unit 16

Healthcare financing revolution

-The rising cost of care over the last 70 years is a dangerous trend that continues today and poses significant threat to the US economy. · every dollar a person spends buying products or services in the United states, currently almost $0.18 goes to pay for health care. · To control rapidly rising health care costs, Medicare moved from a retrospective (fee for service) payment system to a prospective payment system (PPS) based on diagnosis related groups (DRGs).

public insurance

Medicaid is a joint federal state program to provide health insurance coverage for impoverished families, particularly those with children. · Medicaid, along with the Children's Health insurance program (CHIP), offers health coverage to more than 64 billion Americans. · Those eligible for health care services include pregnant women, children and parents, persons with disabilities, and seniors who meet certain income criteria. · Each state administers its own Medicaid program with minimum federal income guidelines, so some variances can occur from state to state. · The ACA expanded the minimum income levels for Medicaid eligibility for those less than 65 years of age, effective January 1st, 2014. · However, according to the 2012 Supreme Court ruling on the ACA, states have the right to opt out of offering the expanded Medicaid coverage. · Medicaid is a primary pair of long-term care nationwide. Medicaid represents the fastest growing component in most states' budgets.

goal of managed care

The overall goals of these types of managed care plans are to limit unnecessary health care services, to use the least expensive service when care is needed, and to use the least expensive medication available.

Diagnosis-related groups (DRG)

a common method of reimbursement for health care services based on a predetermined fixed price-per-diagnosis.

Patient Protection and Affordable Care Act (ACA).

a federal statue enacted in 2010 the requires U.S citizens and legal residents to have health insurance through comprehensive health care reform; expands health care coverage access to millions of people who were previously uninsured.

Medicare

a federally funded health insurance program for the disabled, persons with end stage renal disease, and persons 65 years of age or older who qualify for Social Security benefits.

Medicaid

a jointly sponsored state and federal program that pays for medical services for persons who are elderly, poor, blind, or disabled and for certain families with dependent children who meet specified income guidelines.

provider

a licensed health care professional who or an organization that receives reimbursement for providing health care services.

Private health insurance

a method for individuals to maintain insurance coverage for health care costs through a contract with a health insurance company that agrees to pay all or a portion of the cost of a set of defined health care services such as routine, preventive, and emergency health care; hospitalizations; medical procedures; and/or prescription drugs. Typically, the private insurance is provided through and individual's employer, with a portion of the cost paid by the employer and a portion paid by the employee. Private insurance policies can also be purchased by individuals but are generally much more expensive than when provided through an employer's group plan.

Single payer system

a method of reimbursement in which one payer, usually the government, pays all health care expenses for citizens; funded by taxes; decisions about covered treatments, medications, and services are made by the government. Though the terms universal health care and single payer system are sometimes used interchangeably, universal healthcare could be administered by many different payer groups; both offer citizens health insurance coverage.

Prospective payment system

a method of reimbursing health care providers (physicians, hospitals) in which the total amount of payment for care is predetermined on the basis of the patient's diagnosis; encourages increased efficiency in the use of health care services because providers are reimbursed at a predetermined level regardless of how many services are rendered or procedures performed to treat a particular diagnostic category; the most common method of payment in today's health care system.

Retrospective payment system

a method of reimbursing health care providers in which professional services are rendered and charges are billed based on the basis the individual services provided; also known as the "fee-for-service" payment system. This system may encourage overuse of health care services because the more services rendered or procedures performed, the more revenue received by providers.

Health insurance exchange

also known as "health insurance marketplace," an online marketplace for individuals to shop for and purchase health insurance at affordable rates and to identify whether they qualify for cost assistance subsidies to help pay the cost of the insurance; states established health insurance exchanges as a component of the patient protection and Affordable care act to provide access to affordable health insurance options for American citizens and legal residents.

Third-party payer

an organization other than the patient and the provider, such as an insurance company, that assumes responsibility for payment of health care charges. An individual's health insurance plan provided by his or her employer is considered a third-party payer.

Effectiveness

production of a desired outcome; taking the right action to achieve the expected result.

