AgendaAgenda Introductions Overview of the U. S. Health Care System Major Stakeholders Health Care Financing in the U. S. Typical Flow of Health Care Transactions HIPAA Health Care Technologies Roles for Satyam Resources Glossary of Terms

Overview of the U. S. Health Care SystemOverview of the U. S. Health Care System How big is it? Who pays for it? Who provides care? What care? Who administers the system? How is it regulated?

How big is it?How big is it? Roughly $1.3 trillion, $5,000 per person, 13.3% of GNP 10.5 million workers 720,000 physicians 200,000 medical offices & provider practices 6,200 hospitals 1 million hospital beds 4.7 billion claims 2.5 billion prescriptions

Who pays for it?Who pays for it? Employers/Employees mostly through Insurers & Other Third-Party Payers Patients – Privately Insured & Uninsured Government/Taxpayers

1.1. Who pays for it? IIWho pays for it? II2.2. Who provides care?Who provides care?

Physicians

Primary care

Specialty care

Other Professionals

Nurses/Nurse Practitioners

Physical Therapists

Chiropractors

Psychologists/Clinical Social Workers

Dentists8.Who provides care? II8.Who provides care? II Facilities

Hospitals, Nursing homes ,Behavioral care facilities

Ancillary Service Providers

Pharmacies ,Labs, Radiology facilities ,DME suppliers99 What care?What care?

Facilities

Hospitals $420 billion

Nursing homes $100 billion

Professional Services

Physician $290 billion

Other professional $ 80 billion

Prescription Drugs $120 billion Other Medical Products $ 50 billion Dental Services $ 60 billion10 What care? II10 What care? II Hospital Care11 what care? III11 what care? III12Who administers the system?12Who administers the system? Providers & Provider Organizations,Insurance Companies/TPAs,Managed Care Organizations,Government,Employers13How is it regulated?13How is it regulated? U. S. Federal Government

DHHS, HCFA

State Governments Professional Organizations/Accrediting Bodies

Specialty Boards

JCAHO14 Major Stakeholders – A Recap14 Major Stakeholders – A Recap Patients/Members Payers

Employers

Insurers

Managed Care Organizations

Medicare

Medicaid

Other

15 Major Stakeholders II15 Major Stakeholders II Providers

Hospitals & other facilities

Physicians & physician groups

Pharmacies

Ancillary service providers

16 major Stakeholders III16 major Stakeholders III Government U. S. DHHS U. S. HCFA State Health Departments Other Equipment & supply manufacturers Information service vendors Pharmaceutical companies Biotech firms

17 Health Insurance17 Health Insurance

Type of Plan1988 1999

Traditional 73% 9%

Managed Care

o HMO 16% 28%o PPO 11% 38%o POS 0% 25%

18 Health Insurance - Types18 Health Insurance - Types Traditional Fee-for-Service Free choice of providers Freedom to self-refer Less coverage for preventive care Higher premiums, usually More out-of-pocket expense, usually PPOs Financial incentive (less out-of-pocket expense) to see in-network providers Freedom to self-refer Preventive services may not be covered20 Health Insurance – Types II20 Health Insurance – Types II Point-of-Service

Network of providers

PCP gatekeepers for referrals

Self-refer option, but at higher out-of-pocket cost

More likely to cover preventive services

HMOs

Closed panels of physicians

PCP gatekeepers for referrals

Preventive services covered21 Health Insurance Features21 Health Insurance Features Common Features:

Premiums

Defined benefits

Fee schedules, UCR

Balance Billing, or Not

Utilization Review/Management22 Health Insurance Features II22 Health Insurance Features II Common Features (continued):

Deductibles

Coinsurance

Copayments

Out-of-pocket maximums

Lifetime policy limitsHMOsHMOs

Provide medical care to members for a set monthly premium Generally, excellent coverage of routine health care services, but more restrictive on choice of providers Services provided by HMO physicians & facilities are covered almost in full

Services by “out-of-network” physicians & facilities have reduced coverage, except in emergencies or when specialized care is needed & referral is authorized in advance

