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0

How US population insured

53% private
32% public
15% uninsured

1

What is the function on insurance?

Method to guard against the financial risks in life

Pay small defined amount to avoid paying much larger amount in event of major loss

2

4 principles of insurance

Risk is unpredictable
For large populations, risk can be predicted with some accuracy
Insurance transfer risk from individual to group through pooling of resources
Losses are shared by all members

3

3 types of private insurance

Group
Self-insurance
Individual private health insurance

4

Group insurance explain

Through employer Union or other professional organization

Large number in group so cost and risk distributed equally

State licensed

5

Explain self insurance

Ex is large employer

Diversified enough such that can predict medical expenses

Assume the risk but don't pay insurers a dividend

6

Explain private health insurance

For about 7-12% of population

Costs $10000 to $25000 for individual per year

Cost can vary widely

7

Define beneficiary

The "insured" covered under a health insurance plan

8

Deductible

Fixed amount of money to be paid by the insured under a contact before benefits become available

9

Premiums

Amount charged by insurer to insure against risk

Two types
1. Experience rating - based on groups medical claims experience; different from group to group based on risks
2. Community rating - risk spread among larger community; premium based in utilization; rate same regardless of age and gender; cost shifted from poor to healthy

10

Trend in health insurance costs

From 2000 to 2010, costs for family insurance doubled

Increased financial burden on worker

Worker contribution saw greater overall increase

Premiums increase much faster than inflation and workers earnings

Worker contributes 20-30% of premium ( individual pays about $1000; family about $4000)

11

Percent of covered workers enrolled in a plan with $1000 or more deductible

22-50%

All firms 31%

12

Methods used to compensate during economic downturn

Reduced scope of benefits
Increased cost sharing
Increased workers share of premium

13

Percentage of firms offering health insurance

Between 45 and 70%

14

Retiree health benefits

Less and less firms offering this benefit over time

From 66% in 1988 to 26% in 2011

15

Insurance and risk

Manage uncertainty about future utilization

Loss rate (claims paid to providers) - both number of losses and timing of losses

Must forecast - info to classify risk and to set premiums

16

Define underwriting

Process of identifying and classifying the potential degree of risk represented by individual or group

Goal - determine group loss rate compared to the typical rate

Factors - size, composition, level of participation, level of benefits, occupational hazard, geographic location

17

Anti-selection in underwriting

Aka adverse selection

Those with higher than average risk are more likely to need or seek insurance

18

Indemnity plan

Reimburse insured without regard to the expense incurred

Fixed amount paid to beneficiary per procedure/day

Insured is responsible for paying provider

19

Service insurance plan

Provides services to the insured

Pays hospital, physician directly except for deductible snd copay

20

Regulation of health insurers

1. State
Financial standards
Market conduct
Premiums
Renew ability
Hmo MCO and network arrangements
Complaints remedies and appeals

2. Federal
ERISA provisions

21

ERISA provisions

Written document
Disclosure requirements
Fiduciary requirements
Claims for benefits
Remedies and enforcement
Continuation coverage

22

HIPAA Provisions for insurance

Pre- existing conditions
-if requiring treatment during previous 3 months
-wait limited to no longer than 12 months
-as long as no extended gap in health coverage when transitioning employment


Requires insurers to make all of their small group products available to any qualifying small employer regardless of claims experience or the health status of employees

Insurers must guarantee that coverage can be continued at end of the period of coverage

23

HIPAA

Health insurance portability and accountability act

24

ERISA

Employee retirement income security act

1974

Protect workers from loss of benefits provided thru the workplace

Applies to most private employer benefit plans established or maintained by employer

Preempts state insurance laws

25

Health reform law - changes

-high risk pools
-assessment and reporting premium increase
-80/20 rule - no more than 20% on admin costs
-end to lifetime coverage limits
-cannot rescind coverage based on health status
-eligible under parents plan until 26
-zero copay for certain preventative benefits

26

Health reform law initiatives

Create state insurance exchanges (two types - individual and small business)

Guarantee issue and renew ability

Modified community rating (geography, age and tobacco use)

Collaboration between HHS, states and insurers

Competition in exchanges

27

CMS what is it?

