For Phyllis Young
valhal
resources_for_week_1_hlth440.docx
Sources of Financing Health Care
Throughout this essay, the term patient (pt.) is used to indicate the person who is seeking health care, or the recipient of health care services.
The United States has a multitiered, multimodel payment system that is driven by the market economy’s swings (as adverse to other nations like Canada, which has national health insurance, and the European Union). In a free-market economy, such as what exists in the health care arena in the United States, the patients are buyers, and the health care providers are sellers. The purchase of health care goods and services is based on price and quality.
The health care industry is a business that sells products for a profit. In this model, the consumer is not necessarily the purchaser of the product. Health care is price-sensitive. A free-market health care system requires that patients and the public be informed of their options for financing their health care needs. The patient would need to understand the cost versus the benefit analysis of treatment options and make an informed decision based on that understanding. The basic concept is whether health care is an inalienable right under the Constitution. The overarching concept that drives that inalienable right is access to goods and services equitably.
This patchwork of systems provides no clear guidelines or integration. Health care has two discrete funding sources: private pay and public funding. In other words, private expenditure and public expenditure. Public funding is paid for by taxing the populace and is seen as social insurance. Medicaid and Medicare are examples of publicly funded health care insurance. Medicare was enacted in 1965 as part of the larger Great Society programs of President Lyndon Johnson, and subsequently, Medicaid was enacted through an amendment to the Social Security Act of 1935. Medicaid and Medicare are administered through the Centers for Medicare and Medicaid Services.
This social insurance exists side by side with privately funded health care through health care insurance. Health care insurance is paid for by employers for employees as part of a benefits package or by the patient as private pay with a provider (this is referred to as an out-of-pocket payment). The patient may also buy insurance as an individual, instead of in a group through an employer. Many small businesses do not provide their employees with group insurance.
In summary, patients in the United States may have their health care financed in the following ways:
· Private out-of-pocket payments
· Purchased insurance, privately
· Purchased through an employer group health insurance plan
· Covered by a government program
Challenges In Healthcare
Health care is an industry that continues to transform itself. What patients want today from health care organizations is different than what patients wanted 50 years ago. The leaders of health care today have to worry about challenges such as the consumerization of health care and the fast-paced growth of health care costs. The following will provide an overview of some of the main challenges facing health care leaders today.
Rising Health Care Costs
U.S. health care spending is among the highest in the world. Although health care’s share of the U.S. gross domestic product (GDP) has not increased dramatically since 2009, it is expected to rise from just over 17 percent to 19 percent in 2023. That said, a report from the Centers for Medicare and Medicaid Services (CMS) Office of the Actuary suggests that the growth in health care spending will outpace GDP over the next ten years (Carey, 2014). This affects the individual consumer and every health care professional and health care organization. On average, health care costs for individual Americans will increase by 6.8 percent in 2015, which is a staggering number.
Consumerization of Health Care
Health care is no longer a cottage industry. Patients today know far more about their health and expect more than any other generation before them. The Internet offers a plethora of medical information that patients previously did not have access to, and mobile technology allows patients to monitor their health from the comfort of their home. Patients are becoming consumers of their health care, and they are changing the dynamic of health care.
Shortage of Health Care Professionals
The Patient Protection and Affordable Care Act (PPACA) intended to provide coverage to over 30 million people; however, it did not guarantee that the individuals who would benefit from the law would have access to a health care provider. With an already projected shortage of health care providers before the PPACA came into effect, it is estimated that there will be a shortfall of 91,000 doctors by 2020 (Ollove, 2014). Although the reliance of physician-extenders such as physician assistants and nurse practitioners will alleviate some of the shortage, it will not be enough to solve the problem.
Health Reform
When President Obama signed the PPACA into law in 2010, employers, health care organizations, state governments, and other stakeholders recognized many challenges. Employers can face certain ramifications for not meeting minimum requirements, such a $2,000 fine per full-time employee. Smaller businesses must determine how to financially meet those requirements. Health care organizations must now focus on patient satisfaction or face reduced reimbursement rates.
