Objectives To understand the basics of health care financing in
the United States To understand the basic concepts of managed care
To understand the changes taking place in health care financing and
the impact on clinical practice
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Who pays for health care in the United States?
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Payers Employer based insurance Government Self pay
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Health Care Payers in the U.S., 1999
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Employer based insurance In recent years, major shift from
fee-for-service coverage to various forms of managed care Estimated
80% of plans are managed care Employers provide health insurance
for tax advantages, attract employees
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Government health insurance Medicare Medicaid Childrens Health
Insurance Program (CHIP) Military based health care (Tricare,
VA)
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Medicare Federal program that started in 1965 All costs paid by
the Federal government Part A paid by a dedicated Medicare tax Part
B paid by premiums and general revenue
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Medicare Covers: All U.S. citizens over age 65 years Certain
disabled persons under age 65 years All persons with end stage
renal disease
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Medicare Part A Covers inpatient hospital services, hospice
care, very limited skilled nursing facility care Has deductibles,
copays No premiums
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Medicare Part B Is optional and has required premiums
(currently $50.00/month) Pays physician services, certain
outpatient care, certain home health care, physical therapy,
durable medical equipment Has deductibles and copays
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Medicare does NOT cover Most prescription or over-the-counter
drugs Acupuncture Dental care Health care outside the United States
Hearing aid or glasses Routine physical exams or eye exams
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Medicare options Medigap policies: optional insurance policies
sold by private insurers; cover some deductibles and copays, some
cover other services; Medipak is local example
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Medicare options Medicare + Choice: optional managed care plans
that Medicare recipients in which may enroll; operated by private
insurers; variety of features; may cover otherwise uncovered
services such as Rx drugs
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Medicaid Health insurance for the poor Program operated by
state governments under Federal guidelines Costs shared by both
Federal and state governments CHIP: program started in Clinton
administration to increase health insurance for children
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Medicaid Programs vary by state Typically pay for certain
inpatient and outpatient care, prescription and some
nonprescription drugs, physician services, nursing home care In
traditional Medicaid, there are no deductibles or copays; in CHIP,
there are both
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Medicaid Traditionally a fee-for-service program in most states
More are moving to managed care In Arkansas, it is a centralized
managed care, HMO model system; called ConnectCare
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The Uninsured 38 million persons in the U.S. without health
insurance Most (~75%) are employed; most at small businesses that
offer no health insurance
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The Uninsured Less likely to have seen a physician More likely
to delay seeking care Three times more likely to have significant
adverse outcome Four times more likely to have avoidable
hospitalization or ER visit
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Why managed care?
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Evolution of managed care Health insurance traditionally
fee-for-service Health care costs increased dramatically in early
1970-80s, much higher than inflation
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Medical Inflation
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Medical Costs in the U.S. $1 trillion spent per year on health
care About 14-15% of gross domestic product Approximately $4000 per
capita
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Evolution of Managed Care Health Maintenance Organization Act
of 1973; provided federal loans to new HMOs, required self insured
large corporations to offer an HMO choice Some studies suggested
that managed care plans are more cost efficient, some by as much as
25%
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Self insurance Most medium and large employers in 1980s began
to self insure Often use outside companies to process claims Led,
in part, to a large variety of managed care plans
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Managed care plans Health maintenance organization (HMO) Staff
model Group model Preferred provider organization (PPO) Point of
service plan (POS)
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Staff model HMO Directly employs physicians and health care
staff Usually own their own hospitals and clinics, some use
independently owned hospital through contracts Well known example
is Kaiser-Permanente None in Arkansas
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Group model HMO Essentially a partnership among a group of
physicians, hospital, and the health care plan. Usually a large
multispecialty group practice is single source of care for
enrollees Physicians agree by contract to terms of HMO Payment via
discounted fee-for-service, partial capitation, global
capitation
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Preferred Provider Organization Contract with several
independent physicians or groups and hospitals to provide care for
enrollees Usually associated with more provider choices, but may
have higher premiums than HMO Enrollees usually have financial
incentive to use preferred provider
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Point of Service Plan Enrollees have a choice of points of
service with physicians and hospitals; if they choose certain
providers, there is less out of pocket expense For physicians and
hospitals, similar to a PPO
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Physician Compensation Discounted fee-for-service Discounted
fee-for-service with utilization based financial incentives (bonus
or penalty) Partial capitation Global capitation
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Utilization Management Use of financial or other incentives to
control utilization of health services (really cost!!) Physician
profiling: tracking of per member, per month visits, ER visits,
inpatient days, charges per visit, pharmacy utilization, specialty
referrals, etc.
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PCP Gate keeping Feature of vast majority of health plans Each
enrollee chooses or is assigned a primary care physician who
oversees and coordinates care Other physician services,
hospitalizations, some tests must be referred by PCP
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Advantages of managed care Use of primary care physician,
medical home Cost containment In some systems, well coordinated
care Preventive care, screening, immunizations ??? Quality of
care
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Weaknesses of managed care Less freedom to choose physicians,
hospitals Less clinical autonomy for physicians Reduced access to
specialty care Bureaucracy ? Patient satisfaction ??? Quality of
care
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Physician Challenges Coerced change situation Conflict of
interest, communication difficulties with utilization based
financial incentives Risk sharing agreements Rapid change ? Lower
income