Efficiency

the extent to which resources, such as energy, time, and money, are used to produce the intended result.

Centers for Medicare and Medicaid services (CMS)

the federal government agency that administers Medicare and Medicaid.

Gross domestic product (GDP)

the measure of the total value of goods and services produced within a country; the most comprehensive overall measure of economic output; provides key insight into the driving forces of the economy.

How Health Care Is Paid

· A combination of private and public sources pays for healthcare services and supplies for individuals in the United States. · Most individual health care is paid for either by households through direct Out of pocket payments or by third party public or private insurers. · Third party payers include private insurance companies and government health programs, such as Medicare, Medicaid, and the veterans administration health system.

Reducing readmissions

· A provision of the ACA established the hospital readmissions reduction program, which reduces Medicare payments to hospitals with excessive readmissions. · A readmission is defined as admission to a hospital within 30 days of a discharge from the same or another hospital. · The provision is currently focused on readmissions for acute myocardial infarction, heart failure, pneumonia, chronic obstructive pulmonary disease, elective total hip arthroplasty, elective total knee arthroplasty, and coronary artery bypass graft surgery. · New roles for nurses as a patient care navigators and transition care providers are rapidly emerging both in community settings and as part of the hospital services to prevent readmissions. · Just as with VBP models and never events, nurses are at the center of the efforts to prevent readmissions and to avoid costly financial penalties to the hospital.

History of Health Care Financing

· Another cause of rising cost was that the consumers of health care remained insulated from the cost of care. · Most patients had some form of insurance or a third party payment and did not pay the full cost for their care or even for their health insurance premiums. The full cost of care remained hidden from consumers because costs were subsidized by employers through private insurance or by taxpayers through such programs as Medicare and Medicaid. · Providers had little incentive to contain costs and patients rarely considered cost, so the demand for medical care generated pre verse economic incentives and which providers received more income from using more services, with no financial risk for their use of additional resources, and patient did not question the appropriateness of treatments ordered by the provider. · These previous economic incentives had a drastic effect on the Medicare program. · Medicaid was established by the US Congress in 1965 to provide health insurance coverage for persons 65 years and older who are eligible for Social Security benefits, persons with end stage renal disease, and eligible disabled population. · By the early 1980s, increased medical usage and high inflation combined with a growing older adult population generated substantial increases in Medicare costs. The rapid growth of Medicare expeditors became a major factor in the federal budget deficit, causing the CMS to rethink the entire Medicare payment system. · This process led to a revolution in how the government and private health insurance companies paid for health care.

Access to Healthcare

· As healthcare costs continue to rise dramatically in the United states, one major issue that must be addressed is access to health care for the uninsured or underinsured. · The lack of access to healthcare primarily reflects a lack of insurance coverage, so access is an issue of financial access. · The uninsured and underinsured included the working poor employed by small businesses without insurance coverage, part-time workers, unemployed persons, and the homeless. The poor are more likely to lack a usual source of care, less likely to use preventive services, and more likely to be hospitalized for avoidable conditions than those who are not poor. · The increase in coverage is the result of the availability of more affordable health insurance options through the ACA. · The uninsured and underinsured populations generate uncompensated or indigent care cost and bad debt for health care providers. · Unpaid cost must be covered by those who do pay so the hospital can continue operating, a process known as cost shifting.· Providers increase their charges to households and public and private insurers who pay for care to make a contribution for the care of the uninsured population. This practice raises insurance premiums, making it even more difficult for many households and businesses to afford coverage. · The problem of uncompensated care and cost shifting was a major factor leading to the health care reform and the passage of the ACA.

types of businesses using managed care

· As healthcare costs rise, the cost for businesses to provide health insurance for employees also rises; these increasing costs are then passed to consumers by increasing the price of the products or services produced by the business. · Healthcare costs have led to a situation in which US businesses struggle to compete in an international market, in which health care costs are significantly lower. · Large businesses, such as automobile manufacturers, pushed health insurance companies to decrease the rising costs of health insurance premiums, leading to a move from conventional insurance plans to MCOs.

