Module 5:Healthcare Systems

Developed through the APTR Initiative to Enhance Prevention and Population Health Education in collaboration with the Brody School of Medicine at East Carolina University with funding from the Centers for Disease Control and Prevention

US Healthcare Financing

Acknowledgments

This education module is made possible through the Centers for Disease Control and Prevention (CDC) and the Association for Prevention Teaching and Research (APTR) Cooperative Agreement, No. 5U50CD300860. The module represents the opinions of the author(s) and does not necessarily represent the views of the Centers for Disease Control and Prevention or the Association for Prevention Teaching and Research.

APTR wishes to acknowledge the following individuals that developed this module:

Anna Zendell, PhD, MSWCenter for Public Health Continuing EducationUniversity at Albany School of Public Health

Joseph Nicholas, MD, MPHUniversity of Rochester School of Medicine

Mary Applegate, MD, MPHUniversity at Albany School of Public Health

Cheryl Reeves, MS, MLSCenter for Public Health Continuing EducationUniversity at Albany School of Public Health

Presentation Objectives

1. Describe how clinical services are funded, including how individuals are covered and how providers are reimbursed

2. Explain the models of healthcare financing used in the US system

3. Explain how healthcare reform impacts healthcare financing

Overview of US Healthcare Financing

Individual/Family Coverage

Employer or Self-Insured

Coverage

Health Insurance

Companies

Government Coverage

MedicareMedicaidSCHIP

VA

Healthcare Providers Outpatient medical, hospital, pharmacy, mental

health, dental

Uninsured

Private Public

System at the Brink?

Accelerating healthcare costs promise to swamp access/quality issues

Workforce and hospitals are geared to provide expensive, high-tech, tertiary care for the foreseeable future

Aging population living longer with more co-morbidities

Types of Financing

Public Medicare Medicaid State Children’s Health Insurance Program (SCHIP) Veteran’s Administration benefits

Private Employer-based Private purchase

Public Insurance

Medicaid

Provides health care to poor and disabled Strict means testing Not all poor people covered - under federal law

Very low reimbursements to providers Limited number of participating private providers (e.g.

physicians) Federally and state funded

Medicare

Provides health insurance to All elderly Individuals under age 65 with disabilities

Funded through US General Fund and employee contributions

Government-determined reimbursement rates

Medicare Plans

Medicare AHospital

Medicare Plans

Medicare AHospital

Medicare BHealth

Medicare Plans

Medicare AHospital

Medicare BHealth

Medicare CAdvantage

Medicare Plans

Medicare AHospital

Medicare BHealth

Medicare CAdvantage

Medicare DPrescription

Prescription Drugs

Hearing

Vision

Dental

SNF

Care

Gaps in Medicare Coverage

Preventive

Care

Expanding Medicare Costs

State Children’s Health Insurance Program

Provides health insurance to children whose families: Earn too much to be eligible for Medicaid Cannot afford health insurance

Joint federal/state funding with an enhanced match to states

Expanded in healthcare reform

Veterans Health Administration Benefits

Available to veterans of US military and immediate families (CHAMPVA) Annual caps on # of enrollees Multiple plans Priority groups

Must proactively apply Healthcare access limited to VA facilities

Private Health Insurance

Employer-Sponsored Insurance

Primary mode of delivery Employers provide in benefits package Premiums split between employer and employee

Employer usually pays the majority Benefits and costs vary widely depending on policy

carrier(s)

Managed CareRising Healthcare Costs

Precipitated by soaring healthcare costs Efficiency through healthcare delivery integration

Eliminate duplication, waste, fragmentation Utilization control of medical services Fees for services

Health Savings Accounts

Tax-free account to pay for routine health expenses Contributions to HSA’s via payroll deductions Must have health insurance policy to open HSA Must use entire amount annually Most HSA reimbursements require a “paper trail”

Health Insurers & Preventive Health

Major health insurance companies are engaging patients in health education to save on treatment costs and hospitalizations Health information Chronic disease management Caregiver supports Preventive health Wellness incentives

Private Pay Health Insurance

Purchased on non-group insurance market Very expensive Pressure to lower premiums often leads to poor coverage Medically underwritten versus guarantee issue