Centers for Medicare and Medicaid services

Part of HHS

Formerly health care financing administration

Spends $1 trillion a year (60:40 Medicare:Medicaid)

28

What does CMS do?

Assures Medicare and Medicaid run properly by states

Established policies for paying providers

Conducts research on effectiveness of treatments and financing and health care management

Assesses quality of health care facilities and services

29

Medicaid

Funded jointly by state and federal

Established 1965 part of social security act

Fed contributes 50-83%

States determine payment rates to providers

30

Who is eligible for Medicaid?

Based on monthly income and financial resources

Categorically needy -welfare status

Low income aged blind disabled

Medically needy - monthly income exceeds allowable maximum

31

Mandatory Medicaid groups

Low income with children

Supplemental security income recipients

Infants born to Medicaid women

Some Medicare beneficiaries

Children under 6 and pregnant women with income below 133% of federal poverty limit

Recipients of adoption assistance and foster care

32

Optional Medicaid individuals

Low income children

Low income women with breast or cervical cancers

TB-infected individuals with income at SSI

Institutionalized individuals with low income

Some blind aged disabled adults

33

Medicaid benefits

Federally mandated

Prenatal care
Vaccines for kids
Family planning services
Nurse-midwife services
Rural health clinic services
Pediatric and family nurse services

Each state can determine other benefits like vision and dental

Medicaid always payer of last resort

34

Medicaid Rx benefits

Provided by all states

High utilization population

States limited in ability to manage Rx utilization

May request nominal copayment but cannot deny

Medicare part d overrides this

35

Medicaid reimbursement

Providers must accept Medicaid payment as full payment

States can add nominal deductible copay or coinsurance

Cannot require copay for emergency or family planning services

36

Medicaid in 1990s

Rising costs 25% per year

Managed care attractive solution (fixed rates, capitation)

Waive some federal requirements
-mandatory enrollment in MCO
-matching federal funds for additional expenditures

37

CHIP

Children's health insurance program

Health insurance to uninsured low income children

Under age 18

Not currently eligible for Medicaid

Income below 200% of federal poverty limit

Must meet benchmark coverage (bc/bs option, state employees, Hmo)

38

What is PACE?

Program of all inclusive care for the elderly

Comprehensive prepaid healthcare devices

Waives certain requirements for long term care nursing facility

39

Medicare

1965 social security act

Hospital expense and medical expense to elderly and disabled

Must be 65

Chronic physical or mental disability

End-stage renal disease - need dialysis

40

Medicare part A

Covers hospital, nursing facility, hospice and some home health care

Funded mainly by payroll tax on employers and workers

Patients do have deductibles and co-insurance

41

Medicare part B

Covers doctor services, outpatient hospital, ambulance, medical supplies and equipment, diagnostic tests, physical therapists and some home health care

Voluntary enrollment

Premiums are means tested

42

Medicare part C

Medicare and managed care

1982 managed care introduced to Medicare (TEFRA)

1997 balanced budget act created part C
-increase organizations that can participate

Now called Medicare Advantage

43

Medicare A B and D reimbursement

Traditional fee for service

Delivered thru CMS

limited utilization management

Payment done by intermediaries or carriers

44

Medicare part C reimbursement

Delivered by health plans

Capitation and discounted payment

Includes utilization management

Case management

Integration and coordination

Preventative benefits

45

Media gap

Medicare supplement

Medicare A and B doesn't cover all expenses

Private insurance that reimbursed for out of pocket expenses

10 standardized policies that differ in price

46

Medicare part D

Prescription drug benefit

Plans control drugs on formulary

Use cost management tools

Maybe included in Medicare advantage program

Covers medical supplies associated with insulin injection

Has a must cover list (cancer, hiv, etc)

Rated based on quality and customer service (5 point system)

Must have medication therapy management program

47

MTM

Medication therapy management

Appropriate use

Reduce risk of adverse events

Could be a pharmacist


For those with 2-3 chronic diseases; taking multiple part D meds; and incur costs annually over $3000 in 2014

