Introduction to Health Services Administration homework 2

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Introduction to Health Services Administration homework 2

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Introduction to Health Services

Professor Miguel Figueroa
Assignment #2

Review Questions- please answer all questions in complete sentences. Make sure to add your name to the assignment

CHAPTER 4:
Financing Health Systems

1.
Describe the size of the U.S. health care industry in financial terms, and discuss the growth in health care expenditures.

2.
Describe the flow of finance in health care in the United States, referring specifically to payment sources and outlays for health care services.

3.
Describe the three main types of health insurance in the United States, referring specifically to voluntary health insurance, social health insurance, and welfare medicine.

4.
Briefly describe Medicare Parts A, B, C, and D.

5.
Briefly describe the Medicaid program.

6.
Discuss the methods of physician reimbursement in the United States.

7.
Provide an overview of the prospective payment system.

8.
Describe the resource-based relative-value scale payment method.

CHAPTER 5:
Private Health Insurance and Managed Care

1.
What is insurance, and why is it used?

2.
How does private health insurance violate the standard principles of insurance?

3.
Describe the three methods for categorizing health insurance in the United States.

4.
Briefly describe the differences among commercial insurance industry, the Blues, and HMOs.

5.
What is managed care? List the main objectives of managed care.

6.
Briefly describe PPO and HMO plans.

7.
List the common managed-care practices designed to influence physician behavior.

8.
Describe the role of the gatekeeper.

9.
Describe the impact of managed care on both the Medicare and Medicaid programs.

10.
Discuss the conflict of interest inherent in managed care.

11.
Briefly describe the characteristics of the uninsured population in the United States.

1

4

Instructor’s Manual to Accompany Introduction to Health Services

3

Understanding Health Systems: The Organization of Health Care in the United States Topics Covered

Financing Health Systems

Chapter 4

Size of U.S Health Care Industry

In 2004, Americans spent $1.878 trillion on health care.

Health care comprised 16 percent of GDP.

Health care amounted to $6,280 per capita.

Table 4.1

Aggregate and Per Capita National

Health Expenditures, United States, Selected Years

Year
Total (Billions)
Per Capita
GDP (Billions)
Percent of GDP

1940
$4.0
$30
$100
4.0

1950
$12.7
$82
$287
4.4

1960
$26.9
$141
$527
5.1

1970
$73.2
$341
$1,036
7.1

Table 5.1

Aggregate and Per Capita National

Health Expenditures, United States, Selected Years

Year
Total (Billions)
Per Capita
GDP (Billions)
Percent of GDP

1980
$247.2
$1,052
$2,784
8.9

1990
$699.4
$2,689
$5,744
12.2

2000
$1,358.5
$4,729
$9,817
13.8

2004
$1,877.6
$6,280
$11,734
16.0

Factors Contributing to Disproportionate

Growth in Health Care Expenditures

Rapid development and dissemination of technology.

Rising expectations about the value of health care services.

Government financing.

Nature of third party reimbursement.

Factors Contributing to Disproportionate

Growth in Health Care Expenditures

Aging population.

Lack of competitive forces in the health care system.

Maldistribution of physicians and other providers of health care services.

Payment Sources (2004)

Private health insurance

37 percent

Out-of-pocket payment

13 percent

Philanthropy and other private sources

4 percent

Federal, state, and local governments

46 percent

Outlays (2004)

Hospital and nursing home services

41 percent

Physicians’ services and other personal care items

40 percent

Prescription drugs

11 percent

Administration and health insurance

8 percent

Health Insurance: Distributing Risk

Risk is defined as the probability of incurring loss and stems from both anticipated and unanticipated events.

Illness is an anticipated event, but it is uncertain for the individual patient.

Since groups are actuarially predictable, insurance is a way of pooling or distributing risk.

Violations to Insurance Assumptions

The theory of insurance assumes that risks are independent of each other:

– What befalls one person does not affect another.
For a single individual, risks are independent.

Neither assumptions are true in health insurance.

Moral Hazard

and Adverse Selection

Moral hazard:

To the extent that the event insured against can be controlled, there exists a temptation to use insurance.

Moral Hazard

and Adverse Selection

Adverse selection:

Occurs when a particular insurance policy experiences a higher number of claims due to sickness than would be probable on a random basis.

Benefit Structure-Definitions

Deductible

Sum of money which must be paid by the patient on an annual basis before the insurance policy becomes active.

Copayment

Sum of money paid as the beneficiary uses the insurance.

Benefit Structure-Definitions

Coinsurance

Percentage of the total charges incurred and is paid by the patient.

Voluntary Health Insurance

Blue Cross and Blue Shield.

Private or commercial insurance companies.

Health maintenance organizations.

Insurance Coverage (2002)

85 percent of the U.S. population had some type of health insurance coverage.

71 percent of the population under 65 had some form of VHI.

93 percent were covered by group policies

15.2 percent of the population had no health insurance coverage.

Private Health Insurance

Most commonly covered services are linked to inpatient hospitalization.

Most comprehensive policies cover physician office visits, outpatient mental health care, prescription drugs, DME, ambulance services, etc.

Prepaid Plans

Provide fairly comprehensive coverage in return for a prepaid fee.

Usually without deductibles and coinsurance for most services

In 2003, there were about 454 HMOs in the United States.

Covered approximately 72 million Americans

Social Health Insurance Programs

Social insurance

Entitlement program earned by individuals in the course of their employment.