Components of the HCAHPS Patient Experience Survey

· Communication with nurses · communication with doctors · responsiveness of Hospital staff · communication about medicines · cleanliness and quietness of hospital environment · discharge information · overall hospital rating

Consumer Empowerment

· Customers or patients as health care consumers are demanding quality services at affordable rates · economic forces motivate the shift toward health promotion and preventative care to achieve cost effectiveness. Nurses must understand and provide customer-focused care. · This relationship with the consumer emphasizes cost sharing through individual choices and health practices. · For instance, the presence of unhealthy personal practices, such as smoking, illegal drug use, and a sedentary lifestyle, may lead to a higher insurance rate for an individual. · Smokers may pay higher rates and have to be smoke free for one year to qualify for lower rates. · Being overweight may cost the subscriber more in premiums because this status poses additional health concerns and potential increased health costs. · Legislation is in place to protect individuals enrolled in managed care plans: access, quality, and cost. · Nurses can take the lead in demonstrating the value of wellness and of teaching health consciousness. · Reducing health care costs as a consumer

Access to Healthcare

· Despite advances in providing health insurance through the ACA, there are still over 26 million people in the United states without health insurance. · People most likely to be uninsured are low income adults and people of color; the major barrier to obtaining and maintaining health insurance is the cost of coverage. · Lack of health insurance is perhaps the greatest barrier to accessing health care services and has a tremendous negative effect on an individual's overall health status. · Consider that people without health insurance: · do not have a usual source for health care and are more likely to go without needed care due to cost; · having increased risk of being diagnosed at the later stages of a disease, leading to higher mortality rates; · may not receive preventive care; · are less likely to receive care for chronic diseases; · and may often seek treatment in emergency departments at a much higher cost to the healthcare system.

Public Insurance

· Government is the biggest influence in the health insurance market, generating half of hospital revenues in more than 1/4 of physician incomes. · The largest government health insurance program is Medicare. · Medicare is an entitlement program based on age or disability criteria, rather than on need. · Medicare Part A covers inpatient hospital services, skilled nursing facilities, and home health benefits; Medicare does not cover long term care. · Hospital coverage has deductible and coinsurance requirements and some coverage limitations. · Medicare Part B covers physician and outpatient services. · In January 2006, Medicare added access to the prescription medication benefit, a noted and costly change from previous benefits.

History of Health Care Financing

· Historically, several underlying themes have driven healthcare financing in the United States. Among these are the following: · The physician's role as being primarily responsible for health care decision-making. · The fee-for-service payment method that encouraged overuse of health care services. · The rapidly increasing sophistication and cost of medical technology. · For many years, physician domination and decision making and the fee for service payment method were intertwined and contributed to the lack of cost consciousness in health care. · Physicians made all decisions about what health care services were needed; costs were rarely discussed between physician and patient, so the cost of care was not considered. · Beginning in the 1960s, the attitude that "if it might help, do it" flourished as the rapid pace of sophisticated technologies enhanced providers abilities to provide treatment. · The more tests are procedures performed, the greater the earnings for providers because they were paid according to the number of procedures performed or services provided. Instead of attempting to allocate medical resources to the highest medical need, the financial incentive was to provide as much care as possible using the most technically advanced methods of care. Overuse of health services and rapid cost inflation resulted.

Economic Issues and Trends

· Illness treatment ----> prevention and population health driven · Acute care----> preventive care, home care · Hospital or institution based ---> non-institution based (clinic or home) · Fee for service (cost based) ----> value driven payment models · If it might help, use it -----> outcomes measurement and cost effectiveness. · Independent decisions (practice variation) --> protocols and guidelines (EBP)

Expansion of Technology

· Improved technology for diagnostic and therapeutic practice is under examination for cost efficiency in comparison with outcome delivery. · Leaders must balance the health contributions of the improved technology and the accompanying cost with issues of quality of life, access to care, risk benefit analysis, and individual consumer choice. · US consumers have had access to high levels of technology with little concern for cost. · Nurses are key players in educating patients and their family members about the cost to benefit ratio of certain technologies and can assist in selecting alternative treatment options. · One example is the increased use of pharmaceuticals; more advanced drugs are marketed although they have varying degrees of actual documented benefit in comparison with existing, less expensive drugs. · Patients may not trust generic drugs, although they are less expensive. · The nurse can be a key to educating patients and the public regarding the potential and implications of using a less expensive drug instead of a more expensive alternative.

