Dynamics of Care in Society Health Care Economics 1

Just the Facts What factors cause this rise in HC cost? Technology (including pharmaceuticals), professionals fees, aging, chronic illness…

Health care & insurance 2010 Affordable Care Act 2010 Affordable Care Act

Institutions providing care Voluntary Nonprofit Institutions Exempt from federal, state, & local taxes Must be operated for charitable purposes Proprietary Institutions For-profit health care facilities Owned by a corporation Often consist of a chain of: Hospitals Nursing homes Outpatient facilities Pay local, state, & federal taxes

Institutions providing care Government Public health facilities (VA hospitals, Military treatment facilities, Public or Government funded hospitals, State hospitals for the mentally ill, State rehabilitation hospitals) The Walter Reed National Military Medical Center is one of the nation’s largest and most renowned military medical centers.

Payment Methods 1 Private Insurance Employment-based, group plans for medical ins. Employer pays part of premium; employee pays rest Current Trend: employers shifting costs to employee Terms: ( also see handout) Premium: monthly amount the insured pays for policy Deductible: amount the insured must pay before benefits start Co-insurance: insured shares a portion (10-30%) of costs Co-pay: flat fee paid by the insured per service

2 Direct Payment Patients pay for health care with their own money “Shopping around”: Creates competition Drives down prices 3 Government Plans: Medicare Health care program for older Americans Established in 1965 by amendments to Social Security Act Expanded in 1972 to include disabled & their dependents Medicare Part A: inpatient care costs (no monthly premium) Part B: outpatient costs (monthly premium) Part C: extra benefits Part D: prescription drug coverage

4 Government Plans: Medicaid Health insurance for low-income & disabled people Established in 1965 as part of Social Security Act 5 Government Plans: TRICARE for Military Personnel 6 Government Plans: for children ◦ CHIRPA  Children’s Health Insurance Program Reauthorization Act  Passed in Government Plan: Workmen’s Compensation for those injured on the job, covers medical expenses for that injury and partial wages

Claim form

Understanding How Health Insurance Works Let's say that you are in a serious accident. You've accumulated $50,000 in covered medical expenses. A sample health insurance plan might offer: Deductible: $5,000 Coinsurance: 20 percent Out-of-pocket maximum: $6,000 In the example above, you would be responsible for the first $__________ After you pay your deductible, you would be responsible for _____ percent coinsurance until you reach your out-of-pocket maximum of $_________. Your health insurance plan would pay the rest of the covered medical expenses (in this case, _____ percent). After you reach your out-of-pocket maximum, you would pay _______ for any additional covered medical expenses for the rest of the plan year. Deductible: The amount you're responsible for paying for covered medical expenses before your health insurance plan begins to pay for covered medical expenses each year. Coinsurance: Shared costs between you and the health insurance plan. For example, you pay 20 percent of costs and your plan pays 80 percent. These percentages may be different from plan to plan. Some plans may not have coinsurance. Copayment: The payment you make, usually a fixed dollar amount such as $15, each time you visit the doctor or fill a prescription medication. Not all plans have copayments. These typically do not accumulate toward the deductible. Out-of-pocket maximum: The most you will have to pay for covered medical expenses in a plan year through deductible and coinsurance before your insurance plan begins to pay 100 percent of covered medical expenses.

Case management includes:  Utilization review the critical examination (as by a physician or nurse) of health-care services for the purpose of controlling costs (as by identifying unnecessary medical procedures) and monitoring the quality of care  Follow-up and Discharge Planning  Patient education  Resource coordination  Clinical management & communication

Case management

Managed Care Health care providers (gatekeepers) manage access to care Goal: contain costs In-network vs. out-of-network providers Utilization review

Managed Care plans Health Maintenance Organization (HMO)-Only “in network benefits”, Primary care physician managed Preferred Provider Organization (PPO)- “in network benefits” covered at a higher rate Point of Service (POS) -combines characteristics of the HMO and the PPO

Diagnostic related group (DRG) classification system used to contain cost (medicare, medicaid & other health care plans use this) Patients assigned to DRG based on: Diagnosis Other demographic info (age, gender…) Health care paid in standard fees, regardless of actual costs (Ex: payment for gall bladder surgery costs are set by the DRG… if actual costs for the surgery exceed that amount {ex. Longer stay due to infection}, the hospital loses money. Acts as an incentive to hospitals to operate more efficiently

International Classification of Diseases (ICD) According to the World Health Organization … ICD is used by physicians, nurses, other providers, researchers, health information managers and coders, health information technology workers, policy-makers, insurers and patient organizations to classify diseases and other health problems recorded on many types of health and vital records,

Utilizing Resources Efficiently Responsibility of all health care professionals Conscientious time management Electronic documentation A utilization review (UR) nurse, also known as a utilization management nurse, is a registered nurse who must decide what level of care is necessary and appropriate for patients within her area of responsibility.

Watch: The Cost of Dying - CBS News Watch: The Cost of Dying - CBS News Watch: The Cost of Dying - CBS News Watch: The Cost of Dying - CBS News min Watch Denial of Insurance for the Mentally IllWatch Denial of Insurance for the Mentally Ill - Watch Denial of Insurance for the Mentally Ill – 60 Minutes min Difficult material