help

alawedahome

b1.pptx

Home >Reading homework help >help

Managed Care

Understanding Insurance

National Health Expenditures

Historical NHE, 2015:

NHE grew 5.8% to $3.2 trillion in 2015,

or $9,990 per person

accounted for 17.8% of Gross Domestic Product (GDP).

Medicare spending grew 4.5% to $646.2 billion in 2015, or 20 percent of total NHE. Medicaid spending grew 9.7% to $545.1 billion in 2015, or 17 percent of total NHE.

Dec 2, 2016

CMS.GOV Fact Sheet 2014

NHE

The Center for Medicare and Medicaid Services projects that health services will consume nearly 20% of the GDP by 2016.

2006:Total health expenditures reached $2.2 trillion, 16.2% of the GDP

2010: NHE $2.6 Trillion, 17.3% of GDP

2014: NHE $3.0 Trillion, 17.6% of GDP, under ACA major coverage expansions, especially Medicaid

Since implementation of the ACA, NHE growth has slowed

Since 1970, health care spending has grown 2.5% faster than the rest of the U.S. economy.

Average Annual Growth Rates for Nominal NHE and GDP for Selected Time Periods

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2008; file nhegdp08.zip).

HEALTH CARE SPENDING BY SERVICE TYPE

In 2007, hospital spending was nearly $700 billion, physician and clinical services was $480 billion and other professional services such as chiropractors, optometrists and podiatrists was $62 billion.

Dental services were $95 billion and community center and school spending was $66 billion.

Home health care services were $59 billion which was an increase of 11% from 2006.

Nursing home spending was $131 billion, prescriptions drugs was $227 billion and medical equipment w as $61 billion.

Hospital spending accounted for the largest percentage of national health care expenditures with physician and other services, prescription drugs and nursing and home health the next three largest.

COSTS: Distribution of National Health Expenditures, by Type of Service, 2008

Note: Other Personal Health Care includes, for example, dental and other professional health services, durable medical equipment, etc. Other Health Spending includes, for example, administration and net cost of private health insurance, public health activity, research, and structures and equipment, etc.

Source: Kaiser Family Foundation calculations using NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; National Health Expenditures by type of service and source of funds, CY 1960-2008; file nhe2008.zip).

HEALTH CARE SPENDING BY MAJOR SOURCES OF FUNDS

In 2007, Medicare spending was $431 billion which is an increase of 7.2% from 2006.

Medicaid spending was $329 billion which was a slight decrease from 2006.

Private health insurance premiums grew 6% while benefit payments decreased because of a decline in spending on prescription drugs.

Out of pocket payments grew 5% in 2007 which was a result of prescription drugs costs, nursing home services and medical equipment.

Out of pocket spending accounted for 12% of national health spending in 2007 which has declined over the past 10 years

Health Insurance Coverage in the U.S., 2008

NOTE: Includes those over age 65. Medicaid/Other Public includes Medicaid, SCHIP, other state programs, and military-related coverage. Those enrolled in both Medicare and Medicaid (1.9% of total population) are shown as Medicare beneficiaries. SOURCE: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of March 2009 CPS

Total = 300.5 million

Rising costs

Much of the burden of health care expenditures has been borne by private sources—employers and their health insurance programs have borne much of the cost.

In 2007, approximately 60% of Americans (180 million) have private health insurance coverage.

Health Insurance Coverage of the Nonelderly Population, 2008

262.8 Million

SOURCE: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of 2009 ASEC Supplement to the CPS.

HEALTH CARE SPENDING BY AGE AND GENDER

These numbers correlate with the fact that the longer we age, the more chronic conditions occur which result in higher spending and that female life expectancy is higher than male life expectancy,

Private Insurance will lose money on the elder population. Before Medicare elderly had trouble finding health insurance; Social Security was not enough to pay medical bills

Distribution of Average Spending Per Person, 2006

	Average Spending Per Person
Age (in years)
<5	$1,508
5-17	1,267
18-24	1,441
25-44	2,305
45-64	4,863
>64	8,776
Sex
Male	$3,002
Female	3,886

Notes: Includes individuals without any spending in 2006.

Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2006.

Consumer, Provider, payer

There are three parties involved in providing health care:

the provider

the patient

the fiscal intermediary such as a health insurance company or the government.

Health Insurance as a Payer

Health insurance is a financing mechanism that protects the insured from using their personal funds when expensive care is required.

Having insurance also decreases the risks of delays in seeking treatment that may result in increased costs disease.

Health Insurance as Payer

Health insurance, particularly employer provided health insurance, is the primary source for payment of health care services in the U.S.