Key components of the Affordable Care Act

· Individuals and families with incomes up to 400% of the federal poverty level receive financial assistance either through tax credits or subsidies to help make health insurance more affordable. · Employers with more than 200 employees must offer health insurance. · State based health insurance exchanges, also known as the ACA marketplace, are offered whereby individuals and small businesses can purchase qualified coverage at more affordable rates. · The health plan must cover specified benefits to be deemed qualifying health insurance coverage including ambulatory patient services, emergency services, hospitalizations, maternity and newborn care, mental health and substance abuse treatment, prescription drugs, rehabilitative services, laboratory services, preventative and Wellness services, chronic disease management, and pediatric services to include vision and oral care. · Insurers cannot deny coverage for pre-existing conditions, charge higher premiums based on health status or gender, revoke coverage when someone gets sick, Or impose annual or lifetime limits. · Dependent coverage for children up to age 26 years must be included for all individual and group policies. · Insurance companies must spend 80% of premiums on medical care, a requirement that forces them to reduce their administrative expenses. · Medicare will no longer pay hospitals to treat hospital acquired conditions. · The value based purchasing program was established in which hospitals are paid on the basis of their performance on quality measures, including patient satisfaction. · Medicare payments to hospitals for preventable hospital readmissions are reduced.

Value-based payment models

· Medicare and private insurance companies have shown success with various methods of reimbursing providers based on quality measures that reflect the quality of care provided, with an emphasis on providing evidence based care, preventing complications, and coordinating care to reduce cost. · Hospitals and other providers are rewarded through financial incentives for meeting standards of care for certain conditions such as diabetes, myocardial infarction, pneumonia, and heart failure. · To promote innovative models of care designed to improve care quality, reduce costs, support patient centered practices, and keep people healthier, CMS established its Innovation Center, which allows for creating and testing of new care delivery models. · New models include accountable care organizations, medical home models, an episode based payment initiatives. · Several innovative models focus on specific disease treatments such as: · comprehensive end stage renal disease care model to improve care and reduce costs for ESRD patients. · Comprehensive care for joint replacement model to improve care and reduce cost for patients receiving hip and knee replacements. · Oncology care model to improve quality and coordination of care for patients receiving chemotherapy.

The Patient Protection and Affordable Care Act (ACA)

· On March 23rd, 2010, the Patient Protection and Affordable Care Act was signed into law. · The comprehensive health care reform plan was designed to expand health insurance coverage to uninsured Americans while controlling costs and improving the quality of care. · In its broadest view, the ACA is the plan for a comprehensive National Health insurance program to provide funding for U.S. citizens and legal residents to secure health insurance beyond the current program such as Medicare and Medicaid while also providing for provisions to improve the quality of healthcare and reduce costs. · Over a decade after this legislation was signed into law, the ACA continues to be debated in Congress, with various components of the law, or the entire law, being up for revisions or repeal. · Thus it remains important for nurses to understand the key components of the ACA. · The ACA represents the first major effort to reform the US healthcare system by expanding health insurance coverage to uninsured populations and, just as important, slowing unsustainable growth in health care costs, improving quality, and moving health care to a focus on prevention and population health rather than acute illness treatment. · Has the ACA in healthcare reform continued to be under debate in Congress, it is important for nurses to understand and evaluate any new health care reform proposals that come forward for possible legislative consideration. · Provides affordable health insurance options through an insurance marketplace · Requires U.S. citizens/legal residents to have a qualifying health insurance coverage or pay a penalty · Addresses many issues including employer requirements, health insurance exchanges, and prevention and cost-reduction approaches