When it comes to health care today, the challenges are many, and health care leaders must determine how to navigate through these challenges.
References
Carey, M. A. (2014, September 3). Health care spending forecast to increase modestly in next decade. Retrieved from the Kaiser Health News Web site: http://kaiserhealthnews.org/news/health-costs-inflation-cms-report/
Ollove, M. (2014, January 3). Are there enough doctors for the newly insured? Retrieved from the Kaiser Health News Web site: Retrieved from http://kaiserhealthnews.org/news/doctor-shortage-primary-care-specialist/
Major Players in Health Care Financing
· Employers
· Government – both State and National
· Insurance Companies
· Physicians – this includes all sub-professions, however, the physician is the only professional whose license has no limitations – the Scope of Practice has no limits.
FAQ: Health Care Financial Management
Question 1: What is an example of a current strategic financial planning trend for health care organizations?
Answer 1: An example of a current strategic financial planning trend for health care organizations (when positioning themselves to capture a growing market) would be positioning themselves to capture a market segment because of the current and future increase in the number of older adults in the United States.
Question 2: How are employer-sponsored health plans addressing the ever increasing costs of health care?
Answer 2: Employer-sponsored health plans are addressing the ever increasing costs of health care by providing employers with options on how to pay for the cost of health care premiums. This would include higher premium and copay costs paid by the employee.
Question 3: What are some of the job responsibilities of a finance department staff member?
Answer 3: Some responsibilities of a finance department staff member include the following:
· Entering financial transitions into the chart of accounts
· Reconciling the chart of accounts
· Preparing draft financial statements
· Preparing draft correspondence for senior financial personnel
· Preparing draft executive summaries with pros and cons of financial impact of optional strategic endeavors
Question 4: List some challenges health care executives face when making strategic financial decisions.
Answer 4: Some examples of the most difficult strategic financial decision-making challenges of health care executives are the following:
· Acquisitions: Acquiring another health care organization
· Mergers: Two organizations becoming one entity
· Divestitures: expanding business lines (e.g., assisted living facility purchasing behavioral health facility)
Question 5: What is one of the most uncertain elements when forecasting?
Answer 5: One of the most uncertain elements when forecasting is predicting the demand for future health care services. Health care organizations often take educated guesses about future demand and will adjust the demands upward or downward by an inaccurate percentage amount.
Question 6: How can a health care financial professional stay current with financial trends in health care?
Answer 6: A health care financial professional can stay current with financial trends in health care through several venues, including the following:
· Reviewing health care financial journals
· Participating in activities associated with financial management organizations
· Engaging in networking opportunities with other health care professionals
Question 7: Are there currently specific laws that dictate how a health care organization can allocate its resources?
Answer 7: No, there are no specific laws that dictate how to allocate resources. However, a health care organization that receives government-financed health care (e.g., Medicare, Medicaid, Block Grants) has some restrictions and or guidelines about the use of funds towards service delivery.
Question 8: What are some of the biggest challenges in applying for grants?
Answer 8: Some of the biggest challenges in applying for grants include the following:
· Ensuring that the submission submitted to the granting organization addresses what the granting organization is specifically looking for
· Coordinating across departments to obtain all the necessary information required to submit with a grant application
Question 9: Are there specific requirements in submitting a request for grant funding?
Answer 9: Yes, there are specific requirements in submitting a request for grant funding. Completing a grant request requires specific knowledge on how to respond to a grant application request and the knowledge to respond to the technical information within a grant request. Each grant application must include the following:
· Application forms
· Application receipt dates
· Grant mechanisms and descriptions
· Receipt and referral process
· Peer review
· Process study section
· Review meeting award process
Question 10: What are the typical resources for health care grant funding?
Answer 10: The following are typical resources for health care grant funding:
· Federal
· State
· County
· Private
· Foundation
Financing Health Care
Although controversy surrounds the subject, paying for health care is a real issue in this country. Health care costs have risen tremendously in the past decades, and many hospitals struggle during times of economic troubles.
