RATE: price set by a third-party payer * FEE SCHEDULE: index of charges listing individual fees for each type of service - to receive payment for services rendered, the provider must file a CLAIM with the third-party payer (fee for service, bundled payments, RBRVS, cost-plus reimbursement, prospective reimbursement)

financing and cost control

- insurance is the main factor that determines the level of demand for medical services - restricting financing for health insurance (demand-side rationing) controls total healthcare expenditures - expenditures are increased by (1) expansion of health insurance (2) increase in health insurance premiums - expenditures are reduced by (1) restricting insurance (demand-side rationing) (2) restricting reimbursement to providers (3) having fewer specialists (4) spending less on R&D (5) direct control over utilization (supply side rationing) (6) designating certain services as noncovered (rationing) - insurance influences supply/availability of health services: reducing reimbursements used to contain growth of healthcare expenditures - diffusion of technology can be restricted through health planning (used in countries with national health insurance): reduced utilization of technology results in direct savings

COST SHARING

- insured individuals pay a share of cost of premiums through payroll deductions & portion of actual cost of medical services out of their own pockets *DEDUCTIBLE- amount the insured must first pay each year before any benefits are payable by the plan *COPAYMENT- flat amount the insured must pay each time health services are received * COINSURANCE- set proportion of medical costs that the insured must pay out of pocket - used to control utilization of health care services: since insurance creates moral hazard by insulating the insured against the cost of health care, making the insured share in the cost promotes more responsible behavior in health care utilization - reduced moral hazard (Rand Health Insurance Experiment: cost sharing had a material impact on lower utilization, without any significant negative health consequences)

Private Coverage and Cost Under the Affordable Care Act

- insurers mandated to enroll young adults until age of 26 under their parents' plans --> helped nonpoor young adults in gaining insurance coverage --> increase in insurance premiums - mandate did not lead to any significant increase in preventative care utilization - ACA made it illegal to charge more or refuse coverage for people who had PREEXISSTING CONDITIONS (diabetes, cancer, heart disease, and HIV/AIDS) - all health plans had to include essential health benefits and meet certain requirements: required to include preventative and wellness care - a fee was imposed on insurers for privilege of selling plans through the exchange - the ACA required minimum medical loss ratio of 85% for large-group insurance plans and 80% for individual or small-group plans to pay medical claims: MEDICAL LOSS RATIO (MLR)- percentage of premium revenue spent on medical expenses

chronically ill

- leading cause of death in the US (heart disease, cancer, and stroke account for 50% of all US deaths each year) - expensive: accounts for 86% of all US healthcare costs ($2.9 trillion) - results from 4 modifiable risk behaviors: physical activity, nutrition, smoking, and alcohol use

Mental Health

- leading cause of disability for US population - risk factor for death from suicide, cardiovascular disease, and cancer - most common mental disorders are phobias; substance abuse, and affective disorders (depression) - barriers to mental health: prohibitive costs of services, shortage of available mental health professionals - patients without insurance coverage or personal financial resources are treated in state and county mental health hospitals and in community mental health clinics

women

- leading providers of care in the nursing profession but also represented in various other health professions - expected to live about 4.8 years longer than men, but suffer greater morbidity and poorer health outcomes - have higher prevalence of certain health problems than men - reported more physically and mentally unhealthy days than men - office of Women's Health: dedicated to the achievement of goals range across the life cycle and address cultural and ethnic differences among women; promotes, coordinates, and implements comprehensive women's health agenda on research, service delivery, and education across various government - Women and the US health Care system: women face distinct disadvantage in obtaining employer-based health insurance coverage because they are more likely than men to work part-time, receive lower wages, and have interruptions in their work histories --> married women are more likely to be covered as dependents under their husbands' plans and are at a higher risk of being uninsured

short-term stop gap

- leaving an employer means loss of health insurance coverage --> Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA)- allows workers to keep their employer's group coverage for 18 months after leaving a job - Health Insurance Portability and Accountability Act (HIPAA) of 1996: extended coverage of up to 29 months is available if the insured or family member is determined by the Social Security Administration to be disabled at any time during the first 60 days of COBRA coverage & extended coverage of up to 36 months available to the spouse and dependent children if the former employee dies, enrolls in Medicare, or gets divorced or legally separated

