The American Healthcare System Week 6 Notes

Differences between different types of insurance: - Everything besides health insurance is for property if you have it, but everyone has a body and everyone needs insurance to care for it - Discourage demand on the pool through co-pays, so-insurance, etc. - In the US, government involvement in health insurance unlike any other types of insurance (auto, home, boat, etc.) - Current administration: cutting medicaid money on poor and disabled and also on the ACA, up to a trillion dollars - Might mean less access for childless adults; means and access test and more pressure on state to meet eligibility - Big attack on waste, fraud and abuse - Social justice perspective: does everyone have a right to health insurance because everyone has a body? Dental therapist: something between a dental hygienist and a dentist - People are against it because dentists could make less money - Therapist could do extractions and minor procedures dealing with infections, decaying teeth, and maybe even facilitating dental prosthesis - We need regulatory processes for safety and prevention of further damage or unnecessary procedures Medicaid: - Privatized medicaid: you turn medicaid over to a private company and they help set the rules - Title XIX of the Social Security Amendments of 196s - Means tested: eligibility depends on individual or household means to pay for health care - A national program, but - Voluntary for all states, but all do participate now - Income eligibility and scope of benefits vary by state within national guidelines for participation - Federal government determines the federal poverty level - Eligibility overview: - Florida has Medicaid programs for needy parents/caretakers, former foster care recipients, and non-citizens with medical emergencies - Washington boasts a wider Medicaid offering than many states. Adults in financial need are covered whether they have dependents or not, as are children, pregnant women, the elderly and disabled - requirementsL individuals 19 to 64 must make $16, 640 (138% FPL) or less if living alone, or under $22,146 in a two person household to qualify. Pregnant women living alone are subject to the same income restrictions as all adults, or under $32,160 in a household of two or 40k in a household of three - Michigan: low income kids, adults under 21, pregnant women, people with dependent children and adults who are elderly - Low-income families: - Pregnant women: pre-natal care and delivery costs - Children: routine and specialized care, shots, dental, vision, speech therapy - Families: affordable coverage to prepare for the unexpected - Individuals with disabilities: - Autistic children - Cerebral palsy - HIV/AIDS - Mental illness - Elderly people: - Medicare beneficiary - Community waiver participant - Nursing home resident - Mandatory and Optional benefits: - Optional: - Clinic services, dental services, optometry services - Prescription drugs - Physical therapy - Occupational therapy - Theoretically, Medicaid can offer a wider range of services than Medicare does - A “safety net” program for those who qualify and would otherwise be uninsured - Special eligibility for children in households >200% of FPL, pregnant women and the disabled Why does this matter? - Compared to the uninsured, Medicaid increases access to care - Who benefits: - Nonelderly below 100% FPL - Children below 100% FPL - Births (pregnant women) - Most (40%) of funding goes to disabled - Under ACA, expanded coverage: - Federal government will pay 100% of premium for those not currently covered through 2018, then will pay 90% - Expanded eligibility = up to 138% of FPL - But this is an “opt-in” choice by each state - Political, not administrative or access issue - 38 states and DC have opted in, 13 have not - Pre-expansion (2013) 48.9 million non elderly/disabled + 10 million elderly or disabled about 59 million - Total growth from 59 million to 78 million - The ACA Medicaid expansion mostly fills gaps in coverage - Expansion states show: - Increase in enrollees - Decrease in un-insurance - Decrease in inability to afford followup care - Decrease in anxiety over paying medical bills - Increase in waiting time - States save money, increased economic activity, increase in jobs, healthy people do better and make more money and pay more taxes - Non-expansion states: - Poor adults fall in a coverage gap and can’t afford regular insurance but make too much for medicaid - More coverage than medicare: Rx, dental, vision - Even though Medicaid expands insurance coverage, newly insured still have problems accessing care Medicaid continues to reimburse providers less than private insurance and even Medicare Impact of lower payments to providers - Payment and voluntary provider participation = - Fewer providers participate in Medicaid than in medicare or in private plans - Huge barrier to access! - Fewer providers accept new Medicaid patients than other types of insurance, and it varies by community and access - Can’t force practitioners to take Medicaid rates - The only incentives are social conscience, no financial gain for them to do so. Depends on if they want to serve all people, or just get paid Options under consideration for Medicaid funding changes: - Raise threshold for eligibility - Reduce federal and raise state levels of financial participation - Move to more managed care models - Add work requirement to keep the Medicaid benefit - Institute a share of cost for recipients at lower income thresholds - Block grant: reduce federal spending and it does not account for economic downturn; fundamental change in Medicaid financing; capped - Per capita cap: not based on healthcare costs and needs, but fixed with pre-set growth per enrollee; may be guaranteed for certain groups; federal spending not tied to state spending past per enrollee cap - - - 2/12/20 - Up to ⅓ of people have not seen or talked to a doctor in the past year Paying for Health Services Medicaid Wrap-Up - The inevitable downside - Even though Medicaid expands insurance coverage, newly insured may still have problems accessing care - Medicaid continues to reimburse providers less than private insurance and even Medicare - More on this in the section on payment - Impact of lower payments to providers - Fewer physicians accept new Medicaid patients - A lot of