1. Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture c This material (Comp1_Unit5c) was developed by Oregon Health and Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number [IU24OC000015)].

2. Financing Healthcare (Part 2) Learning Objectives Describe the revenue cycle and the billing process undertaken by different healthcare enterprises. (Lecture a) Understand the billing and coding processes, and standard code sets used in the claims process. (Lecture a) Identify different fee-for-service and episode-of-care reimbursement methodologies used by insurers and healthcare organizations in the claims process. (Lecture a) Review factors responsible for escalating healthcare expenditures in the United States. (Lecture b) Discuss methods of controlling rising medical costs. (Lecture c) 2 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

3. Financing Healthcare (Part 2) Review some potential methods of controlling rising costs in medicine –Examine the role of health information technology in reducing and limiting costs Use of electronic health records and evidence based medicine Clinical decision support Clinical practice guidelines 3 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

4. Financing Healthcare (Part 2) Examine delivery models for reducing healthcare expenditures –Urgent care/retail clinics –Extenders/DNPs –Patient Centered Medical Home Direct primary care or concierge medicine 4 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

5. Cost Drivers: Technology Technology –50 % total annual expenditures –Devices advance diagnosis and care Imaging - CT, MRI Surgery - da Vinci robot Artificial devices – hips, knees, pacemakers –Procedures treat the untreatable, minimize risk, improve outcomes Minimally invasive surgery Angioplasty New treatments 5 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

6. Cost Drivers: Utilization Physician and hospital utilization –Aging Increasing number >65 y.o. Increasing cost >65 y.o. –Chronic disease Diagnostic tests Management of disease 6 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

7. Cost Drivers: Administrative Costs and Reimbursement Methods Administrative Costs –Billing Procedures Rules Process Reimbursement methods –Fee-for-service encourage utilization –Disparities within and among insurance plans 7 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

8. Cost Drivers: Defensive Medicine & Patient Preference Defensive medicine –Overutilization of services –Tort reform Patient preference –Request for specific test or medication –Direct to consumer advertising 8 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

9. Fixing a Broken System? Limit available resources –Rationing Incentives to change utilization –Increase patient cost –Wellness and prevention Increase in efficiency –Health Information Technology (HIT) –Evidence-based medicine (EBM) –Clinical Practice Guidelines 9 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

10. Health Information Technology Health information technology (HIT) –Best chance to lower costs HITECH Reward ($$$) for meaningful use of EHR –Facilitates coordination of care –Supports provider Clinical decision support (CDS) Clinical practice guidelines/EBM Shared information (health information exchange) Error avoidance 10 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

11. Evidence-based medicine Evidence-based medicine (EBM) –Systematic review of published research –Clinical practice guidelines –Standard of care Lower costs Defensive medicine Cook book medicine? Evaluating technology 11 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

12. The Medical Home Provides comprehensive medical care –Personal physician = director –Practice team Collective responsibility –Enhanced access Same day appointments 12 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

13. The Medical Home –Coordinated care Specialists, hospitals Other organizations –Active patient participation in decision making –Improves quality and safety Planned coordinated care EBM, CDS HIT measure quality performance –Research: 5.6% lower costs 13 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

14. Concierge Medicine Also known as direct primary care Patient pays fee or retainer –Monthly or annual –Receives special service –Enhanced access Multiple models –Practice size limited –Limited or no insurance billing –Requires patient maintain health insurance for services not covered in the practice 14 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

15. Concierge Medicine Typical features –Same day urgent care appointments and next day non-urgent care appointments –24-hour telephone access –Extended office visits –Preventive care physicals/screenings –E-mail and mobile phone access 15 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

16. Concierge Medicine Typical features –Wellness and nutrition planning –Coordination of medical needs during travel –Patient’s home or workplace consultations –Smoking cessation support –Stress reduction counseling –Mental health counseling 16 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

17. Concierge Medicine Practice costs lower –Lower staff costs Fewer patients/fewer administration/fewer nursing –Lower overhead costs Rent smaller office Lower utility costs Perception of improved quality –No difference from traditional primary care 17 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

18. Concierge Medicine Challenges –Health insurance for specialty services, high- cost procedures, emergency treatments, and hospitalization. –No data on how model affects overall health care costs –Employers evaluating model for savings –Could exacerbate the shortage of primary care providers 18 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

19. Alternative Delivery Methods Urgent Care –Low cost alternative Incentives to avoid the high cost of the ED –X-ray and lab on site –Extended hours Retail Clinics –Located in non-traditional provider locations Pharmacy and large retail locations Staffed by nurse practitioners and physicians Minimal laboratory and x-ray services 19 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

20. Doctor of Nursing Practice –Graduate trained –Post-graduate training –Certification examination –Work independently Benefits –Lower cost for professional development –Lower expenditures 20 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

21. Tort Reform Tort reform –Frivolous lawsuits No lawsuits for expected complications –Damage caps Limit punitive awards Limit attorney fees Pain and suffering –Binding arbitration 21 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

22. Financing Healthcare (Part 2) Summary – Lecture c Improved efficiency –Health information technology –Evidence-based medicine Medical home model –Lower costs 5.6% –Comprehensive care Concierge medicine or direct primary care –Retainer based model of the medical home –Enhanced services –No research to support cost containment 22 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