Black Americans

- more likely to be economically disadvantaged than whites --> fall behind in health status - shorter life expectancies than whites - higher age-adjusted death rates for a majority of leading causes of death - higher age-adjusted maternal mortality rates - higher infant, neonatal, and postneonatal mortality rates - more likely to report fair or poor health status compared to whites - black males are slightly more likely to smoke cigarettes than white males, but white females are more likely to smoke than black females - highest rates of heart disease, stroke deaths, and hypertension - black women more likely to lose more expected years of life due to breast cancer than non-Hispanic whites

American Indians and Alaska Natives

- more than 3/4th reside in rural and urban areas outside of reservations or off-reservation trust lands - demand for expanded health care services within this population has been increasing for decades and becoming more acute - incidence and prevalence of certain diseases and conditions (diabetes, hypertension, infant mortality and morbidity, chemical dependency, and AIDS & HIV) is high - higher death rates from alcoholism, tuberculosis, diabetes, injuries, suicide, and homicide - twice as likely to be poor and unemployed as other Americans - Indian Health Care Improvement Act: 7-year effort to help bring American Indian health to a level of parity with the general population - Indian Health Service: ensure that comprehensive and culturally acceptable health services are available

private health insurance

- mostly employment based - different types of health plan providers: commercial insurance companies (United Health Group, Well Point, Cigna, and Aetna), Blue Cross/Blue Shield, and managed care organizations

children

- nearly 20% of US children younger than 18 years have special health care need, defined as having a chronic medical, behavioral, or developmental condition lasting 12 months or longer and experiencing a service-related or functional consequence -asthma is one of the most common childhood chronic diseases *DEVELOPMENTAL VULNERABILITY: rapid and cumulative physical and emotional changes that characterize childhood and the potential impact that illness, injury, or disruptive family and social circumstances can have on a child's life-course trajectory *DEPENDENCY: children's special circumstances that require adults (parents, school officials, caregivers, and sometimes neighbors) to recognize and respond to their health needs, seek health care services on their behalf, authorize treatment, and comply with recommended treatment regimens

ecological forces

- new diseases, natural disasters, and bioterrorism

Fee for Service

- oldest method of reimbursement - based on the assumption that healthcare is provided in a set of identifiable and individually distinct units of services - each of the services is separately itemized on one bill and there can be more than 1 bill - providers established their own fee-for-service charges --> insurers started to limit reimbursement to a usual, customary, and reasonable (UCR) amount --> providers would then BALANCE BILL (ask the actual charges and the payments received from third-party payers) charges set by provider each service billed separately insurers adopted UCR charge main drawback: provider induced demand

Hispanic Americans

- one of the faster growing groups - youngest groups in the US - because of their relatively low education levels --> higher unemployment rates than non-Hispanic whites - more likely to be employed in semiskilled, nonprofessional occupations - more likely to be uninsured or underinsured than non-Hispanic whites - less likely to take advantage of preventative care than non-Hispanic whites and other races - experience greater behavioral risks than whites and other races

The Role and Scope of Health Services Financing

- pays for health insurance premiums - financing determines who has access to health care (1) production of healthcare services - capital expenditures, renovations, and expansions (2) new services and technology proliferate when they are covered by health insurance - the demand for healthcare influences financing (health insurance increases demand for covered services) --> increased demand = greater utilization of health services --> insurance lowers out-of-pocket cost of medical care to consumers (consume more medical services than if they paid totally out of pocket) * MORAL HAZARD: consumer behavior that leads to higher utilization of healthcare services when services are covered by insurance - financing influences supply-side factors (how much healthcare is produced in private sector): healthcare services and technology proliferate when covered by insurance; if reimbursements are cut, supply of healthcare services are stopped - financing influence supply and distribution of healthcare professionals: reimbursements can spawn growth of health professionals; reimbursements of physicians can affect physicians' incomes