behavioral health fields take up front cash and ignore insurance - A lot of insurances won’t cover mental health - Average annual Medicaid spending growth: 6.2% national average - Enrollment went down in 2019: low unemployment, improved eligibility verification - Medicaid demonstration waiver: law allows states to petition for an 1115 to increase care or to save money, so the argument for an 1115 waiver under Medicaid would let the state petitions the secretary of HHS to change the guidelines - Options under considerations for Medicaid funding changes - Raise thresholds for eligibility - - - Reduce federal and raise state levels of financial participation - Move to more managed care models = more oversight - Add work requirements to keep the Medicaid benefit - Move to a block grant system What is health services payment? And how are those prices set? - $3.6 trillion in 2018 for US Health services - highest per capita health spending ($9,000 per person) - 33% goes to hospital care - Elements of payment: - 1. Cost: the value of a service based on the basic resources needed to provide it - 2. Price: the combination of cost plus profit and anticipated in cost - 3. Reimbursement: the actual amount you pay - Example: - Cost: $100,000 for wages, insurance, space, etc. - Price: $120,000 to include profit, reserves, etc. - Payment: Medicaid may pay $75, Medicare may pay $200, HealthNet may pay $120, BlueCross may pay $200 - Selecting an insurance plan will have different reimbursements: premiums, annual cost, deductibles, etc. - Your insurance cost (premium + out of pocket) - Your risk profile - Provider fee schedule and anticipated “loss” ratio - Insurance company earnings after expenses - And this is how your insurer determined the price you will based on your risk group - Enrollee risk → american health insurance → doctors and services → american health insurance (cash flow model and insurance wants to capitalize on most coming back to them) Putting price in context: - Can you negotiate: insurance companies are better at negotiation than you are because they work directly with the doctors - Insurance determines price they will pay based on risk group - From the provider’s point of view: - Will have many insurance contracts - Will need to negotiate for best payment from each one - Will have variation in requirements among plans - Different services covered - Different deductibles, co-pays and co-insurances - Different providers covered in network which influences referrals to specialists, Rx, labs, etc. - Providers may be able to average high and low payers through cost shifting and cross subsidization - Cost =/= price =/= payment - So how do providers stay in business? - Depends on market position - Depends on market cost of living - Depends on your bargaining acumen - Depends on your organization’s goals if you are part of a group or integrated practice (HMO) - Depends on your values - Depends on you alignment with other providers to achieve cost savings, improve bargaining power - Depends on your ability to manage your cost, payer mix and clinical outcomes - Providers will have many payers: - Federal government wants to recognize that they need to interact with all different negotiators - Choices: - Private insurance: - Most are managed care plans - Payments to providers are negotiated between plan and network - PPOs will use modified fee for services and bundled payment - HMOs will use capitation - Public insurance: - Fill in later - Each insurance also has a variety of payment mechanisms - 1. Fee for service - Payment for each visit or individual services within a visit - Basic office visit vs. office visit with x-ray - Do more, charge more, no incentive for cost efficiency - Paid after the service has been delivered (retrospective payment) - Paid a fee negotiated between the provider and insurance company - Provider determines the frequency and quantity of service, but the payer exerts oversight on appropriateness of charges and can challenge them PPO: insurance and provider are linked - 2. Bundled or Global Payment - Payment for diagnosis or episode of care - Based on expected cost for usual care and for a diagnosis of episode of care - Used by Medicare for inpatient care and increasingly by private insurers/PPOs - Retrospective payment - Creates incentive to keep costs down - Payer can exert oversight on appropriateness of charge in extenuating circumstances - Hybrid between prospective and retrospective, but deemed retrospective - FFS vs bundled - FFS: payment for each service regardless of quantity or quality; comprehensive information on patient care and cost is with the payer - Bundled: payment for comprehensive, coordinated intervention - 3. Capitation - Combines insurance and provider - Per member per month payment to providers to manage the health of the enrollees in an HMO - Providers receive payment whether or not patients receive care (prospective: paid up front) - All members of the delivery team in the HMO contribute to the cost effectiveness of care - Oversight of performance is shared between providers and insurers since HMOs integrate these functions into one organization - What makes HMOs work? - Limited choices, rules and regulations, member satisfaction - Capitation Health Care Payment: - Payment per member per month, money is split between the HMO (profit), the medical groups, hospitals, etc. - FFS: retrospective; risk is on payer for more care = potentially more payout, provider is in charge - Bundled: provider is at risk, must deliver needed services within global payment, payer emphasizes cost savings, pressures providers to be cost efficient (in charge) - Capitation: system is at risk, provider must weigh care options and be cost effective - cross shifting: the practice of assigning the value of the payment losses from one payer to the cost base used to negotiate payment rates with another payer - cross subsidization: the result of the higher payment from one payer covering the shortfall from payment from another payer - making payment “whole” - decreasing shortfall from Medicaid payment is brought back up by subsidy from private payment to maintain the cost base - Payer Mix: - Provider has multiple contracts with a favorable mix so that they can make money - To improve costs: take fewer Medicaid, higher more NPs, increase patient load, etc.