Introduction to Healthcare and Public Health in the US

1
Introduction to Healthcare and Public Health in
the US

• Financing Healthcare (Part 1)

• Lecture e

• This material (Comp1_Unit4e) was developed by
  Oregon Health and Science University, funded by
  the Department of Health and Human Services,
  Office of the National Coordinator for Health
  Information Technology under Award Number
  IU24OC000015).

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Financing Healthcare (Part 1)Learning Objectives

• Understand the importance of the healthcare
  industry in the US economy and the role of
  financial management in healthcare.  (Lecture b)
• Describe models of health care financing in the
  US and in selected other countries. (Lecture c)
• Describe the history and role of the health
  insurance industry in financing healthcare in the
  United States, and Federal laws that have
  influenced the development of the industry.
  (Lecture a)
• Understand the differences among various types of
  private health insurance and describe the
  organization and structure of network-based
  managed care health insurance programs. (Lecture
  d)
• Understand the various roles played by government
  as policy maker, payer, provider, and regulator
  of healthcare. (Lecture d)
• Describe the organization and function of
  Medicare and Medicaid. (Lecture e)

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Goals of Lecture e

• Publically funded health insurance
• Insurance that is managed by the Centers for
  Medicare and Medicaid Services (CMS)
• Medicare
• Medicaid
• Childrens Health Insurance Program (CHIP)
• Medicaid/Medicare fraud and abuse
• Workers Compensation

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Government Funded Healthcare

• Government Health Insurance
• Medicare
• Medicaid
• Childrens Health Insurance Program
• Government provided healthcare services
• TRICARE
• Veterans Health Administration
• Indian Health Service

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Medicare

• Created by Social Security Act of 1965
• Social Security Administration determines
  Medicare eligibility, processes premium payments
• Partially financed by payroll taxes (Federal
  Insurance Contributions Act FICA)
• 2.9 deduction (1.45 from employee, 1.45 from
  employer)
• FICA pays for Medicare Part A (hospital
  insurance)

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Medicare Part A

• Hospital insurance
• Helps cover
• Inpatient care (including psychiatric hospital)
• Hospital outpatient care
• Skilled nursing facility or rehabilitation
  facility
• Long-term-care facility
• Hospice (end-of-life care)
• Patient pays deductible
• Most Americans pay no premiumothers can buy Part
  A coverage

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Prospective Payment System (PPS)

• System for reimbursing providers under Medicare
  Part A
• Controls costs
• Pays predetermined, fixed dollar rate for most
  patients, regardless of services provided
• The rate depends on the patients
  diagnosis-related group (DRG)
• DRG reflects information in the patients chart
  at time of discharge
• Each type of facility has its own PPS

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Medicare Part B

• Medical insurance
• Coverage
• Doctors services
• Outpatient care
• Home health services
• Some preventive services
• Other medical services
• Patient pays premium and deductible

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Medicare Part C

• Medicare Advantage plans
• Offered by private companies that are approved by
  Medicare
• Companies provide all Part A and Part B most
  also include Part D
• May offer extra coverage (such as for vision,
  hearing, and dental services)
• Patient pays premium and deductible

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Medicare Part C (continued)

• Part C options include
• Health maintenance organization (HMO)
• Preferred provider organization (PPO)
• Private fee-for-service plan
• Special needs plan

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Medicare Part D

• Prescription drug coverage
• Created in 2003
• Voluntary enrollment
• Provided by insurance company or other private
  company approved by Medicare
• Patients pay premium and deductible
• After a certain point, may pay up to 50 of drug
  costs themselves (doughnut hole)

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Medicaid

• Helps pay medical costs of people with limited
  income and resources
• Joint federal and state program
• Some people on Medicare qualify for Medicaid too
• Funded by taxpayers income tax payments
• Administered through CMS at state level
• States formulate and administer a plan that is
  subject to federal regulations and guidelines
• The plan outlines the nature and scope of
  services to be provided

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Medicaid (continued)

• Each state has different eligibility requirements
  and co-payments
• Must provide payments for hospital and physician
  services
• May provide payments for pharmacy, dental, and
  eye care
• Must not provide payments for abortions

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Medicaid (continued)