Trends in Private Health Insurance

- private health insurance coverage (both employer based and individually purchased) are declining - although the ACA have increased privately purchased health insurance, it has not really had a positive effect on overall employment-based coverage

Health Maintenance Organization

- provided medical care during illness but also offered a variety of services to help people maintain their health - enrollee is generally required to choose a PCP from the panel of physicians - provider receives a capitated fee regardless of whether the enrollee uses health care services and regardless of the quantity of services used - all healthcare must be obtained from in-network hospitals, physicians, and other healthcare providers - specialty services (mental health and substance abuse treatment) are carved out (special contract outside regular capitation that an HMO funds separately) - HMO is responsible for ensuring that services comply with certain established standards of quality - emphasize preventative care - PCP as gatekeeper - capitation - in-network access (except hybrid and triple-option plans); carve out for special services - standards of quality enrollment - rapid growth in early 1990s which peaked in 1996 - PPO and POS plans become popular - majority of Medicaid and Medicare Advantage beneficiaries are enrolled in HMOs models staff - employ physicians on salary - contracts for only uncommon specialties and hospital services -advantages: exercise control over physicians & convenience of one-stop shopping - disadvantages: fixed salary expense can be high, expansion into new markets is difficult, & limited choice of physicians group - contract with a single multispecialty group practice - separate hospital contracts - group practice is paid a capitation fee - advantages: no salary or facility expenses & well known practice may lend prestige - disadvantages: difficulty with service obligations if a contract is lost network - contract with more than 1 group practice - variations: contracts with only PCPs who are financially responsible for specialty services or separate contracts with PCPs and specialists - advantage: wider choice of physicians - disadvantage: dilution of utilization control independent practice associations (IPAs) - separate entity from the HMO -HMO contracts with IPA -IPA (not HMO) contracts with providers - advantages: eliminates the need to contract with various providers, transfers financial risk to the IPA, and choice of providers - disadvantages: difficulty with service obligations if a contract is lost, dilution of utilization control, & a surplus of specialists

development of legislative health policy

- relationship of government to the private sector - distribution of authority and responsibility within a federal system of government - relationship between policy formulation and implementation - pluralistic ideology as the basis of politics - incrementalism as the strategy for reform

Individual Private Health Insurance (nongroup plans)

- risk indicated by each individual's health status and demographics are taken into account --> high-risk individuals often unable to obtain this insurance (barrier eliminated by provisions in the ACA that required health insurers to cover anyone regardless of preexisting medical conditions

CH. 14 The Future of Health Services Delivery

- social and demographic - political - economic - technological - informational - ecological - global - anthro-cultural

technological forces

- technological innovation in medical sciences will continue to revolutionize heath care

informational forces

- tool in managing today's healthcare organizations

cost-plus reimbursement

- traditional method used by Medicare and Medicaid to establish per diem (daily) rates for inpatient stays in hospitals, nursing homes, and other institutions - reimbursement rates for institutions are based on the total costs incurred in operating the institution --> institution required to submit a cost report to the third-party payer - reimbursement is directly related to length of stay, services rendered, and cost of providing the services - to reimburse health care institutions - per diem rate or per patient day rate (PPD) - based on total operating cost + portion of capital costs - retrospective reimbursement - no incentive to control costs or judicious use of services -largely replaced by prospective methods - critical access hospitals in rural areas are still paid under cost-plus

Managed Care Plans

- vast majority of health insurance takes the form of managed care plans preferred provider: discounted fee for service capitation - per member per month (PMPM) fee to cover all needed services - monthly fee = PMPM rate x number of enrollees - minimizes provider induced demand and promotes prudence salary combined with productivity-based bonuses