PPOsPPOs Contractual agreements with health care providers, who accept lower fees for services to PPO members Members who use participating providers generally receive more generous benefits Combine characteristics of traditional insurance plans & HMOs

Point-of-Service PlansPoint-of-Service Plans Combine aspects of indemnity health insurance with some elements of PPOs Like PPOs, establish contracts with providers who agree to offer services to plan members Allow members to choose at the time they need health care whether to seek treatment within the plan's network of health care providers or outside the network Expenses for services received outside the network are reimbursed, usually after the patient pays a specified deductible and coinsurance

Providers – FacilitiesProviders – Facilities Hospitals SNFs Behavioral Care Facilities Hospital Networks

Providers – HospitalsProviders – Hospitals Types of Hospital

o General or specializedo Short-stay or long-termo Not-for-profit (84%), proprietary or government-owned

Providers – Hospitals IIProviders – Hospitals II Services

Inpatient care – 33 million admissions/year

Outpatient care – 483 million outpatient visits

Diagnosis

Surgery

Medical care

Rehabilitation

Behavioral careProviders – Hospitals IIIProviders – Hospitals III

Services (Continued)

Physician & nurse education & training

Health education programs

Centers for research & medical technology

Payment/Reimbursement

FFS vs. DRGs vs. Per Diems

Financial Risk, Financial IncentivesProviders – Hospitals: AdministrationProviders – Hospitals: Administration

Complex organization Medical staff/departments – Physicians, Nurses, Therapists, Nutritionists, Otherso E.g., ER, ICU, Surgery, Pediatric, Maternity, Anesthesiology, Oncology, Radiology, Pathology Administrative staff/departmentso HR, Finance, Purchasing, Security, Operations Mergers, Alignments, Networks – Multihospital Systems

Vertical Integration – PHOs +, IDSs

Providers – Hospitals: RegulationProviders – Hospitals: Regulation State Licensing JCAHO Accreditation

State Hospital AssociationsProviders – PhysiciansProviders – Physicians

Primary Care Specialists

Private Practice vs. Staff

Half are in one- or two-doctor practices

Capitation vs. FFS vs. Case Rates Financial Risk, Financial Incentives Hospital Affiliated

Providers – Physicians IIProviders – Physicians II State Licensing Specialty Board Certification

AMA State Medical Societies Organizations of Practicing Physicians

Providers – Prescription DrugsProviders – Prescription Drugs 2.5 billion prescriptions

Retail channels 60%

Hospital pharmacies 14%

Mail order 11%

Clinics 6%

Long-term care pharmacies 3%

Staff-model HMOs 2%

Other 4%Providers – Prescription Drugs IIProviders – Prescription Drugs II

PBMs (Pharmacy Benefit Managers)

40 PBMs in U. S.

Top 5 = 75% of market

Largest PBMs are allied with Rx companies

On-line claims processing

Half the insured populationProviders – Prescription Drugs IIProviders – Prescription Drugs II

Pharmacies

Move from independent to chainProviders – OthersProviders – Others

Stakeholders – GovernmentStakeholders – Government Medicare – 38 million beneficiaries

Stakeholders – Pharmaceutical CompaniesStakeholders – Pharmaceutical Companies Time to develop new drug – 15 years Cost to develop new drug - $500 million+

Total R&D expenses - $21 billion (1998) Currently, 1,000 new drugs in development

Stakeholders – OtherStakeholders – OtherHealth Care Financing - RevenueHealth Care Financing - Revenue

Revenue Sources

Private

o Health insurance $440 billiono Individual out-of-pocket $200 billiono Other private funds $ 80 billion

Government

o Medicare $230 billiono Medicaid (federal & state) $200 billiono Other federal $ 70 billiono Other state & local $ 90 billion

Revenue – Employers/eesRevenue – Employers/ees Private Health Care Insurance

Usually, through employer

Employer selects coverage options

Employer pays bulk of premiums

Employees choose plan from among options

Employees pay premiums, coinsurance, copays, deductibles

Insured or employer-funded risk

Non-employer-based insurance - ExpensiveRevenue - GovernmentRevenue - Government

Medicare Medicaid Other

Revenue – MedicareRevenue – Medicare Federal health insurance program for citizens 65 years of age & older. Also for people under age 65 who have certain disabilities, including kidney disease. Funded primarily by federal payroll taxes & by monthly premiums paid by participants. Two-part benefits: Part A -- Basic hospital insurance Part B -- Voluntary medical insurance covering physicians' fees, outpatient services & other medical services.

