Module 5: Healthcare Systems

1. Module 5:Healthcare Systems US Healthcare Financing Developed through the APTR Initiative to Enhance Prevention and Population Health Education in collaboration with the Brody School of Medicine at East Carolina University with funding from the Centers for Disease Control and Prevention

2. Acknowledgments This education module is made possible through the Centers for Disease Control and Prevention (CDC) and the Association for Prevention Teaching and Research (APTR) Cooperative Agreement, No. 5U50CD300860. The module represents the opinions of the author(s) and does not necessarily represent the views of the Centers for Disease Control and Prevention or the Association for Prevention Teaching and Research. APTR wishes to acknowledge the following individuals that developed this module: Anna Zendell, PhD, MSW Center for Public Health Continuing Education University at Albany School of Public Health Joseph Nicholas, MD, MPH University of Rochester School of Medicine Mary Applegate, MD, MPH University at Albany School of Public Health Cheryl Reeves, MS, MLS Center for Public Health Continuing Education University at Albany School of Public Health

3. Presentation Objectives • Describe how clinical services are funded, including how individuals are covered and how providers are reimbursed • Explain the models of healthcare financing used in the US system • Explain how healthcare reform impacts healthcare financing

4. Overview of US Healthcare Financing

5. Public Private Individual/Family Coverage Government Coverage Medicare Medicaid SCHIP VA Employer or Self-Insured Coverage Health Insurance Companies Uninsured Healthcare Providers Outpatient medical, hospital, pharmacy, mental health, dental

8. System at the Brink? Accelerating healthcare costs promise to swamp access/quality issues Workforce and hospitals are geared to provide expensive, high-tech, tertiary care for the foreseeable future Aging population living longer with more co-morbidities

9. Types of Financing • Public • Medicare • Medicaid • State Children’s Health Insurance Program (SCHIP) • Veteran’s Administration benefits • Private • Employer-based • Private purchase

10. Public Insurance

11. Medicaid • Provides health care to poor and disabled • Strict means testing • Not all poor people covered - under federal law • Very low reimbursements to providers • Limited number of participating private providers (e.g. physicians) • Federally and state funded

12. Medicare • Provides health insurance to • All elderly • Individuals under age 65 with disabilities • Funded through US General Fund and employee contributions • Government-determined reimbursement rates

13. Medicare Plans

14. Medicare Plans

15. Medicare Plans

16. Medicare Plans

17. Gaps in Medicare Coverage Preventive Care

18. Expanding Medicare Costs

19. State Children’s Health Insurance Program • Provides health insurance to children whose families: • Earn too much to be eligible for Medicaid • Cannot afford health insurance • Joint federal/state funding with an enhanced match to states • Expanded in healthcare reform

20. Veterans Health Administration Benefits • Available to veterans of US military and immediate families (CHAMPVA) • Annual caps on # of enrollees • Multiple plans • Priority groups • Must proactively apply • Healthcare access limited to VA facilities

21. Private Health Insurance

22. Employer-Sponsored Insurance • Primary mode of delivery • Employers provide in benefits package • Premiums split between employer and employee • Employer usually pays the majority • Benefits and costs vary widely depending on policy carrier(s)

23. Managed CareRising Healthcare Costs • Precipitated by soaring healthcare costs • Efficiency through healthcare delivery integration • Eliminate duplication, waste, fragmentation • Utilization control of medical services • Fees for services

24. Health Savings Accounts Tax-free account to pay for routine health expenses Contributions to HSA’s via payroll deductions Must have health insurance policy to open HSA Must use entire amount annually Most HSA reimbursements require a “paper trail”

25. Health Insurers & Preventive Health • Major health insurance companies are engaging patients in health education to save on treatment costs and hospitalizations • Health information • Chronic disease management • Caregiver supports • Preventive health • Wellness incentives

26. Private Pay Health Insurance • Purchased on non-group insurance market • Very expensive • Pressure to lower premiums often leads to poor coverage • Medically underwritten versus guarantee issue • Regulated by state governments • www.healthinsuranceinfo.com for state specific information