23. Financing Healthcare (Part 2) Summary – Lecture c (continued) Alternate delivery methods –Urgent care & retail clinics –New providers Tort Reform –Reduction in defensive medicine costs 23 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

24. Financing Healthcare (Part 2) Summary Revenue cycle is a unique process. US has highest per capita national health expenditures and highest national healthcare expenditures as a percentage of GDP in the world. Challenge is to reduce costs, maintain quality of care, and improve outcomes and accessibility to care. HIT, EBM, clinical practice guidelines, new primary care models, and urgent care and retail clinics reduce costs. Tort reform may change providers’ practice patterns. 24 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

25. Financing Healthcare (Part 2) References – Lecture c References American Academy of Family Physicians (AAFP), American Academy of Pediatrics (AAP), American College of Physicians (ACP), American Osteopathic Association (AOA) 2007 [cited August 1, 2010]. Joint Principles of the Patient-Centered Medical Home available at: http://www.aafp.org/online/etc/medialib/aafp_org/documents/ policy/fed/jointprinciplespcmh0207.Par.0001.File.dat/022107medicalhome.pdf. Last accessed March 22, 2011. http://www.aafp.org/online/etc/medialib/aafp_org/documents/ policy/fed/jointprinciplespcmh0207.Par.0001.File.dat/022107medicalhome.pdf. Fisher E, Bynum J, Skinner J. The Policy Implications of Variations in Medicare Spending Growth. The Dartmouth Atlas: The Dartmouth Institute for Health Policy and Clinical Practice Center for Health Policy Research, February 27, 2009. [cited 2010 July 31]. Available at: http://www.dartmouthatlas.org/downloads/reports/Policy_Implications_Brief_022709.pdf. Last accessed March 22, 2011. http://www.dartmouthatlas.org/downloads/reports/Policy_Implications_Brief_022709.pdf Fisher E, Goodman D, Skinner J, Bronner K. Health Care Spending, Quality, and Outcomes More Isn’t Always Better. The Dartmouth Atlas: The Dartmouth Institute for Health Policy and Clinical Practice Center for Health Policy Research, February 27, 2009. [cited 2010 July 31]. Available at: http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709.pdf Last accessed March 22, 2011. http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709.pdf Nelson AR, Costs of Health Care: New Solutions for an Old Problem. The Commonwealth Fund. May 13, 2005 [cited August 3, 2010]. Available from: http://www.commonwealthfund.org/Content/Publications/Commentaries/2005/May/Costs-of-Health-Care--New- Solutions-for-an-Old-Problem.aspx. Last accessed March 22, 2011. http://www.commonwealthfund.org/Content/Publications/Commentaries/2005/May/Costs-of-Health-Care--New- Solutions-for-an-Old-Problem.aspx Robert Wood Johnson Foundation. Available at: http://www.rwjf.org/. Source for health issue research and health policy.http://www.rwjf.org/ 25 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b

26. Financing Healthcare (Part 2) References – Lecture c References (continued) The Congress of the United States Congressional Budget Office. Washington DC: 2008 [cited July 31, 2010]. Technological Change And The Growth Of Health Care Spending. Available at: http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf. Last accessed December 12, 2011. http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf The Hastings Center, Chapter 17 Health Care Costs and Medical Technology in From Birth to Death and Bench to Clinic: The Hastings Center Bioethics Briefing Book for Journalists, Policymakers, and Campaigns, available at: http://www.thehastingscenter.org/uploadedFiles/Publications/Briefing_Book/health%20care%20costs%20chapter.p df. Accessed December 12, 2011. http://www.thehastingscenter.org/uploadedFiles/Publications/Briefing_Book/health%20care%20costs%20chapter.p df The Henry J Kaiser Family Foundation. Menlo Park, CA: 2009 [cited 2010 August 1]. Healthcare Costs: A Primer; available from: http://www.kff.org/insurance/ 7670.cfm Key information on health care costs. Last accessed March 22, 2011 http://www.kff.org/insurance/ 7670.cfm The Henry J Kaiser Family Foundation. Menlo Park, CA: 2010 [cited 2010 August 1]. Kaiseredu.org > Cost and Spending > US Healthcare Costs; available from: http://www.kaiseredu.org/index.asp. Provides background information, links to key data and policy information on US healthcare costs. Last accessed March 22, 2011.http://www.kaiseredu.org/index.asp The Henry J Kaiser Family Foundation. Menlo Park, CA: 2010 [cited 2010 August 1]. Prescription Drug Trends. Available at: http://www.kff.org/rxdrugs/index.cfm Last accessed March 22, 2011.http://www.kff.org/rxdrugs/index.cfm The Henry J Kaiser Family Foundation. Menlo Park, CA: 2010 [cited 2010 August 1]. The Kaiser Commission on Medicaid and the Uninsured; Uninsured and Untreated: A Look at Uninsured Adults Who Received No Medical Care for Two Years (2010); available at: http://www.kff.org/uninsured/8083.cfm. Last accessed March 22, 2011.http://www.kff.org/uninsured/8083.cfm 26 Health IT Workforce Curriculum Version 3.0/Spring 2012 Introduction to Healthcare and Public Health in the US Financing Healthcare Lecture b