Revenue – Medicare IIRevenue – Medicare II About 39 million people enrolled Part A – Hospital Insurance No premiums for most participants $792 deductible (2001 benefit period) Coinsurance after 60th day in hospital; 20th in SNF All costs after 150th day in hospital; 100th in SNF Part B – Medical Insurance Monthly premium $50/month $100 deductible 20% coinsurance

Revenue – Medicare IIIRevenue – Medicare III Medicare “gaps” “Medigap” insurance - to supplement Medicare coverage

Revenue – MedicaidRevenue – Medicaid Provides coverage for some low-income Americans In 1994, over 31 million people received Medicaid health care support A federal-state program Each state decides who is eligible and what services will be included Usually operated by state welfare or health departments Guidelines issued by the HCFA

Revenue – Medicaid IIRevenue – Medicaid II At least five basic services:

Inpatient hospital care

Outpatient hospital care

Physicians' services

Skilled nursing-home services for adults (SNF)

Laboratory and x-ray servicesHealth Care Financing - ExpensesHealth Care Financing - Expenses

Expenses

Health care services

o Insurance incentiveso Aging populationo Medical technologyo Malpractice claimso Increased demand, excess service, fraud, abuse

Administration

o Insurerso Providerso Government

Expenses – FacilitiesExpenses – Facilities Inpatient Utilization & Cost Hospitalso FFS, DRGs, Per Diems, Case Rateso High-tech equipment & processeso Cost-shifting – Medicare, Medicaid, Uninsured Other facilities Outpatient Utilization & Cost Procedures Ancillary services “Managed care” shift from inpatient

Expenses – Physicians & OthersExpenses – Physicians & Others Outpatient Utilization & Cost

Procedures

Ancillary services

Office-Based Care

Preventive

Procedures

Ancillary services

Behavioral careExpenses – AncillariesExpenses – Ancillaries

Ancillary Services Lab

Radiology Prescription Drugs 16% of total cost by 2010 Alternative Care Chiropractors Nutrition therapy Acupuncturists Etc.

Expenses – Administration: InsurersExpenses – Administration: Insurers Each claim costs payers & providers between $8.50 and $18 It takes an average of six weeks for simple claims to be resolved 30% of claims must be re-filed due to errors

Expenses – Administration: ProvidersExpenses – Administration: Providers Hospital administration PHO/IDS administration

Expenses – Administration: GovernmentExpenses – Administration: GovernmentHealth Care TransactionsHealth Care Transactions

Health Care Insurance From the insurer/administrator side From the provider side From the employer/employee side From the patient side Health Care Providers Hospitals Physicians Pharmacies Other Providers

Flow of Health Care TransactionsFlow of Health Care TransactionsTransaction ProcessingTransaction Processing

Enrollment/Membership/Disenrollment Claims/Encounters Inquiries (Customer Service) Membership/Eligibility Benefit design (Multitude of product designs) Claim status

From members From employers From providers

Transaction Processing IITransaction Processing II Referral Authorizations Health Care Payment & Remittance Advice Health Plan Premium Payments COB

Health Claims Attachments First Report of Injury

Transaction Processing IIITransaction Processing III Homegrown vs. Purchased Systems Indemnity vs. Managed Care

Electronic vs. Manual Add-on or free-standing systems for prescription drugs, behavioral care, vision, dental

Processing a ClaimProcessing a Claim For starters, processing a claim involves the following queries: Is the patient a member of the plan? Of what plan? Is the particular service covered by that plan? Does the patient have other insurance? Is the service related to an incident that may be subrogatable to workers’ comp, disability or accident insurance? Is the service consistent with the patient’s diagnosis, age & gender?

