Introduction to Health Care and Public Health in the U.S.

1. Introduction to Health Care and Public Health in the U.S. Financing Health Care, Part 1 Lecture e This material (Comp 1 Unit 4) was developed by Oregon Health & Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number 90WT0001. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/4.0/.

2. Financing Health Care, Part 1Learning Objectives - 1 • Describe the history and role of the health insurance industry in financing health care in the United States, and Federal laws that have influenced the development of the industry. (Lecture a) • Explain the importance of the health care industry in the U.S. economy and the role of financial management in health care. (Lecture b)

3. Financing Health Care, Part 1Learning Objectives - 2 • Describe models of health care financing in the U.S. and in selected other countries. (Lecture c) • Explain 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)

4. Financing Health Care, Part 1Learning Objectives - 3 • Describe the various roles played by government as policy maker, payor, provider, and regulator of health care. (Lecture d) • Describe the organization and function of Medicare and Medicaid. (Lecture e)

5. The Government as Insurance Payor • Insurance Managed by the Centers for Medicare and Medicaid Services (CMS) • Medicare • Medicaid • Children’s Health Insurance Program (CHIP) • Medicaid/Medicare Fraud and Abuse • Workers’ Compensation

6. Government-Funded Health Care • Government-Provided Health Care Services • TRICARE • Veterans Health Administration • Indian Health Service • Government Health Insurance • Medicare • Medicaid • Children’s Health Insurance Program

7. Medicare • Created by Social Security Act of 1965 • Determines Medicare eligibility • Processes premium payments • FICA - Financed by payroll taxes 1.45% from employee + 1.45% from employer 2.9% deduction • Pays for Medicare Part A (hospital insurance)

8. Medicare Part A • Hospital insurance • 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 • No premiums after 10 years of payments • Can purchase through premiums

9. Prospective Payment System (PPS) • System for reimbursing providers • Controls costs • Pays predetermined, fixed dollar rate regardless of services provided • The rate depends on the patient’s diagnosis-related group (DRG) • Age • Gender • Principal diagnosis • Other conditions • Surgical procedures

10. Medicare Part B • Medical insurance • Coverage • Doctors’ services • Outpatient care • Home health services • Some preventive services • Other medical services • Patient pays premium and deductible

11. Medicare Part C - 1 • Medicare Advantage plans • Offered by private companies approved by Medicare • Provide all Part A and Part B • Vision • Hearing • Dental • Most plans include Part D • Patient pays premium and deductible

12. Medicare Part C - 2 • Differences in Advantage Plans: • Out-of-pocket costs • Rules for services • Change each year • Part C options include: • Health maintenance organization (HMO) • Preferred provider organization (PPO) • Private fee-for-service plan • Special needs plan

13. Medicare Part D • Created in 2003 • Prescription drug coverage • Voluntary enrollment • Pay premium to company approved by Medicare • Patients pay deductible & co-payment • After certain point, may pay up to 50% of drug costs themselves (“doughnut hole”)

14. Medicaid - 1 • Helps pay costs for people with limited income and resources • Joint federal and state program • Some Medicare patients qualify for Medicaid • Funded by taxpayers’ income tax payments • Administered through CMS at state level • Formulate and administer plan subject to federal regulations and guidelines • Outlines nature and scope of services provided

15. Medicaid - 2 • Differs by State • Eligibility requirements • Co-payments • Counting income and resources • Must provide payments for hospital and physician services • May provide payments for pharmacy, dental, and eye care • Must not provide payments for abortions

16. Medicaid - 3 • Programs have different names in different states • Federal government reimburses states for expenditures • States accepting funding must provide coverage to people who receive: • Temporary Assistance to Needy Families • Supplemental Security Income (SSI)

17. Children’s Health Insurance Program (CHIP) • Low-cost coverage for children • Family doesn’t qualify for Medicaid but can’t afford private health insurance • Each state has its own program and eligibility criteria • Eligibility is based on child’s status, not parents • Example: child who is U.S. citizen qualifies even if parent is not a citizen • Low-income pregnant women eligible

18. Medicaid and CHIP • Children covered by CHIP, may also qualify for Medicaid • Range of benefits include: • 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

19. Medicare/MedicaidFraud and Abuse - 1 • Fraud - intentional falsification of information or deception of Medicare or Medicaid • Abuse - doctors or suppliers don’t follow good medical practices • Unnecessary costs • Improper payment • Services that aren’t medically necessary

20. Medicare/MedicaidFraud and Abuse - 2 • Examples of possible fraud/abuse: • Provider bills for services or equipment that the patient never received • Someone uses another person’s Medicare or Medicaid card to get medical care or equipment • Provider bills for home medical equipment after it is returned

21. Medicare/MedicaidFraud and Abuse - 3 • Not abuse to complain about quality of care from a physician, hospital, or other provider or facility • Medicare Web site offers options to file: • Inquiries • Complaints • Grievances • Appeals

22. Methods of Fighting Medicare/Medicaid Fraud • Senior Medicare Patrols (SMP) • Health and Human Services Online brochure (stopmedicarefraud.gov) • HEAT law enforcement activities

23. Workers’ Compensation • Provides fixed monetary awards to employees who are injured or become sick while at work • Regardless of who was at fault • Employee gives up the right to sue their employer for negligence • Is not: • Disability insurance • Unemployment income

24. 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)