• Medicaid programs have different names in
  different states
• Federal government reimburses states for
  expenditures under Medicaid
• States accepting funding for Medicaid must
  provide coverage to families and individuals who
  receive
• Temporary Assistance to Needy Families
• Supplemental Security Income (SSI)

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Childrens Health Insurance Program (CHIP)

• Provides low-cost health insurance coverage
• For children in families that earn too much to
  qualify for Medicaid but cant afford private
  health insurance
• Each state has its own program and eligibility
  criteria
• Eligibility is based on childs status (for
  example, a child who is a U.S. citizen can
  qualify even if the parent is not a citizen)
• Also for low-income pregnant women

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Medicaid and CHIPMay Work Together

• Typically cover a range of benefits, including
• Doctor visits, emergency care, hospital care
• Prescription drugs, vision, hearing, dental
• Free preventive care, including vaccinations
• Low premiums and cost-sharing may be available
  for other services

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Medicare/MedicaidFraud and Abuse

• Fraud is intentional falsification of information
  or deception of Medicare or Medicaid
• Abuse occurs when doctors or suppliers dont
  follow good medical practices
• Unnecessary costs
• Improper payment
• Services that arent medically necessary

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Medicare/MedicaidFraud and Abuse (continued)

• Examples of possible fraud/abuse
• Health care provider bills for services or
  equipment that the patient never received
• Someone uses another persons Medicare or
  Medicaid card to get medical care or equipment
• A provider bills for home medical equipment after
  it is returned

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Medicare/MedicaidFraud and Abuse (continued)

• It is not abuse to complain about quality of care
  from a physician, hospital, or other provider or
  facility
• The Medicare Web site offers options to file
• Inquiries
• Complaints
• Grievances
• Appeals

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Methods of Fighting Medicare/Medicaid Fraud

• SMPs (formerly called Senior Medicare Patrols)
• Educate older adults receiving Medicare and
  Medicaid benefits to prevent, detect, and report
  health care fraud
• Online brochure (stopmedicarefraud.gov)
• Helps older adults spot, stop, and report fraud
• HEAT law enforcement activities

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Workers Compensation

• Form of insurance that provides fixed monetary
  awards to employees who are injured or become
  sick during the course of employment
• Regardless of who was at fault
• In exchange for monetary award, employee gives up
  the right to sue his or her employer for
  negligence
• Workers Compensation is not
• Disability insurance
• Unemployment income

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Benefits of Workers Compensation Plans

• Wage replacement (form of disability insurance)
• Compensation for economic loss (past and future)
• Medical benefits (form of health insurance)
• Benefits to survivors of employees killed in
  work-related accidents (form of life insurance)

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Workers CompensationFederal and State

• Federal government
• Provides Workers Compensation for non-military
  federal employees
• Administered by Office of Workers Compensation
  Programs
• State governments
• Since 1949, all states have required some form of
  Workers Compensation
• Most employers are required to offer this
  insurance
• States investigate fraud and abuse

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Workers Compensation at State Level

• Administration differs by state
• Some states operate state fund
• In most states, Workers Compensation is provided
  by private insurance companies

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Financing Healthcare (Part 1) Summary lecture e

• Government health insurance programs operate on
  the federal level, state level, or both
• Major government
• Programs sometimes work together, e.g. Medicaid
  and CHIP, Medicare and Medicaid
• All programs are subject to legislative change
  over time
• Fraud and abuse challenge for government
  programs
• Workers compensation provides coverage to
  injured workers

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Financing Healthcare (Part 1) Summary

• There are two types of health insurance in the
  US private and public/government
• The US government has three roles pass laws,
  provide services, pay for service
• The US has both private and public health
  insurance systems healthcare insurance is an
  important factor in healthcare spending
• The UK and Canada have primarily public-funded
  healthcare systems the UK has a multipayer
  system and Canada has a single payer system
• Insurance spreads the financial risk of
  healthcare it can be private or public or a
  combination as seen in the US, UK and Canadian
  systems
• State and Federal laws regulate US healthcare
  insurance recent laws include ERISA, COBRA,
  HIPAA and the Affordable Care Act )

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Financing Healthcare (Part 1)References
Lecture e