Processing a Claim IIProcessing a Claim II Is the service medically necessary? Has the service been preauthorized? Is the submitting provider a qualified provider for this service? Is this provider a member of “the network”? How much does this plan pay this provider for this service under these circumstances? Has the patient’s deductible been met this year? Are we reimbursing the patient or the provider? Etc.

A Transaction Processing SystemA Transaction Processing System CSC’s POWERmhs

Benchmarked to 5 million members

Supports multiple lines of business

AS/400 platform

Transactions – Provider SideTransactions – Provider Side Health Insurance Transactions Provider Operations

Supply ChainHIPAAHIPAA

Federal Law & Regulation Mandates major changes in the way health care organizations manage and process information

Standardizes electronic exchange of administrative and financial health care transactions

Mandates health care information privacy

Mandates health care information securityHIPAA – The OpportunityHIPAA – The Opportunity

To forward thinking organizations, HIPAA can be seen as more of an opportunity than a burden. Adopting the business practices envisioned under the regulations will provide many benefits for health care plans and providers, including the following:

1. Cost-reduction as a result of standardization.2. Simplified processes for health care operations and transactions.3. Standard transactions will encourage e-business and Web-based transactions.4. A facilitated fight against waste, fraud and abuse in health insurance and health care delivery.5. Reduced financial liability and exposure through more effective risk management.

HIPAA – Satyam’s SolutionHIPAA – Satyam’s Solution A complete solution with a range of options

Backed by an SEI-CMM Level 5 company Microsoft-endorsed tools Integrated solution for multiple systems Customer partnership World-class methodology Team of experts

HIPAA - MethodologyHIPAA - Methodology Educating the client about HIPAA Requirements gathering & analysis Inventory assessment Gap analysis Impact analysis, partitioning & sequencing Choose from among Satyam’s range of HIPAA solutions

HIPAA – Methodology IIHIPAA – Methodology II Remediation & unit/system testing Change unit & integration testing at client site EHNAC-STFCS testing Formal sign-off for user acceptance Update documents & train end-users with the new system

HIPAA – TransactionsHIPAA – Transactions Health care claims or equivalent encounter information Eligibility for a health plan Referral certification and authorization Health care claim status Enrollment and disenrollment in a health plan Health care payment and remittance advice Health plan premium payments Coordination of benefits (COB) [Note: Standards for health claims attachments and first report of injury have not yet been established.]

HIPAA – Transaction MandatesHIPAA – Transaction Mandates Specific data content standards, including specific code sets Standardized health care provider, employer, health plan & individual identifiers Covered entities must be in compliance with standards for electronic transactions by October 16, 2002 Small health plans have until 10/16/03

HIPAA - PrivacyHIPAA - Privacy Three major purposes: To protect & enhance the rights of consumers by giving them access to their health information & controlling inappropriate use of that information To improve quality of health care in the U.S. by restoring trust in the health care system among consumers & health care professionals To improve the efficiency & effectiveness of health care delivery by creating a national framework for health privacy protection that builds on efforts by states, health systems, & individual organizations & individuals.

HIPAA – Privacy IIHIPAA – Privacy II Any information that identifies the subject & any associated information Written authorizations from the individual must be in place for use & disclosure of individually identifiable health information

Even then, the amount of information that could be used or disclosed is restricted to the minimum amount necessary to accomplish the relevant purpose

HIPAA – Privacy IIIHIPAA – Privacy III Business partners must not use or disclose protected health information in ways that would not be permitted of the covered entity Fair information practices required to inform people about how their information is used & to ensure that they have access to their own information Failure to comply – Possible monetary or criminal penalties

HIPAA - SecurityHIPAA - Security Requires covered entities who electronically store & transmit health information to comply with minimum threshold protocols & procedures in 4 broad security categories:

Administrative procedures

Physical safeguards

Technical protections relating to data storage

Technical protections relating to access to & transmission of data Case StudiesCase Studies

New England Healthcare EDI Network (NEHEN)NEHENNEHEN

Some of Boston’s dominant providers – Regional cooperative HIPAA was the catalyst Return on investment was the driver Patient eligibility transaction – Done!