Administrative costs are estimated at $120 billion annually.

There are approximately 850 health insurance companies that contract with millions of employers to provide coverage.

Unfortunately, employer-provided health insurance has become very expensive for businesses, resulting in the increase in cost sharing by employees.

Average Health Insurance Premiums and

Worker Contributions for Family Coverage, 1999-2009

Note: The average worker contribution and the average employer contribution

may not add to the average total premium due to rounding.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.

$5,791

128% Worker Contribution Increase

131% Premium Increase

$13,375

Private Health Insurance Plan Types

There are two basic types of insurance plans:

Indemnity Plans and Managed Care

Indemnity plans or fee for-service plans are contracts between a beneficiary and a health plan but there is no contract between the health plan and providers.

The beneficiary pays a premium to the health plan. When the beneficiary receives a healthcare service, the plan will reimburse the beneficiary based on an established fee for a particular service regardless of the provider’s fees. The beneficiary will reimburse the provider directly.

Health Insurance Plan Types

Managed care refers to the cost management of health care services

by controlling who the consumer sees

how much the service cost.

Health Maintenance Organization Act of 1973 was signed into law by President Nixon.

Health care costs were spiraling out of control during that period. HMOs and MCOs would help to control the health care costs.

MCOs integration of the financial industry with the medical service industry resulted in controlling the reimbursement rate of services which allowed them more control over the health insurance portion of health care.

Managed Care

Managed care became very popular in the 1990s. Enrollment increased from 27% in 1988 to 95% in 2002.

For a period, health care costs decreased during the 1990s as a result of the influence of MCOS. However, the influence was short lived and health care costs continued to increase.

From 2000-2007, health care premiums rose 98% while wages only rose 23%.

Health Insurance Terms

All insurance plans fall into three categories:

voluntary health insurance (VHI)- private insurance through employer or individually purchased

social insurance: Medicare (entitlement program because most people pay into the program through payroll taxes all of their lives)

public welfare insurance: based on financial need; Medicaid

Health Insurance Terms

Group insurance :employers have a large group to purchase insurance and the risk is spread among those paying individuals.

Individual private health insurance: purchased by self employed or people who cannot get insurance from employer

These plans are being provided by the Health Insurance Marketplace.(Exchanges)

Who pays

Payment of health care services is derived from

1) out of pocket payments from patients who pay entirely or partially for services rendered,

2) health insurance such as indemnity plans or managed care organizations,

3) public/government funding such as Medicare, Medicaid and other government programs

4) health spending accounts (HSAs).

Health Insurance Payment Terms

There are two forms of payment

Fee for service - retrospective

Prepayment – prospective (capitation)

These provide the basis for all health insurance coverage.

As healthcare expenditures continue to increase, the major focus of the healthcare industry is cost control in both the public and private sector.

Fee for Service = retrospective payments

Retrospective reimbursement methods for healthcare services, which means that a provider submitted a bill to a health insurance company that will reimburse the provider, had no incentive to control costs in health care.

The provider may be paid by the insurance coverage or out of pocket by the patient.

Prospective Pay = set prices

The establishment of a prospective reimbursement system for Medicare and then MCOs—developed based on care criteria for certain conditions regardless of provider costs—was an incentive system for providers to manage how they were providing services.

In a prepayment concept, the individual pays a fixed, predetermined amount for the services rendered.

MCOs negotiate prices with providers

History of Health Insurance Laws

In the 1960s, President Johnson signed Medicare and Medicaid into law which protects the elderly, disabled and indigent.

President Nixon signed into law the Health Maintenance Act of 1973 which focused on effective cost measures for health delivery which was the basis for the current Health Maintenance Organizations (HMOs).

Also, in the 1980s, diagnostic related groups or (DRGs) and prospective payment guidelines were established to provide guidelines for treatment.

History of Health Insurance Laws

A National Health Care Program was proposed during Clinton’s administration in the 1990s, it was never passed.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was passed to provide health insurance protection if an individual changes jobs.

In 1993, the Family Medical Leave Act (FMLA) was passed to protect an employee if there is a family illness. They can receive up to 12 weeks of unpaid leave and their health insurance during this period.

Also, in 1996, the Health Insurance Portability and Accountability Act (HIPAA) were passed that provided stricter confidentiality regarding the health information of individuals.

In 2005, Massachusetts proposed mandatory health coverage for all citizens so it may be that universal health coverage may begin at the state level.

Children’s Health Insurance Program (CHIP)

Authorized by the Balanced Budget Act of 1997, and codified as Title XXI of the Social Security Act, the State Children's Health Insurance Program (SCHIP), now Children's Health Insurance Program (CHIP), was initiated in response to the number of children who are uninsured in the United States.