Social Health Insurance Programs

Workers’ compensation

Provides a cash replacement for a portion of wages lost due to disability and payment for all or part of the medical care necessary.

Medicare

Covers medical services for the elderly, disabled, and other special groups.

Medicare

Provides a variety of hospital, physician, and other medical services for the following individuals:

Persons 65 and over.

Disabled individuals who are entitled to local Security benefits.

End-stage renal disease victims.

Part A – Hospital Insurance (HI)

90 days inpatient care in a “benefit period.”

Lifetime reserve of 60 days inpatient care, once the 90 days are exhausted.

100 days of post-hospitalization care in a skilled nursing facility.

Part A – Hospital Insurance (HI)

Home health agency visits.

Three pints of blood, as part of an inpatient stay.

Part B –

Supplementary Medical Insurance (SMI)

Physicians

Physician-ordered supplies and services

Outpatient hospital services

Rural health clinic visits

Home health visits

Preventive services

Hospice benefits

Not Covered by SMI

Dental care

Routine eye exams and eyeglasses

Hearing exams and hearing aids

Long-term care services

Part C and Part D

Part C:

Medicare advantage plans

Private HMOs, PPOs, and other plans that offer comprehensive services to Medicare recipients.

Part D:

Medicare prescription drug benefit

“Doughnut hole” benefit provides coverage for prescription drugs.

Medicaid

Medicaid is an “in-kind” transfer payment to welfare recipients who are eligible to receive cash under TANF or SSI.

It is financed by an average federal contribution from the general treasury of 59 percent and from state treasuries at an average contribution of 41 percent.

Medicaid

Federal matching varies from 50 to 77 percent, depending on the income of the individual state.

In 2005, approximately 57 million Americans received Medicaid benefits at some point within the year, with an average monthly enrollment of 45 million.

Distribution of Medicaid Recipients

and Expenditures by Eligibility Category

Needy families comprised 72.4 percent of Medicaid recipients, but accounted for only 28.1 percent of the total budget.

Aged comprised 9.8 percent of Medicaid recipients, but accounted for 24.3 percent of the total budget.

Distribution of Medicaid Recipients

and Expenditures by Eligibility Category

Blind and disabled comprised 17.9 percent of Medicaid recipients, but accounted for 42.1 percent of the total budget.

Basic Health Benefits

Hospital inpatient care

Hospital outpatient services

Certified nurse practitioner services

Lab and x-ray services

Nursing facility services for those aged 21 and older

Home health services for those eligible for nursing services

Basic Health Benefits

Physicians’ services

Family planning services and supplies

Rural health clinic services

Early and periodic screening, diagnosis, and treatment for children under 21

Basic Health Benefits

Nurse midwife services

Certain federally qualified health center services

Medical and surgical services furnished by a dentist

Most Commonly

Covered Optional Services

Clinic services

Nursing services in a care facility for the aged and disabled

Intermediate care facility services for the mentally retarded

Inpatient psychiatric services

Most Commonly

Covered Optional Services

Optometrist services and eyeglasses

Prescribed drugs

Prosthetic devices

Dental care

Medicaid Payments

Payments are made directly to providers.

Methods for reimbursing physicians and hospitals vary widely among the states.

Payment rates must be sufficient to enlist enough providers so that comparable care and services are available to the Medicaid population.

Physician Reimbursement

Fee-for-service

Indemnity

Fixed fees

Prepayment

Salary

Fee-For-Service

Advantages:

1. Adjusts for case complexity
2. Transparency of physician’s profile of practice
3. Patients can exercise economic clout over practitioners

Fee-For-Service

Disadvantages:

1. Incentives favor overwork and overutilization
2. Fosters unnecessary or duplicative services

Indemnity Benefits

Advantages:

1. Administratively simple
2. Accounts for inflation and changing physician practice patterns

Disadvantages:

1. No provision to protect patients from outlandish charges

Service Benefits

Advantages:

1. Protects insurers from unlimited liability in the wake of high charges
2. Provides patients with information about reasonable fee norms

Fixed Fees

Advantages:

1. Little or no cost sharing on the part of the patient
2. Cost containment

Capitation Payments

Advantages:

1. Administratively simple
2. Facilitates global budgeting
3. Incentive for physicians to control the cost of medical services

Capitation Payments

Disadvantages:

1. Incentives to decrease costs and services provided
2. Incentives for “dumping” patients with complex cases on other providers
3. Little transparency of physician’s profile of practice

Salary

Advantages:

1. Administratively simple
2. Medical treatments selected are not influenced by profitability
3. Encourages cooperation among physicians
4. Facilitates advance budgeting

Salary

Disadvantages:

1. Incentives to treat fewer patients
2. Patients lose economic clout over physicians
3. Little transparency of physicians’ profile of practice

Prospective Payment System

October 1, 1983.

Pays a standardized amount for each DRG.

Payment bears no direct relationship to length of stay, services rendered, or costs of care.

Decreased Medicare hospital admissions.

Decreased average LOS.

Resource-Based Relative Values

Initiated by Medicare on January 1, 1992 as a new system for reimbursing physicians

Divides resources needed to produce physician services into three components

Physician work, practice expenses, and malpractice insurance costs

Establishes a uniform definition of “global surgery”

Strategies for Health Care Reform

National Health Insurance

Clinton Health Security Plan

Medicaid Reform

SCHIP

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