Health Care TechnologiesHealth Care Technologies Transaction Processing Data Warehousing/Data Mining E-Business/E-Commerce Customer Relationship Management (CRM)

Transaction Processing TechnologiesTransaction Processing Technologies Homegrown vs. Vendor-Developed Systems Mainframe vs.

Heavy, legacy investments in “big iron”

Integrated vs. NotData Warehousing/Data MiningData Warehousing/Data Mining

Needs:

Financial/profitability analysis & reporting

Marketing

o Employerso Subscribers/Members/Patientso Providers

Provider Profiling

o Practice patternso Financialo Quality of care

Data Warehousing/Data Mining IIData Warehousing/Data Mining II Needs (Continued):

Actuarial analysis

Quality of care analysis & reporting

o For accreditation

o Disease management

UR, case management

Regulatory reportingData Warehousing IssuesData Warehousing Issues

Multiple transaction systems Missing/incomplete data Poor quality data Poor or Missing Documentation Lack of easy-to-use tools Inability to achieve success “from the data”

Data Warehousing/Data Mining IIIData Warehousing/Data Mining III 55% of insurers & 41% of HMOs have a data warehouse (as of 1998) But efforts are spotty, inconsistent & incomplete Oracle, DB2, SQL Server, SAS OLAP tools – Vendor-driven or Cognos, SQL Server, etc.

E-Business/E-CommerceE-Business/E-Commerce 20,000 health Web sites; 60% of hospitals Top functions of health care Web sites:

Promoting organizations

Employee recruitment

Providing consumer information

Providing a physician/provider directory

From HIMSS 2001 Survey

E-Business/E-Commerce IIE-Business/E-Commerce II

Keys to a successful health site for consumers:

Interesting, eye-catching info on Home page

Quality, up-to-date content

Ease of use & navigationE-Business/E-Commerce Case StudyE-Business/E-Commerce Case Study

Harvard Pilgrim Health Care Subscribers can look up benefits information Can order replacement ID cards Can update demographic data online Transactions with employers & brokers – health plan invoicing & employee enrollment/disenrollment Providers can verify eligibility, copayment amount & claim status; online referrals, authorizations & claims submission coming Free for employers

E-Business/E-Commerce Case Study IIE-Business/E-Commerce Case Study II Crozer-Keystone Health System

High personalization

o E-mails on topics of interesto Online health risk appraisalso Personal health journals

Baptist Health Care, Pensacola

Online health surveys

Questions answered by online clinical staffE-Business/E-Commerce Case Study IIIE-Business/E-Commerce Case Study III

CareGroup Healthcare System

6 hospitals, 2,500 providers, 800,000 patients

CareWeb

o Intranet access to patient medical histories, for physicians, nurses & patientso Insurance transactions, for insurance companieso 12,000 users, 90GB of clinical datao 173 servers, Windows NT, Exchange Server, IIS, SQL Server 7.0, CACHÉ e-DBMS (hierarchical), RSA SecureID, Cisco Systems VPN

Customer Relationship Management (CRM)Customer Relationship Management (CRM) Needs to be tailored to meet specific health industry needs Pivotal’s eHealthcare Relationship Management To manage the interaction & collaboration of the entire health care chain (consumers, members, providers, payers, wholesalers & manufacturers) Premera Blue Cross Insurer, American Medical Security Group Using Pivotal CRM to customize product offerings to customers & to up-sell & cross-sell Delivering personalized, precise & timely solutions

Health Care IT BarriersHealth Care IT Barriers Insufficient budget Vendor inability to deliver satisfactory products Achieving end-user acceptance

From HIMSS 2001 SurveyHealth Care IT Barriers IIHealth Care IT Barriers II

Reluctance to change, to do things differently Allegiance to old technologies Reluctance to commit to new technologies Disconnect between business needs & technological possibilities Business “silos” Insufficient budget Achieving end-user acceptance