HCA 701: Paying for Health Care

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HCA 701 Paying for Health Care

• Private Insurance, Medicare, Medicaid Managed
  Care

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RESOURCES NEEDED TO MAINTAIN A HEALTH CARE
DELIVERY SYSTEM
Financing
Health Care Delivery System
Technology Supplies
Healthcare Professionals
Facilities
Source Williams and Torrens, Introduction to
Health Services, 2002
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Payment sources and where the money goes

• Hospital care 33
• Physician care 23
• Nursing home care 9
• Prescription drugs 9
• Other spending 26

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Health Insurance vs. Other Insurance

• Other Insurance
• Loss is to be avoided
• Losses are intended to be independent events
• Loss should be something for which we cant
  adequately budget

• Health Insurance
• Ill health cant be avoided
• Many illnesses imply a great degree of dependency
  among the insured losses
• First dollar base / major medical health plans
  violate this tenet.

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Taxonomies of Health Insurance

• Basic employee coverage
• The second taxonomy includes the type of
  insurance provided
• Commercial carriers
• Blue Cross/Blue Shield
• Self funded plans
• Cost shifting to private plans
• Cost shifting to uninsured
• Funding mechanism

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Increases in Health Insurance Premiums compared
to other Indicators
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of Firms Offering Health Benefits, by Firm Size
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Health Maintenance Organizations

• Began in 1929
• HMO Act of 1973
• Growth has slowed somewhat due to more enrollment
  in PPOs
• Guarantee provision of specific services

9
Medicare

• Title XVIII of the Social Security Act, "Health
  Insurance for the Aged and Disabled" is commonly
  known as Medicare began in 1966.
• Elderly aged 65 and over
• Disabled individuals entitled to Social Security
  benefits
• End stage renal disease.

10
Medicare Part A Coverage (Hospital Insurance)

• 90 days of inpatient care in a benefit period
• No limit to number of benefit periods
• Use of Medigap (about 75 of beneficiaries)
• Lifetime reserve of 60 days of care once 90 days
  are exhausted
• 100 days of post-hospitalization in skilled
  nursing facility (or rehab)
• Home health agency benefits

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Part B Supplementary Medicare

• 95 beneficiaries enrolled in Part B
• Coverage optional
• Requires beneficiary to meet set deductibles
  (Medicaid programs pay premiums for qualified
  Medicaid enrollees who qualify for Medicare)

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Medicare Provider Reimbursement

• Hospitals
• Physicians
• Beneficiaries can join Medicare HMOs
• Catalyst system for new prescription drug benefit
  of Medicare
• Private insurance participate in supplemental
  policies (most include managed care plans)

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Medicare Regulatory Initiatives

• Tax Equity and Fiscal Responsibility Act (TEFRA)
• Prospective Payment System creates DRGs
• Resource based relative value scale (RBRVS)

14
Medicare Prospective Payment System

• Standardized payment amount
• DRG weights
• Outliers
• Quality Indicators
• Churning multiple admissions for same patient
  with same diagnosis
• Skimming taking more profitable less severely
  ill
• Reducing length of stay, procedures, etc which
  may affect morbidity and mortality.
• Financial performance

15
Medicare Prescription Drug, Improvement and
Modernization Act of 2003

• Allows elderly and disable beneficiaries to
  enroll in private plans that contract with
  Medicare for drug benefit.
• Two types of plans
• Prescription Drug Plan (PDP)
• Medicare Advantage (MA)
• Plan is an enticement to get more enrollees in
  Medicare Managed Care
• Beneficiaries must pay monthly premium and
  deductible

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Medicare Rx Drug Benefit

• HHS expects 29.3 million to enroll in Medicare
  drug plans
• 10.9 million beneficiaries will receive
  low-income subsidies
• 9.8 million will have drug benefits through their
  employers

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Drug Benefit Cost Sharing
2006 2010 2014
Average monthly premium 32.20 48.49 64.26
Annual deductible 250 331 437
Coverage gap 2,850 3,774 4,984
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Medicare Rx Drug Benefit
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U.S. Medicaid Enrollment (A Federal Perspective)

• The largest health insurance program in the
  United States.
• Provides coverage for more than 50 million poor
  and disabled Americans.
• Spending is in excess of 300 billion a year.
• Accounts for 20 percent of national health care
  spending.
• Without it, the ranks of Americas uninsured
  would swell to more than 90 million, 1 of every 3
  citizens.

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Medicaid

• Enacted with Medicare as Title 19 of the Social
  Security Act in 1965
• Joint program financed between the Federal and
  State Governments through use of matching funds
  for
• Categories of individuals that could be covered
• Categories of benefits that could be covered
• Today, 35 million people in low-income families,
  predominately children and pregnant women.