27. Streams of Funding Money Collection Payers Provider Reimbursement

28. Prior Authorization for Services • Insurers may require prior approval for services • Rehabilitative therapies • Screening procedures • Mental health services • Outpatient procedures • Inpatient stay • Certain medications • Without authorization, services not reimbursed • Varies greatly by insurer • May need to provide continued justification for care

29. Models of Healthcare Financing

30. Healthcare System Models Socialized Medicine (United Kingdom Model) Socialized Insurance (Bismark Model) Private insurance is dominant payor Fund via employers and/or employees Need additional mechanisms for universal access In US, this is primary model for citizens <65 years • Government is dominant service payor and provider • Fund through taxes • Universal access • In US, this is model for Veterans Affairs (VA)

31. Healthcare System Models National Health Insurance (Canadian Model) Out of Pocket Model No organized system for payment No pooling of risk Access limited In US, this is the model faced by large numbers of uninsured • Government is dominant payor • Providers, hospitals are a mix of public/private • Funded through taxes • Universal access • In US, this is the model for Medicare and Medicaid

32. Global Comparison

33. Healthcare Reform 2010

34. The Basics • Patient Protection and Affordable Care Act passed in 2010 • Implementation occurs 2010 – 2018 • Mandates health insurance coverage for most Americans – or face financial penalty • Provides increased access to public and private health insurances

35. Healthcare Reform Provisions Creation of Health Insurance Exchanges Establishment of pre-existing condition plans Expanded small business tax credits Expanded coverage for young adults Expanded access to SCHIP, Medicaid, and Medicare prescription coverage Much, much more....

36. Current Attempts to Expand Access • Insurance/Payment reforms • Less exclusion, access to larger pools • Offering less comprehensive benefits/limiting choice • Shifting more costs to consumers • High deductible plans • Health savings accounts • Subsidize private insurance • Medicaid eligibility expansion • Funding of community health centers

37. Improving Quality & Cost • Medicare Pay-for-Performance • Adjusting payments based on hospital and provider specific process/outcome data • Patient Centered Medical Home • Enhanced primary care payments for service coordination • Payment Bundling • Global payments to health systems encouraging coordination of outpatient, inpatient, rehabilitative care

38. Improving Quality & Cost • Comparative effective research • Coupled with changes in reimbursement for marginally effective/ineffective treatments • Attempt to reduce unwarranted variation in care • Electronic health records • Ideally would reduce duplicative testing, misinformation • Allow for data capture to allow evaluation of providers/hospital systems

39. Impact on Public Health • Will eliminate cost-sharing for US Preventive Services Task Force (USPSTF) recommendations • Screenings, laboratory tests (e.g. HIV), and routine vaccines • Smoking cessation and obesity counseling • Potentially high impact on public health initiatives • Increased vaccine adherence, smoking cessation and obesity reduction • Expansion of access to preventive services

40. Healthcare Reform Implementation

41. Healthcare Reform Implementation Federal web site to educate Americans on healthcare reform: www.healthcare.gov Kaiser Family Foundation The Heritage Foundation National Governor’s Association’s Time Line for Implementation

42. Summary The US healthcare financing system is funded both publicly and privately The cost of healthcare is a dominant issue Many people remain uninsured or under-insured Preventive health is assuming more importance in healthcare Major reforms are underway targeting the healthcare financing system

43. Collaborating Institutions Department of Public Health Brody School of Medicine at East Carolina University Department of Community & Family Medicine Duke University School of Medicine

44. Advisory Committee Mike Barry, CAE Lorrie Basnight, MD Nancy Bennett, MD, MS Ruth Gaare Bernheim, JD, MPH Amber Berrian, MPH James Cawley, MPH, PA-C Jack Dillenberg, DDS, MPH Kristine Gebbie, RN, DrPH Asim Jani, MD, MPH, FACP Denise Koo, MD, MPH Suzanne Lazorick, MD, MPH Rika Maeshiro, MD, MPH Dan Mareck, MD Steve McCurdy, MD, MPH Susan M. Meyer, PhD Sallie Rixey, MD, MEd Nawraz Shawir, MBBS

45. APTR • Sharon Hull, MD, MPH President • Allison L. Lewis Executive Director • O. Kent Nordvig, MEd Project Representative