Government - Hospital Reimbursement

In 1982, Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA) and the Social Security Amendments of 1983 to manage Medicare cost controls.

There was a mandate to hospitals for a prospective payment system (PPS) to establish reimbursement rates for certain conditions.

Each (Diagnosis-related Groups), DRG group represents similar diagnoses of diseases that are expected to have similar use of hospital services.

Government - Hospital Reimbursement

The amount of reimbursement is set per discharge of a patient.

CMS reimburses hospitals per admission and per diagnosis, which is based on a DRG—a prospective payment system for hospitals established through the Social Security Amendments of 1983.

Government Resource-Based Relative Value Scale Reimbursement

Medicare developed a new initiative of RBRVS to reimburse physicians according to a relative value assigned to a service.

This reimbursement is divided into three components: physician work, practice expenses and malpractice insurance.

Medicare pays a flat fee for physician visit and is based on the Healthcare Common Procedure Coding System which is used to code professional services.

The RBRVS, implemented in 1992, has become a standard Medicare Part B reimbursement method

Government Reimbursement Resource Utilization Group (RUG)

This type of prospective payment systems for skilled nursing facilities, used by Medicare, provides for a per diem based on the clinical severity of patients.

A classification system called resource utilization group (RUG), which is a type of DRG, was designed to differentiate patients based on how much they use the resources of the facility.

As the patient’s condition changes, the rate of reimbursement changes.

Government Reimbursement Home Health Resource Group (HHRG)

Implemented in October 2000, the home health resource group (HHRG), which is a prospective payment used by Medicare, pays a fixed predetermined rate for each 60 day episode of care, regardless of the services.

All services are bundled under a home health agency.

The HHRG uses 80 distinct groups to classify patients’ condition

CMS Innovation: 4 Models

1: The Bundled Payments Initiative: Link payments that multiple service beneficiaries receive during an episode of care.

2 and 3: Retrospective bundled payment arrangement where actual expenditures are reconciled against a target price for an episode of care.

4: Model 4 involves a prospective bundled payment (capitation) arrangement, where a lump sum payment is made to a provider for the entire episode of care.

Medicare

Part A: Hospitalization insurance

Part B: Medicare Part B is a supplemental health plan to cover physician services. It is financed 24% from enrollee premiums and 76% from federal treasury funds.

Part C: Medicare Advantage: It covers all services in Parts A and B. It is voluntary and available when an individual enrolls in Parts A and B. This program was designed to move Medicare patients into more cost-effective health insurance programs such as HMOs or PPOs.

Medicare

Part D: Prescription Drug Plan: Affordable drugs

Medigap or Medicare Supplemental Plan: Medsup plans cover copays, deductibles, and coinsurance, which can be very expensive. Medicare has created 10 medsup plans that vary by state.

Medicaid

Title XIX of the Social Security Act

Provides health insurance to the medically indigent.

It is a welfare program that is administered at the state government level.

The program serves 45 million low-income Americans. Medicaid spending varies based on the status of the U.S. economy.

It is not a federally mandated program, however, all states have Medicaid except Arizona.

Medicaid

The ACA created Community First Choice as an optional Medicaid benefit, which focuses on community health services to Medicaid enrollees with disabilities.

This will enable consumers to receive care at home or at community health centers rather than going to a hospital or their facility.

PACE

Also authorized by the Balanced Budget Act of 1997, Program of All-Inclusive Care for the Elderly (PACE) is a comprehensive healthcare delivery system funded by Medicare and Medicaid.

The PACE model focuses on providing community-based care and services to people who otherwise need nursing home levels of care.

Their philosophy is that seniors with chronic care needs are better served in the community when possible.

TRICARE – Indian Health Services

The U.S. DOD operates the Military Health Services System which provides medical services to active duty/retired members of the armed services.

As the active duty numbers increased, TRICARE was developed to respond to the growing needs of retired members.

TRICARE is regionally managed, structured after managed care and it coordinates the efforts of the Navy, Army and Air Force.

The Indian Health Service provides comprehensive health care services directly to nearly 2 million American Indian and Alaska Native tribes

Health Insurance Plan Types

A recent trend in health insurance plans is consumer-driven health plans (CDHPs) that are tax advantage plans with high deductible coverage.

The most common CDHPs are health reimbursement arrangements (HRAs) and HSAs.

HRAs, or personal care accounts, began in 2001 as a result of an Internal Revenue Service (IRS) regulation. An HRA is funded by the employer but owned by the employees and remains with the company if the employee leaves.