25. Workers’ Compensation:Federal and State • Federal government • Provides for non-military federal employees • Administered by Office of Workers’ Compensation Programs • State governments • 1949- all states required some form of Workers’ Compensation • Most employers are required to offer • Investigate fraud and abuse

26. Workers’ Compensation at the State Level • Administration differs by state • Some operate state fund • Majority provided by private insurance companies

27. Financing Health Care, Part 1Summary – lecture e • Government health insurance programs operate on the federal level, state level, or both • Can be eligible for multiple programs • All programs are subject to legislative change over time • Fraud and abuse – challenge for programs • Workers’ compensation provides coverage to injured workers

28. Financing Health Care, Part 1 Summary - 1 • Two types of health insurance in the U.S.: private and public/government • U.S. government has three roles: pass laws, provide services, pay for service • U.S. has both private and public health insurance systems; health care insurance is an important factor in health care spending

29. Financing Health Care, Part 1 Summary - 2 • UK and Canada have primarily public-funded health care systems • UK: Multi-payor system • Canada: Single-payor system • Insurance spreads the financial risk of health care and provides pay based upon: • Diagnosis and procedure code • Contractual agreement

30. Financing Health Care, Part 1 Summary - 3 • Different types of plans: • Indemnity • Blue Cross/Shield • Managed care • State and Federal laws regulate U.S. health care insurance • Recent laws include: ERISA, COBRA, HIPAA and the Affordable Care Act

31. Financing Health Care, Part 1 Summary - 4 • Government health insurance programs operate on the federal and/or state level • May be eligible for more than one program • Fraud and abuse represent challenges for programs – attempting to manage through education and legislation • Workers’ compensation: Federally mandated in each state when employee is injured on the job

32. Financing Health Care, Part 1References – 1 – Lecture e References American Association of Preferred Provider Organizations. Resources. http://aappo.interactivemedialab.com/Resources.aspx. Accessed January 23, 2017. American Association of Preferred Provider Organizations. PPO?. http://aappo.interactivemedialab.com/Portals/0/Documents/PPO%20Toolkit.pdf. Accessed January 23, 2017. 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. Updated December 15, 2014. Accessed January 23, 2017. Centers for Medicare and Medicaid Services. Children’s Health Insurance Program (CHIP). https://www.cms.gov/Outreach-and-Education/American-Indian-Alaska-Native/AIAN/CHIP-Grantees/Overview.html. Accessed January 23, 2017. Centers for Medicare and Medicaid Services. http://www.cms.gov. Accessed March 30, 2016.

33. Financing Health Care, Part 1References – 2 – Lecture e References Congressional Budget Office. Statement of Douglas W. Elmendorf, Director. CBO’s 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. https://www.cbo.gov/publication/22077?index=12119. Accessed January 23, 2017. Cornell University Law School. Workers’ Compensation: an overview. http://topics.law.cornell.edu/wex/Workers_compensation. Accessed January 23, 2017. Department of Labor. Employee Retirement Income Security Act (ERISA) plan information. http://www.dol.gov/general/topic/health-plans/erisa. Accessed January 23, 2017. Health and Human Services. Summary of the HIPAA security rule. http://www.hhs.gov/hipaa/for-professionals/security/laws-regulations/. Accessed January 23, 2017. Kaiser Family Foundation. The facts on Medicare spending and financing. 2015. http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/. Accessed January 23, 2017.

34. Financing Health Care, Part 1References – 3 – Lecture e References Levey NM. Questions and answers about new rules on appealing rejections of health insurance claims. Los Angeles Times. July 22, 2010. http://articles.latimes.com/2010/jul/22/nation/la-na-health-rules-qa-20100723. Accessed January 23, 2017. Marcinko DE. Understanding the Medicare Prospective Payment System. September 17, 2009. http://medicalexecutivepost.com/2009/09/17/understanding-the-medicare-prospective-payment-system. Accessed January 23, 2017. MCOL. Managed care fact sheets. http://www.mcol.com/factsheetindex. Accessed January 23, 2017. Medicare.gov. How do Medicare advantage plans work? https://www.medicare.gov/sign-up-change-plans/medicare-health-plans/medicare-advantage-plans/how-medicare-advantage-plans-work.html. Accessed January 23, 2017. National Association of Workers’ Compensation Judiciary. http://www.nawcj.org. Accessed January 23, 2017. National Bureau of Economic Research. Prospective Payment System (PPS) data. http://www.nber.org/data/pps.html. Accessed January 23, 2017.

35. Financing Health Care, Part 1 References – 4 – Lecture e References Obringer LA, Jeffries M. Understanding Health Insurance. http://health.howstuffworks.com/medicine/healthcare/insurance/health-insurance.htm. Accessed January 23, 2017. U.S. Department of Health and Human Services and U.S. Department of Justice. Stop Medicare Fraud. http://www.stopmedicarefraud.gov. Accessed January 23, 2017. U.S. Department of Labor. Health Plans & Benefits. http://www.dol.gov/dol/topic/health-plans. Accessed January 23, 2017. U.S. Department of Labor. Workers’ Compensation. http://www.dol.gov/dol/topic/workcomp/index.htm. Accessed January 23, 2017. WorkersCompensation.com. http://www.workerscompensation.com. Accessed January 23, 2017.

36. Introduction to Health Care and Public Health in the U.S.Financing Health Care, Part 1Lecture e This material was developed by Oregon Health & Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number 90WT0001.