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Medicaid

• Dual-Eligibles Supplements Medicare providing
  prescription drugs and long-term care services
  for over 6 million low-income Medicare
  beneficiaries
• Guaranteed entitlement to states and to
  individuals.
• States entitled to Federal financing when they
  cover the populations eligible for coverage
  services they expend state dollars for on behalf
  of that population,
• Entitlement to individuals through automatic
  income eligibility
• No enrollment caps or limits on the coverage.
• Medicaid accounts for 43-44 of all Federal
  dollars that go to states in the form of grants
  and aid.

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Differences in Eligibility by State

• Eligibility for services differ State by State in
  amount, duration, or scope of services
• State legislatures may change Medicaid
  eligibility, services, and/or reimbursement
  during the year.
• Medicaid consists of 56 distinct state-level
  programs with federal guidelines, but
  administered state agencies

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Minimum Eligibility Requirements

• Must meet aid to Families with Dependent Children
  (AFDC) or--at State option--more liberal
  criteria.
• Children under age 6 whose family income is at or
  below 133 percent of the Federal poverty level
  (FPL).
• Pregnant women whose family income is below
  133 percent of the FPL (services to these women
  are limited to those related to pregnancy,
  complications of pregnancy, delivery, and
  postpartum care).
• Supplemental Security Income (SSI) recipients in
  most States
• Recipients of adoption or foster care assistance
  under Title IV
• Special protected groups
• All children born after September 30, 1983 who
  are under age 19, in families with incomes at or
  below the FPL.
• Certain Medicare beneficiaries

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Medicaid Funding Match

• Federal government matches state Medicaid
  spending for medical assistance state per capita
  income formula.
• Federal contribution ranged from 50 77 cents of
  every state dollar spent on medical assistance in
  fiscal year 2004, including
• Medicaid administrative costs (50 federal match)
• Skilled professional medical personnel engaged in
  program integrity activities (as much as 75)

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Nevada Medicaid Enrollment (A State Perspective)

• Adults with children
• Children make up the largest portion of the
  population
• The elderly and disabled recipients
• Account for 75 of total expenditures.
• Biggest increase in expenditures, but smallest
  increase in enrollment

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Nevada Medicaid Enrollment
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Recent Federal Actions

• Federal GAO placed the Medicaid Program on the
  2003 list of programs at high risk for fraud,
  waste, abuse and mismanagement.
• The GAO specifically recommended Congress curb
  state financing schemes, such as
  Intergovernmental Transfers (IGTs).

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Medicaid The Impact on Business

• There is a growing impact on the General Fund.
• The impact is significant because it means far
  fewer resources available for other state funded
  programs that are essential for commerce and
  economic growth.
• Medicaid siphons dollars from education and
  transportation
• Economic multiplier effect.

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Medicaids Impact Health Insurance

• National trends propose eligibility limits and/or
  reducing providers rate of payment.
• Both approaches increase the amount of
  uncompensated care and costs are allocated to
  private health insurance premiums through cost
  shifting.
• The affordability of providing health care
  benefits to employees in the private sector
  creates a burden on business.

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The Balanced Budget Act of 1997

• Subtitle H Medicaid
• The law contains a dramatic expansion in state
  authority with respect to the use of managed
  care.
• It enables states to require most Medicaid
  beneficiaries to enroll in managed care
  organizations (MCOs) without obtaining a waiver.

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Waivers Managed Care Growth

• Managed care programs seek to enhance access to
  quality care in a cost-effective manner.
• Waivers may provide the States with greater
  flexibility in the design and implementation of
  their Medicaid managed care programs.
• Waiver authority under sections 1915(b) and 1115
  of the Social Security Act is an important part
  of the Medicaid program.
• Section 1915(b) waivers allow States to develop
  innovative health care delivery or reimbursement
  systems.
• Section 1115 waivers allow Statewide health care
  reform experimental demonstrations to cover
  uninsured populations and to test new delivery
  systems without increasing costs.
• Finally, the BBA provided States a new option to
  use managed care.
• The number of Medicaid beneficiaries enrolled in
  some form of managed care program is growing
  rapidly, from 14 percent of enrollees in 1993 to
  58 percent in 2002.

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Medicaid Managed Care Program Successes

• Managed care is the prevalent delivery system in
  Medicaid, with 59 percent of beneficiaries
  receiving some or all care through managed care
  instead of fee-for-service.
• Forty-eight states, the District of Columbia and
  Puerto Rico operate Medicaid managed care
  programs, with about 23.1 million beneficiaries
  enrolled in 2002, an increase of over two million
  since 2001.
• Enhancing access to providers and emphasizing
  preventive and routine care, health plans have
  successfully improved the quality of care
  received by enrollees in the Medicaid managed
  care program.