48

Payment - 2 functions

Determine methods and amounts of reimbursement in advance of delivery

Actual payments after services rendered

49

Methods of reimbursement

Bundled charges ( package pricing)
Cost-plus reimbursement
Resource based relative value scale
Prospective reimbursement
Diagnosis related groups
Ambulatory payment classification
Resource utilization groups
Home health resource groups

50

Few for service

Each service bilked separately
Charges set by provider
May be limited - usual and customary
May be discounted (PPO)

Drawback- provider induced demand

51

Capitation

Per member monthly payment to MD

paid in advance of services

MD agrees to provide specific services for specific length of time

Rates can be adjusted based on projected utilization

52

Resource based relative value scale (RBRVS)

Reimbursement based on relative value assigned to the service provided

Complex formula based on time, skill, intensity, geography and malpractice expense

Used by Medicare part B and HMOs

Goal to narrow gap between specialists and generalists

53

Cost Plus reimbursement

For inpatient care

Per diem reimbursement rate or per patient day rate (PPD)

Includes total operating costs plus portion of capital costs

Based on length of stay, service, cost of care

Retrospective method - rate determined after evaluating costs

54

Bundled charges. Package pricing

Related services grouped in one price

Reduces provider induced demand

55

Prospective payment system (PPS)

Criteria applied in advance to determine reimbursement amount

Used by Medicare part A

Examples - diagnosis teamed groups, home health resources group, resources utilization groups, ambulatory payment classification

56

Diagnosis related groups

For hospital inpatient services

Amount set prior to discharge (not per diem)

500 DRGs

57

Ambulatory payment classification (APC)

For hospital outpatient services

300 procedure groups

Bundled rate includes anesthesia, drugs, supplies and recovery

58

Resource utilization groups (RUGs)

For skilled nursing facilities

Case-mix method

Based on intensity of medical intervention and resources used

59

Home health resource groups (HHRG)

Fixed, pre-determined amount for each 60 day episode of care

Bills consolidated - 1 payment per patient

Medical equipment and drugs not included

60

Payment innovations

Never events

Pay for performance

Bundling hospital admissions

Accountable care organizations

Consumer directed plans (high deductible)

61

System before managed care

Direct access to any provider

Itemized billing by provider

Few controls over payment amount

Sickness coverage

Little wellness or prevention coverage

Insurers simply passive payer

62

Managed care organizations

Result of flaws with indemnity

Some still have FFS for certain services

63

Flaws with fee for service

Inefficient

Moral hazard

Over utilization of specialty care
Charges set artificially high
Provider induced demand
Physicians benefit financially by putting patients in hospitals

Caused premiums to increase

64

Characteristics of managed care

Integration of financing and delivery

Shared risk

Defined group of enrolled
Limits in provider choice
Utilization management
Financial incentives to providers for efficiencies
Accountably for performance (quality)
Coordination of benefits

65

Networks in MCOs

Includes MDs, hospitals and other providers that have contracted to deliver medical services

66

Primary care

Focus on preventative care
Treat routine injury and illness
Point of entry for most patients

Acts as gatekeeper and coordinator of care

67

Utilization management

Manage services so receive necessary appropriate high quality care in cost effective manner

Disease management
Utilization review

68

HMOs

Health maintenance organizations

Assumes both financial risks and the delivery risks with providing comprehensive medical care

Usually fixed prepaid fee

Must be licensed

69

IPA Model

Independent practice association model

Separate legal entity

Contacts with HMO

HMO pays IPA

70

Types of HMOs

IPA model
Staff model
Group model
Network model

71

Staff model HMOS

HMO employs providers
All services under one roof
Strictly managed
Less choice for patient

Not very common model

72

Group Model HMO

MDs employed by group practice
Practice paid by capitation method

HMO doesn't own equipment or facilities or pay salaries

Members have more choice

MDs more self managed

73

Preferred provider organization

Network of providers
Discounted fee for service payment
Networks not very restrictive
Providers don't assume much risk
Less utilization management

74

Point of service product

Hybrid between HMO and PPO

When need care patient decides between in or out of network care

In network cost less to patient
Freedom of choice
High admin costs

75

Types of health service professionals

Physicians
Nurses
Dentists
Pharmacists
Chiropractors
Psychologists

76

Places of healthcare

Hospitals
Nursing homes
School clinics
Mental health facilities
Outpatient settings