Public Health Insurance pg. 259

-2011: almost 1/3 of Americans had public health insurance public financing supports categorical programs Medicare -beneficiaries: 65 years and older & disabled who are entitled to Social Security -security: end-stage renal disease -83% are age 65 and older -federal program consistent across the nation - financed by mandatory payroll taxes: employer and employee pay equally into the Hospital Insurance Trust Fund - Medicare consumes over 1/5th of national health expenditures - Medicare is financially sick and headed for insolvency unless it is steered around - 3 main issues: (1) rising cost of delivering health care, (2) aging population (3) shrinking workforce to support tax revenues Medicaid - finances health care for the indigent as determined by each state (means tested) - jointly financed by federal and state governments - CHIP - Military Health Services - Veterans Health Administration

prospective reimbursement

-Criteria established to determine in advance the amount of reimbursement -Removes incentives to be inefficient (present in cost-plus) -Enables Medicare to predict future health care spending -Organizations make a profit by keeping their operating costs below the fixed prospective rates types of prospective reimbursement - diagnosis-related groups (DRGs) - psychiatric DRGs - outpatient prospective payment system - case-mix methods: (resource utilization groups, case mix groups, home health resource groups)

Point-of-Service Plans

-combines features of classic HMOS with some of the characteristics of patient choice found in PPOs --> these plans are a type of hybrid plan (open-ended HMOs) - cross between HMO and PPO - HMO features are retained (utilization controls, capitation) - PPO feature: open access option available at the point of service - later, the need for POs plans become less important: HMOs relaxes utilization controls and PPOs already offered out-of-network access

policy cycle

-issue raising: enactment of a new policy is preceded by a variety of actions that create a sense that a problem exists and needs to be addressed -policy design: Presidents have segments of executive branch of government or outside task forces to develop new policy proposals public support building: major addresses to the nation and efforts to mobilize their administration to make public appeals and organized attempts to increase support among interest groups legislative decision making and policy support building legislative decision making and policy implementation

flaws in fee-for-service model (indemnity insurance): allows the insured to obtain healthcare services anywhere and from any physician or hospital

-uncontrolled utilization - uncontrolled prices and payment - focus on illness rather than wellness -fee for service (indemnity insurance) allowed the insured to get services anywhere, without restraint - moral hazard prevailed, along with provider-induced demand - few controls over the amount of payment - insurers functioned simply as passive payers of claims - sickness coverage; no coverage for wellness and prevention; no control over hospitalizations

Trends in employment-based health insurance

2005: 91.6% of private health insurance was employment based 2011: figure dropped to 89% fewer small businesses offered health insurance - decreasing premium subsidiaries from employers - higher out-of-pocket costs - number of uninsured increased dramatically between 2000 and 2009 - despite tax credits under the ACA, small business insurance coverage declined

global forces

Falling barriers to international trade have enabled: domestic markets enter to foreign markets. foreign enterprises to enter the domestic markets.

service strategies

HORIZONTAL INTEGRATION: growth strategy in which a healthcare delivery organization extends its core product or service to control the geographic distribution of a certain type of health care service VERTICAL INTEGRATION: links services at different stages in the production process of health care to increase the comprehensiveness and continuity of care across a continuum of health care services

Types of Managed Care Organizations

Health Maintenance Organization (HMO) Preferred Provider Organization (PPO) Point-of-Service Plans (POS)

organizational integration

INTEGRATION: various strategies that healthcare organizations employ to achieve economies of operation, diversify existing operations by offering new products or services, or gain market share -ACQUISTITION: purchase of one organization by another -MERGER: involves a mutual agreement to unify two or more organizations into a single entity - JOINT VENTURE: two or more institutions share resources to create a new organization to pursue a common purpose ALLIANCE: agreement between 2 organizations to share their existing resources without joint ownership of assets - simple to form - provide opportunity to evaluate financial and legal ramifications of the arrangement before a potential "marriage" takes place - require little financial commitment and can be easily dissolved

anthro-cultural forces

In US, the beliefs and values have traditionally been espoused by middle-class Americans --> strong deterrent against attempts to initiate radical changes in the financing and delivery of healthcare

basic forms of integration

Management services organizations (MSOs): supply management expertise, administrative tools, and information technology to physician group practices Physician-hospital organizations (PHOs): legal entity that forms an alliance between a hospital and local physicians Provider-sponsored organizations (PSOs): risk-bearing entity that incorporated the insurance function into integrated clinical delivery