This has been an issue because it has no portability.

Consumer Driven Plans

A health savings account (HSA), which was authorized by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, pairs high deductible plans with fully portable employee-owned tax-advantaged accounts.

This plan encourages consumers to become more cost conscious when using the healthcare system because they are using their own funds for healthcare services.

The HSA, unlike the HRA, is a portable account, which means it can be transferred to another employer when the employee changes jobs.

Assessment of MCOs

The National Committee on Quality Assurance (NCQA) was established in 1990 to monitor health plans and improve health care quality.

Their focus is to measure, analyze and improve health care programs.

a voluntary review process including surveys by managed care experts and physicians.

An organization can be accredited at three levels: excellent, commendable and accredited.

Assessment of MCOs

The Health Plan Employer Data and Information Set (HEDIS) were established by the NCQA in 1989.

It is used by nearly 100% of all health plans to measure service and quality of care.

HEDIS uses 71 measures from different areas of health care.

Health plans also use HEDIS results to assess performance

Health Insurance Payment Terms

Most insurance policies require a contribution from the covered individual in the form of a copayment, deductible, and/or coinsurance. This concept is called cost sharing.

Used in both fee-for-service and prepaid plans, copayments are costs that patients must pay at the time they receive the services. It is a designated dollar amount.

Health Insurance Payment Terms

For coinsurance, a type of copayment that is part of a fee-for-service policy, the patient pays a percentage of the cost of the services.

A typical coinsurance portion is 20% paid by the individual, with the remaining 80% paid by the health insurance plan.

Health Insurance Payment Terms

Deductibles are payments that are required prior to the insurance paying for services rendered in a fee-for-service plan.

Deductible amounts vary from individual and family health insurance coverage and cover one calendar year.

For example, an individual may have a $250 deductible per calendar year, which means they must pay the $250 before their health insurance covers the services, unfortunately.

Health Insurance Policy Types

Comprehensive health insurance policies provide benefits that include outpatient and inpatient services, surgery, laboratory testing, medical equipment purchases, therapies, and other services such as mental health, rehabilitation, and prescription drugs.

Major medical policies, which reimburse hospital services such as surgeries and any expenses related to any hospitalization only.

Health Insurance Policy Types

Catastrophic health insurance policies cover unusual illnesses with a high deductible and have lifetime reimbursement caps.

There are also specific health insurance policies such as disease-specific policies for cancer.

Also medigap or Medicare supplement or medsup policies that provide supplemental insurance coverage for Medicare patients

There are four types of HMOs:

The Staff model hires providers to work at a physical location.

The Group model negotiates with a group of physicians exclusively to perform services.

The Network model providers may see other patients who and there is a negotiated rate for service

The Independent Practice Associations (IPA) contracts with a group of physicians who are in private practice to see MCO members at a prepaid rate per visit.

managed care models

Preferred Provider Organizations (PPOs): providers agree to a fee schedule or a discounted fee to see members.

No gatekeepers.

No co pay but a deductible.

A member may see a provider not in the network but they may pay more out of pocket for their services.

The bill could be as much as 50% of the total bill. They are currently the most popular type of plan.

managed care models

Exclusive Provider Organizations (EOP): They are similar to PPOs but they restrict members to the list of preferred or exclusive providers members can use.

Physician Hospital Organizations (PHO): These organizations include physician hospitals, surgical centers, and other medical providers that contract with a managed care plan to provide health services .

managed care models

Point of Service Plans (POS): The POS plans are a blend of the other MCOs-a type of HMO/PPO hybrid. They encourage plan members to seek but are not required to use a primary care provider.

Members will receive lower fees if they use a gatekeeper model.

They may also see an out of network provider at any time but will be charged a higher rate.

This type of plan was developed as a result of complaints about the inability of a member to choose their provider.

managed care models

Provider Sponsored Organizations (PSOs): These organizations are owned or controlled by health care providers. This is an emerging term that describes provider organizations that are formed to directly contract with purchasers to deliver health care services. PSOs are formed by organizations such as IPAs. However, unlike IPAs, they assume insurance risk for their beneficiaries

7.8%

5.5%

4.8%

7.2%

12.7%

10.8%

6.6%

7.1%

9.5%

10.6%

10%

12%

14%

1970s1980s1990s2000-20081970-2008

GDPNHE

Physician/

Clinical

Services

21.2%

Hospital Care

30.7%

Other Personal

Health Care

12.9%

Nursing Home

Care, 5.9%

Prescription

Drugs

10.0%

Home Health

Care, 2.8%

Other Health

Spending

16.5%

Employer-