Among the current methods of paying for health care are private insurance, federally funded Medicare for the elderly and disabled, and federal-and state-funded Medicaid for those who do not have financial resources to cover the cost of health care. Medicaid covers children and elderly who are not covered by other forms of insurance.
Within private insurance are options from health care providers for the client. Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) offer different options for the client.
There are advantages and disadvantages to both, but the largest complaint regarding HMOs and PPOs is the HMO limitation to services. There have been clients who have died waiting to get care under an HMO plan.
Restructuring Health Care
Restructuring health care has been in the forefront of the nation’s consciousness for decades. The primary goals for restructuring are as follows:
· Accessibility: This is how to increase access to health care, especially in underserved areas.
· Coordination and integration of services: The United States has no central mechanism of control but rather independent modes of providing care. Multiple points of entry provide a divisive "the left hand does not know what the right hand is doing" approach to care. Physician communication should be enhanced by the use of electronic medical records (EMRs), also known as electronic health records (EHRs). Personal health records (which are portable) are touted as a solution to the issue, and the implantable chip with personal health information is also being marketed as a solution.
· Accountability: Who is responsible for health care? Are physicians and hospitals being held accountable for patient outcomes (cost/benefit analysis)? Is the expenditure on health care technology producing the desired outcomes in terms of quality of life issues? The use of technological advancements (every hospital has to have an MRI) is driving the spiraling cost of health care. (Buzz words for quality initiatives: is it needed, is it necessary, and why is it being done?)
· Creating a culture of accountability is the new slogan for health care issues, and the concept of transparency works to bring accountability to health care services.
· Accountability is enhanced by the use of quality initiatives (auditing, quality improvement, and performance management systems).
· Justifying expenditures turns the issue into one of control: who controls how health care resources are allocated? Is it the physician, the insurance company, or the patient? A choice that is based on informed consent on the behalf of the patient is the driving force in accountability. Providers, insurance companies, and patients are the triumvirate of health care accountability.
· Primary care: This is turning the focus from specialized providers to primary care providers, such as family practice physicians (FP); nurse practitioners (NP); and physicians’ assistants (PA).
· Chronic Conditions/Complex Needs: Large amounts of resources are spent on chronic care. The burgeoning baby boomer population will further stretch the health care dollar; how to provide chronic condition care in a cost effective way is a primary drive. Patients with complex needs showcase the issues that are divisive within the health care system and have multiple points of entry for the provision of their care.
· Fraud and abuse: Insurance fraud on the part of physicians is rampant (here it is used only as a representative of the primary source. If an agency is held to have committed fraud, there is a physician who is signing the documentation for submission to an insurance company or CMS for Medicaid and Medicare billing). During the next several years, the billing and coding system will undergo vast changes when ICD-10 is instituted, as well as the drive for EHRs, opening the window for fraud and abuse to occur. Increasing complexity heightens the possibility for error. The False Claims Act will also provide an enforcement atmosphere, leading to greater scrutiny of claims.
· Medicaid: This system was established to assist those in need; however, the next big issue will be revamping the payment system to prevent undue use. Currently, the majority of people who use the Medicaid system are the poor elderly who are in nursing homes, and at the other end, although less percentage wise, are children of poor parents.
· Medicare: Reform issues will be at the center of the discussions about restructuring health care.
· Health Insurance Portability and Accountability Act (HIPAA): This act provides protection for insurance coverage and privacy. The act limits preexisting medical condition exclusion from coverage and is undergoing significant scrutiny as the new health care law is challenged. The initial act (also entitled COBRA) provides health care coverage for the unemployed by private pay.
· Patient Protection and Affordable Care Act: This enacted into law on March 23, 2010.
· Health Care and Education Reconciliation Act of 2010 (H.R. 4872): This enacted into law on March 30, 2010 (amendment to the PPACA). As of 2011, the PPACA is under act in the house and many states. As of February 24th, 2010, 26 states are suing to stop the implementation of the law. However, a federal judge for the District of Columbia has ruled that the health care reform law is constitutional. The provision that is being challenged is the issue of requiring individuals to purchase health care insurance.