Care coordination

· One key to improving quality and reducing cost is to ensure that healthcare is coordinated in order to decrease duplication of services and reduce wasted resources. · Effective care coordination requires the use of case management and other emerging practice models, search as patient care navigator and transition care coordinator, all with the same goals: to ensure care is delivered in the community through home care, outpatient clinics, and ambulatory care centers at less costly rates; to decrease more expensive hospital based care; and to prevent readmissions to the hospital. · Nurses as care coordinators, case managers, patient care navigators, or transition care coordinators demonstrate cost effectiveness by ensuring that patients have the resources they need to get effective treatment at the appropriate level of care across the continuum of care

New Payment Methods to Control Cost & Quality

· Pay-for-performance · Never events · Value-Based Purchasing · Reducing readmissions

Access to Healthcare

· People without health insurance weigh their cost for daily living expenses, such as food, housing, and transportation, against the cost of health insurance coverage and are simply not able to meet the financial demands for health insurance, even with the assistance provided through the ACA. · The ACA does not provide health insurance for every person for several reasons: a person's income may make him or her an eligible for financial assistance through the ACA, yet he or she is still unable to afford the insurance premiums or has made a conscious decision to not purchase health insurance; the person is subject to immigrant eligibility restrictions; or the state in which the person lives did not expand Medicaid to his or her income level. · Medicaid, it combines state and federal health insurance program administered by each state, it's intended to improve access to health care for the poor, covering approximately 19.8% of the population in 2019. · The ACA expanded federal Medicaid support to any state that accepted this assistance, allowing those states to increase the number of people who meet the qualifications for Medicaid.

Ways consumers can reduce health care costs

· Practice good health behaviors-healthy eating, exercise, good sleep. · Use the Internet to learn more about your health and preventing disease. · Recognize early warning signs of disease and get prompt treatment. · Practice preventive health with health screenings and routine self-examinations. Take advantage of free screenings offered at community sites, hospitals, or churches. · Develop an active relationship with health care providers to improve communication. Ask providers to explain the purpose of all prescribed tests and medications. Become an informed consumer. · Use emergency care only in emergencies. See your healthcare provider during office hours. · No health risk for lifestyle choices, such as alcohol and drug use, dietary habits, sedentary behaviors, and safety at home and while driving. · Understand and use the health care benefits of your insurance plan to stay healthy. Take advantage of all preventive benefits offered. · Determine whether healthcare treatment is really necessary. Choose nonhospital alternatives for treatment whenever possible. Comparison shop for health care alternatives. · Choose generic drugs whenever possible. Question expensive drugs or devices. · Review your healthcare bills carefully, and notify the provider and/or facility of errors.

Private Insurance

· Private insurance accounts for the largest percentage of coverage for all health care, with the cost of providing health insurance to employees passed on by the employer to the consumer in the pricing of goods and services. · This means that everyone pays a part of the country's health care costs in every purchase made. · Individuals still must pay a portion of their health care costs directly from their own pockets, through payments for insurance premiums, deductibles, and copayments. · With managed care products, such as HMOs, PPOs, and POS arrangements, the premium consumer pays for coverage has continued to rise. · In response to these concerns, some companies now offer their employees high deductible health plans (HDHPs), health reimbursement accounts (HRAs), health savings accounts (HSAs), or a combination of these. · These plans offer more flexibility in consumer discretion over their health care dollars and provide a tax free way to save for future health care needs.

Implications for Nursing

· The nurses represent the largest health professional discipline in the United States and have an extremely important role in influencing the delivery of high quality, lower cost healthcare while also promoting health for individuals and communities. · Never has there been a greater opportunity to advance the practice of professional nursing. · Innovation and excellence in all nursing practices are needed to contain cost while attaining positive, measurable outcomes. · Nurses are at the center of ensuring positive patient outcomes, maximizing reimbursement, and decreasing financial penalties for errors and readmissions. · Every setting in which professional nurses practice holds challenges in providing and managing care that is efficient, affordable, and of high quality.

Expansion of Technology

· The technology of the Internet offers promise for information and education that allows consumers or patients to access healthcare resources more effectively. · Some health care plans offer subscribers free newsletters and/or online programs that highlight ways to prevent disease and to manage chronic illness for improved quality of life and lower costs. · Information technology provides the professional nurse the ability to gather and analyze health related information and data for improved care. · Healthcare information systems and electronic health records offer many opportunities for managing health care costs. · Combining clinical skills with information technology skills can be a significant advantage in the success of professional nurses as they demonstrate their ability to provide cost effective outcomes measurement.

