HEALTH CARE ORGANIZATION AND FINANCING

Transcription

1 HEALTH CARE ORGANIZATION AND FINANCING Fee for Service Care Independent physician Patient pays for care No middleman Little paperwork Fee for Service Challenges Running a business Employee relations Collections/ Non-pay patients Self-exploitation Call schedule Hospital care Expensive; hospitals often unpaid 1929: Baylor contracted with 1500 teachers to provide hospital care : Blue Cross was born o Nonprofit o Hospital representatives were majority of Blue Cross boards of directors o State-based Blue Shield Began 1939 California Medical Association Paid physicians bills Nonprofit; physicians a majority on board of directors Health Insurance Pays fee for service Makes health care and hospital care affordable Tax-subsidized Employer-based How can an insurance company succeed? Attract many healthy people Charge deductible (patient pays for first few services) Charge coinsurance (20% of service charge or $5 to $25 per service) Discourage sick people from joining or staying with this insurer Paperwork Payment delays Preauthorization

2 Medicare 1965: US government became a health insurer Covers: o People over 65 o People who are 100% disabled for more than a year (SSI) o End-stage renal disease (ESRD) Part A covers hospital bills is compulsory (no premium charge) Part B covers physician bills optional (patient pays part of premium) Paid from payroll tax Administered by insurance company in each state (usually Blue Cross/ Blue Shield) Fairly low administrative costs Medicare does NOT pay for: Medications Home health care Long-term care (but does pay 21 days of nursing home after hospitalization) Early Medicare challenges Paid whatever physician and hospital charged Usual, customary and reasonable (UCR) rates rose as physicians asked for more As costs rose: responded with regulation Medicaid Joint federal/ state program For people below 150% of poverty level AND o Over 65 o 100% disabled for over a year (SSI), or o Young children and their parents (shorter-term with welfare reform) Federal funds pay 50-83% of costs (depending on state s number of poor people) States pay remainder on average, 20% of states budget States decide on level of coverage and payment (and program structure, within limits) For example: Virginia generally covers only people living under 1/3 of the poverty level -- $230/month for one or $389/month for a family of four Medicaid pays for Prenatal and well child care Hospital care Physician care (but rates so low that many or most physicians refuse) Nursing home care At least some medications and home care

3 Where does the majority of Medicaid money go? Rising health care costs 6% of gross national product (GNP) in 1950s 15% of GNP in 1998 Reasons: o Few restrictions on charges o Unlimited services o Incentive to do everything Cost containment: HMOs and Health Insurance Changes Staff-Model HMOs started by employee groups Group Health Association (GHA): antitrust lawsuit ensued Kaiser/ Permanente: grew in California in 1940s Physicians on salary Some pressure to limit hospital, surgical and emergency room costs HMO benefits Provide wellness as well as sick care Lower costs/ premiums Remove incentive to test or operate Remove some incentives NOT to test or treat (coinsurance) HMO challenges Limits choice of physicians Emphasis on speed and productivity Less physician independence PPOs and IPAs PPO: preferred provider organization (contract with practicing physicians) IPA: independent practice association (often pays physicians FFS) Both provide HMO-type care in private offices Give patients care in a normal practice setting Allow physicians to care for patients with a variety of insurance PPO and IPA challenges Physician at some financial risk a disincentive to see and treat patient Payment to physicians low Gatekeeper : physician must refer (and may have disincentive to refer) May save money at times but risk of errors (knowing what you don t know and when you need help) Limited choice of physicians primary care and specialists

4 Insurance company responses to a competitive market Denials of payment Increasing documentation requirements Time-consuming, required preauthorization for tests, medications, hospital, surgery, referral, etc. Challenges for insurance companies New technologies Other people s money patient has no incentive to contain costs Direct advertising of tests, services and medications to consumers Medicare: cost control through regulation Diagnosis-related groups (DRGs): pay hospital a predetermined sum for each diagnosis (at times with one adjustment for complications) Relative-value units (RVUs): pay physicians set price for level of service Increased coding requirements and auditing Fraud and abuse : includes o failure to charge patient copayment o charging uninsured patients less o failure of hospital physician to write a separate note saying he was there with resident for surgery or visit Documentation requirements Patient not seen unless a documented, identified chief complaint Seven elements of history of present illness Past medical history, social history, family history (2 written on each visit) Review of systems Physical examination checklist Newer regulations Joint Commission on Accreditation of Health Care Organizations (JCAHO): voluntary includes hospitals, clinics, etc. o Latest requirement: pain management documentation Clinical Laboratory Improvement Act (CLIA): restricts physicians from doing most lab tests Health Insurance Portability and Privacy Act (HIPAA): Confidentiality o No visible schedule of patients o Restrict access to information to minimum necessary o Patient must sign Notice of Privacy Practices The future

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