77

What is an MD

Doctor of medicine

Medical treatment to intervene in effects of disease

Most are specialists

78

What is a DO

Doctor of osteopathic medicine

Emphasis on musculoskeletal system; correction of joints and issue

Most are generalists

79

Primary vs specialty care

Primary is

Point of contact with system
Acts as gatekeeper
Is longitudinal
Focuses on person as a whole
Trains others

80

Issues in medical practice

Training and supply

Medical liability

Consolidation and integration

Health reform

81

Advantages of specialists

Make more

Better hours

More prestige

Intellectual challenge

More technolory

82

Nurses

Largest group of health care professionals

Developed after world wars

Major caregiver of sick and injured

Need license to practice

Current shortfall (turnover and exit profession)

83

Physicians assistant

Part of team

Dependent relationship with supervising physician

Masters level training

Can do medical procedures

Focuses on disease

84

Allied health professionals

Technicians/assistants
Therapists/technologists

Health related areas

Manage integrated delivery systems

85

6 aims for improvement in health care systems

Safe
Timely
Effective
Efficient
Equitable
Patient centered

86

Chronic care model

Growing burden of chronic conditions

Need more primary care physicians

Public health policy on tobacco, physical activity, healthy eating

Patients need to be active participants in their care

Self management

87

Patient centered medical home

Patient has personal physician that has team that is responsible for the patients care

Comprehensive care
Coordinated
Patient centered
Accessible
Quality and safety
Payment reform

88

PPACA

Patient protection and affordable care act of 2010

Obamacare

Goals - expand access, reduce costs, improve quality

89

PPACA reforms

2014 most need to have health insurance

If no employer coverage then can purchase they health care exchange

Also creates small business health insurance exchanges

Employers pay penalty if don't offer health insurance

Cannot deny coverage based on pre existing conditions

Cannot charge higher premiums based on health status or gender

Expands Medicaid to 138% of federal poverty level

90

PPACA impact on health insurance plans

Under 26 can be covered by parents

Limits on admin costs

Regulates premium rate increases

Eliminates coverage cancellation

Eliminates yearly and lifetime limits on benefits

Summary of benefits and glossary of terms

91

PPACA impact on Medicare

Part a - no payment for certain hospital re admissions

Part b - pay for preventative services and RBRVS ( less to MDs)

Part d - closes coverage gap by 2020

92

Coverage gap in Medicare part D

Reduces beneficiary rate from 100% to 25% in the gap

Pharm manufacturers will cover 50% of the costs

For generics Medicare will pay 75%

Also reduces amount where catastrophic coverage kicks in

93

PPACA impact on Medicaid

Expands eligibility

Federal govt covers most cost of expansion

Beginning in 2020 fed will cover only 90%

States can choose to participate

94

What is greatest health care expenditure

Hospital

Followed by doctor and clinic services

95

Two types of hospitals

Publicly owned - federal, state, local


Privately owned - voluntary, proprietary

Majority of hospitals are private non-profit

96

What is a non-profit hospital?

Exists for public good

Profits not distributed to any individual (no stakeholders)

Exempt from taxes

97

Types of hospital affiliation

Independent

Multi-unit chains

Teaching and non-teaching

98

Hospitals 1960-1980

Expanded

Advances in medicine
Specialized technology
Medical education
Professional nursing
Health insurance
Govt (hill burton and Medicare/Medicaid)

99

Hill-burton Act

1946

Federal construction and repair grants to states for new community hospitals

In return for funds hospitals must provide free care

100

Hospitals 1980s to present

Downsizing

Reimbursement (retro to prospective)
Economic constraints
Technology
Utilization controls
Social factors
Shift to outpatient services

101

ALOS

Average length of stay

Indicator of illness severity

Highest in federal hospitals

Declined because of payment type, technology and alternative settings

102

EMTALA

Emergency medical treatment and active labor act

1986

Forbids Medicare hospitals from dumping patients out of EDs - patients need to be at no risk

$50000 fine for non-compliance


Must try to communicate with non-English speaking patients

103

Sherman anti-trust act

Physicians and admitting rights