HCA 701: Paying for Health Care

1
HCA 701 Paying for Health Care

• Private Insurance, Medicare, Medicaid Managed
  Care

2
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
3
Payment sources and where the money goes

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

4
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.

5
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

6
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

7
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.

8
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

9
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)

10
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)

12
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

13
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

14
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

15
Drug Benefit Cost Sharing
Source Kaiser Family Foundation, 2005
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
16
Medicare Rx Drug Benefit
Source Kaiser Family Foundation, 2005
17
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.

19
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

21
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

22
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)

23
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.

28
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.