• References
• American Association of Preferred Provider
  Organizations. PPO resources. http//www.aappo.org
  /index.cfm?pageid10. Accessed April 10, 2011.
• American Association of Preferred Provider
  Organizations. PPO Toolkit. http//www.aappo.org/A
  APPO_Toolkit_FINAL.htm. Accessed April 2, 2011.
• Bihari M. Understanding the Medicare Part D donut
  hole learn about the Medicare Part D coverage
  gap. http//healthinsurance.about.com/od/medicare/
  a/understanding_part_d.htm. Accessed April 7,
  2011.
• Centers for Medicare and Medicaid Services.
  Childrens Health Insurance Program (CHIP).
  http//www.cms.gov/home/chip.asp. Accessed April
  7, 2011.
• Centers for Medicare and Medicaid Services.
  http//www.cms.gov. Accessed April 7, 2011.
• Congressional Budget Office. Statement of Douglas
  W. Elmendorf, Director. CBOs analysis of the
  major health care legislation enacted in March
  2010 before the Subcommittee on Health, Committee
  on Energy and Commerce, U.S. House of
  Representatives. March 30, 2011.
  www.cbo.gov/ftpdocs/121xx/doc12119/03-30-HealthCar
  eLegislation.pdf. Accessed April 3, 2011
• Cornell University Law School. Workers
  Compensation an overview. http//topics.law.corne
  ll.edu/wex/Workers_compensation. Accessed April
  7, 2011.
• Kaiser Family Foundation. Health care costs a
  primer. August 2007. www.kff.org/insurance/upload/
  7670.pdf. Accessed April 2, 2011.
• Kaiser Family Foundation. How private health care
  coverage works a primer2008 Update. April 2008.
  www.kff.org/insurance/upload/7766.pdf. Accessed
  April 2, 2011

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Financing Healthcare (Part 1)References
Lecture e

• References
• Levey NM. Questions and answers about new rules
  on appealing rejections of health insurance
  claims. Los Angeles Times. July 23, 2010.
  http//articles.latimes.com/2010/jul/22/nation/la-
  na-health-rules-qa-20100723. Accessed April 12,
  2011.
• Marcinko DE. Understanding the Medicare
  Prospective Payment System. September 17, 2009.
  http//medicalexecutivepost.com/2009/09/17/underst
  anding-the-medicare-prospective-payment-system.
  Accessed April 7, 2011.
• MCOL. Managed care fact sheets.
  http//www.mcareol.com/factshts/factnati.htm.
  2011. Accessed April 9, 2011
• Medicare.gov. Medicare Advantage (Part C).
  http//www.medicare.gov/navigation/medicare-basics
  /medicare-benefits/part-c.aspx. Accessed April 7,
  2011.
• National Association of Workers Compensation
  Judiciary. http//www.nawcj.org. Accessed April
  7, 2011.
• National Bureau of Economic Research. Prospective
  Payment System (PPS) data. http//www.nber.org/dat
  a/pps.html. Accessed April 7, 2011.
• Obringer LA, Jeffries M. How health insurance
  works. http//health.howstuffworks.com/medicine/he
  althcare/insurance/health-insurance.htm. Accessed
  April 2, 2011.
• Partners Human Research Committee. Overview of
  the HIPAA final privacy regulations.
  http//healthcare.partners.org/phsirb/hipaaov.htm.
  Accessed April 10, 2011.
• Purcell P, Staman J. Summary of the Employee
  Retirement Income Security Act (ERISA).
  Congressional Research Service report RL34443.
  May 19, 2009. http//aging.senate.gov/crs/pension7
  .pdf. Accessed April 3, 2011.

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Financing Healthcare (Part 1)References
Lecture e

• References
• Tufts Managed Care Institute. Managed care models
  and products. 1998. www.thci.org/downloads/ModelsP
  roducts.pdf. Accessed April 10, 2011.
• U.S. Department of Health and Human Services and
  U.S. Department of Justice. Stop Medicare fraud
  learn more about fighting fraud.
  http//www.stopmedicarefraud.gov. Accessed April
  7, 2011.
• U.S. Department of Labor. Health plans and
  benefits. http//www.dol.gov/dol/topic/health-plan
  s. Accessed April 11, 2011.
• U.S. Department of Labor. Workers Compensation.
  http//www.dol.gov/dol/topic/workcomp/index.htm.
  Accessed April 7, 2011.
• WorkersCompensation.com. http//www.workerscompen
  sation.com. Accessed April 7, 2011.