01-05C - Introduction to Healthcare and Public Health in the US - Unit 05 - Financing Healthcare...

Introduction to Healthcare and Public Health in the US

Financing Healthcare (Part 2)

Lecture cThis 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)].

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)

2Health IT Workforce Curriculum Version 3.0/Spring 2012

Introduction to Healthcare and Public Health in the USFinancing Healthcare

Lecture b


• 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



Lecture b


• Examine delivery models for reducing healthcare expenditures– Urgent care/retail clinics– Extenders/DNPs– Patient Centered Medical Home

• Direct primary care or concierge medicine



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

The Medical Home

• Provides comprehensive medical care– Personal physician = director– Practice team

• Collective responsibility– Enhanced access

• Same day appointments



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

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



Lecture b

Doctor of Nursing Practice• Doctor of Nursing Practice

– Graduate trained– Post-graduate training – Certification examination– Work independently

• Benefits– Lower cost for professional development– Lower expenditures



Lecture b

Tort Reform• Tort reform

– Frivolous lawsuits• No lawsuits for expected complications

– Damage caps• Limit punitive awards• Limit attorney fees• Pain and suffering

– Binding arbitration



Lecture b

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



Lecture b

Financing Healthcare (Part 2)Summary – Lecture c (continued)

• Alternate delivery methods– Urgent care & retail clinics– New providers

• Tort Reform– Reduction in defensive medicine costs



Lecture b

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.



Lecture b

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.

• 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.

• 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.

• 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.

• Robert Wood Johnson Foundation. Available at: http://www.rwjf.org/. Source for health issue research and health policy.



Lecture b

http://www.dartmouthatlas.org/downloads/reports/Policy_Implications_Brief_022709.pdf

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.

• 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.pdf. Accessed December 12, 2011.

• 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

• 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.

• 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.

• 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.



Lecture b

01-05C - Introduction to Healthcare and Public Health in the US - Unit 05 - Financing Healthcare...

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