DRG

· This shift was critical for hospitals because Medicare is the largest single payer of hospital charges. · Under DRG's, each Medicare patient is assigned to a diagnostic grouping on the basis of his or her primary diagnosis at hospital admission. Medicare limits total payment to the hospital to the amount pre-established for that DRG, unlike with the previous approach, in which hospitals build Medicare for any and all services provided to patients, and Medicare reimbursed these charges with a generous payment schedule. · If hospital costs exceed the DRG payment for a patient's treatment, the hospital incurs a loss, but if costs are less than the DRG amount, the hospital makes a profit. · Thus, hospitals face a strong financial incentive to reduce the patient's length of stay and minimize procedures and test performed. Although DRGS originally applied only to hospital payments for Medicare patients, similar reimbursement arrangements were initiated by private insurance companies. · Implementation of the DRG system created a new role for nurse as utilization review experts to review medical records and determine the most appropriate DRG's for patients.

Never events

· To save lives and millions of dollars, CMS adopted a policy that will no longer pay hospitals for the extra cost of treating preventable errors. · Medicare will no longer pay hospitals for the cost of treating never events-medical errors that are largely preventable and have serious consequences for patients. · The purpose of the never events payment policy is to eliminate payments for certain medical errors and encourage hospitals to direct resources to preventing errors rather than being paid for them. · Never events include hospital acquired infections, injuries from falls, wrong site surgery, and mismatched blood transfusions. · Nurses have a highly visible and important role to play in preventing such complications and helping to control costs for hospitals. · They are also known as serious reportable events

Value-Based Purchasing (VBP)

· Value based purchasing is a CMS reimbursement model that rewards inpatient hospitals for providing quality care to include patient satisfaction. · Then sentence for VBP arise from 2 domains: · the patient experience of care; and clinical processes of care. · The patient experience of care is based on the hospital scores on the hospital consumer assessment of healthcare providers and systems (HCAHPS), which is essentially a standardized patient satisfaction survey. · Clinical process of care measures include such items as discharge instructions delivered to heart failure patients, Receiving fibrinolytic therapy given within 30 minutes of hospital arrival to patients with acute myocardial infarction, in prophylactic antibiotic received within one hour prior to surgical incision. · In addition to affecting hospital reimbursement, data from VBP program is used to provide information to the public about hospital quality, nursing home quality, and even quality of care provided by individual providers.

Effect of payment methods

· Various methods of reimbursing providers for health care services have emerged in attempts to control the rapid growth in health care costs and improve the safety and quality of health care. · Hospitals and providers can now be rewarded for achieving improved health outcomes and are not paid for certain medical errors. · Value based payment models, never events, value based purchasing, in readmission reduction programs focus on aligning reimbursement with patient outcomes. · Nurses are at the center of helping hospitals and other healthcare organizations successfully manage these new payment mechanisms by ensuring that errors are prevented, health and quality outcomes are achieved, and Financial rewards are realized.

Managed care

· With the shift to prospective payment under Medicare, private insurance companies followed Medicare's lead in developed and managed care. · Managed care organizations (MCOs) encompass several different approaches, such as health maintenance organizations (HMOs), preferred provider organizations (PPO), end point of service plans (POS). · The primary commonality among all of these health plans is that they use some method to review and approve or deny the use of healthcare services. In this review process, the patient's medical options are reviewed by a nurse or physician employed by the health insurance company, and a judgment is made as to the necessity of the service being considered. · Coverage may be denied for unnecessary, excessive, or experimental procedures, in strong contrast to the previous "If it might help, do it" approach. · The goal of managed care is to minimize payment of charges for inappropriate or excessive health care services. · As healthcare costs rise, the cost for businesses to provide health insurance for employees also rises; these increasing costs are then passed to consumers by increasing the price of the products or services produced by the business. · Healthcare costs have led to a situation in which US businesses struggle to compete in an international market, in which health care costs are significantly lower.