Future of Health Care Reform

No single-payer system * national health care program in which the financing and insurance functions are taken over by the federal government problems with implementation - shift major segments of costs from private to public sector --> taxes increasing - require overt rationing to curtail runaway costs - major disruptions in well-ingrained programs (Medicare and Medicaid) - government would assume functions of insurance and financing --> increase size of government bureaucracy - government control over insurance and financing would disrupt healthcare industry - from historical and cultural standpoint and under the US constitution, delivery of healthcare to all citizens is not primary function of government reforming the reform - future of healthcare reform will have to address 2 issues: cost of health insurance for businesses and individuals & cost of healthcare services --> overall costs need to be reduced to a level that will allow most people to afford health insurance and enable them to access healthcare services when necessary universal coverage and access

efficiencies and inefficiencies in Managed Care

efficiencies - by integrating the quad functions of health care delivery (financing, insurance, delivery, and payment), MCOs eliminate insurance and payer intermediaries and realize some savings - MCOs control costs by sharing risk with providers or by extracting discounts from providers - cost savings are achieved by coordinating a broad range of patient services and by monitoring care to determine whether it is appropriate and delivered in the most cost-effective settings - gatekeeping reduces moral hazard inefficiencies - complexity of having to deal with numerous plans does not add value to the delivery of health care - administrative inefficiencies are created for providers, who must deal with differences in each plan's protocols and procedures - many contracts with providers exclude some services - lengthy appeals process that patients and providers must sometimes navigate when an MCO denies services

New Frontiers in Clinical Technology

genetic medicine (association of genes with specific disease traits) --> gene therapy (use of genes to prevent or treat a wide array of diseases) personalized medicine (specific gene variations among patients will be matched with responses to selected medications to increase effectiveness and reduce unwanted side effects) precision medicine ) account variability of genes, environment, and lifestyle factors) - Genetic mapping - Personalized medicine and pharmacogenomics - Drug design and delivery - Imaging technologies - Minimally invasive surgery - Vaccines - Blood substitutes - Xenotransplantation (animal tissues are used for transplants in humans ) - Regenerative medicine

Principle Features of US Health Policy

government as subsidiary to the private sector - healthcare programs built on the consensus that healthcare is a right of citizenship and that government should play a leading role in the delivery of healthcare --> in the US, healthcare a been seen as a privilege/ responsibility of the government --> US private sector has played dominant role - government's role in US healthcare has grown incrementally to mainly address perceived problems and negative health outcomes for the underprivileged (or situations in which markets fail or do not function efficiently) fragmented - federal, state, and local governments pursue their own policies, with little coordination of purpose or programs occurring - employed are predominantly covered by voluntary insurance provided through contributions that they and their employers make - elderly are insured through combination of private-public financing of Medicare - poor are covered by Medicaid through a combination of federal and state tax revenues - special populations have coverage through federal government incremental, and piecemeal reform -result of compromises made to accommodate a variety of competing interests - ex) broadening of Medicaid program since its introduction in 1965 pluralistic politics associated with demanders and suppliers of policy - health policy outcomes are heavily influenced by the demands of interest groups and compromises struck to satisfy those demands - each group fights to protect its own interests - each branch and level of government can influence heath policy a decentralized role for the states - role in regulating managed care in delivery of healthcare - financial support of care and treatment of poor and chronically disabled oversight of healthcare practitioners and facilities through state licensure and regulation - training of health personnel - authorization of health services available through local governments impact of presidential leadership - presidents have important opportunities to influence congressional outcomes through their efforts to bring about compromises, to engage in political maneuvering, or to take advantage of economic and political situations, particularly when policies concern their own preferred agendas

compliance requirements by health plans

must cover young adults under 26 in their parents' plans coverage for preexisting conditions - effects: premiums will rise for everyone; the healthy will subsidize the unhealthy likely effects: rise in premiums, consolidation of the insurance industry and less competition

patient-centered care

patients are allowed to make choices that best fit their individuals circumstances --> health professionals take the time to understand patients' individual needs, preferences, and values, and invite patients' participation in their care --> activate patients are more actively engaged and take a greater degree of responsibility for their own health compared to patient-centered care

political forces

public policy is intertwined with almost all aspects of healthcare delivery (education at home, immigration policies, etc.)