Regulated by state governments www.healthinsuranceinfo.com

for state specific information

Streams of Funding

Money Collection

Payers Provider Reimbursement

Prior Authorization for Services

Insurers may require prior approval for services Rehabilitative therapies Screening procedures Mental health services Outpatient procedures Inpatient stay Certain medications

Without authorization, services not reimbursed Varies greatly by insurer May need to provide continued justification for care

Models of Healthcare Financing

Healthcare System Models

Socialized Medicine(United Kingdom Model)

Government is dominant service payor and provider

Fund through taxes Universal access In US, this is model for

Veterans Affairs (VA)

Socialized Insurance(Bismark Model)

Private insurance is dominant payor

Fund via employers and/or employees

Need additional mechanisms for universal access

In US, this is primary model for citizens <65 years

Healthcare System Models

National Health Insurance(Canadian Model)

Government is dominant payor

Providers, hospitals are a mix of public/private

Funded through taxes Universal access In US, this is the model for

Medicare and Medicaid

Out of Pocket Model

No organized system for payment

No pooling of risk Access limited In US, this is the model

faced by large numbers of uninsured

Global Comparison

Healthcare Reform 2010

The Basics

Patient Protection and Affordable Care Act passed in 2010

Implementation occurs 2010 – 2018 Mandates health insurance coverage for most

Americans – or face financial penalty Provides increased access to public and private

health insurances

Healthcare Reform Provisions

Creation of Health Insurance Exchanges Establishment of pre-existing condition plans Expanded small business tax credits Expanded coverage for young adults Expanded access to SCHIP, Medicaid, and Medicare

prescription coverage Much, much more....

Current Attempts to Expand Access

Insurance/Payment reforms Less exclusion, access to larger pools Offering less comprehensive benefits/limiting choice Shifting more costs to consumers

▪ High deductible plans▪ Health savings accounts

Subsidize private insurance Medicaid eligibility expansion Funding of community health centers

Improving Quality & Cost

Medicare Pay-for-Performance Adjusting payments based on hospital and provider specific

process/outcome data

Patient Centered Medical Home Enhanced primary care payments for service coordination

Payment Bundling Global payments to health systems encouraging

coordination of outpatient, inpatient, rehabilitative care

Improving Quality & Cost

Comparative effective research Coupled with changes in reimbursement for marginally

effective/ineffective treatments Attempt to reduce unwarranted variation in care

Electronic health records Ideally would reduce duplicative testing, misinformation Allow for data capture to allow evaluation of

providers/hospital systems

Impact on Public Health

Will eliminate cost-sharing for US Preventive Services Task Force (USPSTF) recommendations Screenings, laboratory tests (e.g. HIV), and routine vaccines Smoking cessation and obesity counseling

Potentially high impact on public health initiatives Increased vaccine adherence, smoking cessation and

obesity reduction

Expansion of access to preventive services

Healthcare Reform Implementation

Healthcare Reform Implementation

Federal web site to educate Americans on healthcare reform: www.healthcare.gov

Kaiser Family Foundation The Heritage Foundation National Governor’s Association’s

Time Line for Implementation

Summary

The US healthcare financing system is funded both publicly and privately

The cost of healthcare is a dominant issue Many people remain uninsured or under-insured Preventive health is assuming more importance in

healthcare Major reforms are underway targeting the

healthcare financing system

Collaborating Institutions

Department of Public HealthBrody School of Medicine at East Carolina University

Department of Community & Family MedicineDuke University School of Medicine

Advisory Committee

Mike Barry, CAELorrie Basnight, MDNancy Bennett, MD, MSRuth Gaare Bernheim, JD, MPHAmber Berrian, MPHJames Cawley, MPH, PA-CJack Dillenberg, DDS, MPHKristine Gebbie, RN, DrPHAsim Jani, MD, MPH, FACP

Denise Koo, MD, MPHSuzanne Lazorick, MD, MPHRika Maeshiro, MD, MPHDan Mareck, MDSteve McCurdy, MD, MPHSusan M. Meyer, PhDSallie Rixey, MD, MEdNawraz Shawir, MBBS

APTR

Sharon Hull, MD, MPHPresident

Allison L. LewisExecutive Director

O. Kent Nordvig, MEdProject Representative