Intro to Health Care EXAM 3 - (Dr. Brown)

What is the difference between HMO and PPO?

- HMOs are usually cheaper than PPOs
-HMOs require a referral from a primary to see a specialist
- PPOs are more flexible to see providers both in an out of network

What is an out of pocket maximum?

the most you have to pay per year for covered healthcare services

Why is it important for people to have insurance as medicine has advanced?

treatment can be extremely expensive without insurance

Why is it that cost containment for individuals is nearly impossible?

- individuals do not get to negotiate prices
-prices prior to services are becoming more difficult to know
-health systems focus on catering to insurers

True or False: All who buy insurance pay for the uninsured who fail to pay bills

True

How can health care be paid for in the simple way?

1. "cash pay"
2.
a. pay for upfront services (insurance premium)
b. use services and don't pay anything additional

How can health care be paid for in the complex way?

-pay upfront (insurance premium)
-pay when you use (copay/coinsurance)
-don't know how much you will always pay upfront/ bills lag behind services (delayed billing)
-defined benefit coverage

What is a premium contribution?

a prepaid set amount that is paid month or per pay check for health insurance

What is a deductible?

A set amount that an individual will pay in addition to the premium when utilizing services until a preset amount is reached for that year

What is a co-payment?

a pre-set amount paid by the individual for an individual service or product

What is a co-insurance?

Individual contributed a pre-determined percentage for a service or product

What are high deductible health plans (HDHP)?

- monthly premium is usually lower, but pay more health care costs yourself before the deductible is met

-can be combined with health savings account (HSA) which allows for medical expenses to be paid with money free from federal tax

How does the IRS define a high deductible health plan?

- any plan with a deductible of at least $1600 for an individual or $3200 for a family
- HDHP's total yearly out-of-pocket expenses can't be more that $7,050 for an individual or $14,100 for a family

Who normally chooses to have a High Deductible Health Plan?

young people who do not have any chronic health conditions

What does medical insurance cover?

-outpatient clinic services
-office delivered prescriptions
-most inpatient cost
-vaccines
-retroactive billing
-does not typically pay for pharmacy services

What do pharmacy benefits cover?

-all outpatient drugs
-specific inpatient or clinic delivered medications
-some vaccines
-MTM or other pharmacy cognitive services
-upfront adjudication
-most pre-approval techniques

What characterizes a classic insurance plan?

-higher premiums
-low to no deductible
-limited cost sharing
- use standard managed care techniques to manage costs

What characterizes a consumer directed insurance plan?

- low premium
-high deductible
-increase cost sharing

How are insurance companies making patients pay more of the cost of care?

increases in deductibles and coinsurance

What are concerns of using high deductibles?

-Average Americans lack necessary knowledge
-Patients may not seek care due to high deductible cost
-Patient information-seeking from unreliable sources

What are examples of being nationally supported to pay for health services?

- govt. run and supported
-typically collected through taxes

What are examples of combined public and private funding to pay for health services?

- individual pay portion of premium
-govt covers remainder
-typically based on income

What is the Bismarck Insurance Model that is used in Germany?

- universal care
-system of private insurers
- privately sign up
- premiums linked to individuals' income
-linked to copayments

What is the United Kingdom health insurance structure?

- National Health Services
-Government run Universal Coverage
-Paid for through tax revenues
- Government owned hospitals

What is the structure for health insurance in Japan?

- Universal coverage
-social insurance (mandated)
- Health Ministry sets prices for services (annually negotiated and based on utilization and budget)

What is Managed Health Care?

A single or group of organization (s) who coordinate the financing, insurance, delivery and payment of health care services

What are the 2 primary driving factors in the creation and expansion of managed care?

1. Increasing cost of healthcare in the U.S.
2. Lack of consistent outcomes

What are the overall goals of Managed Care Organizations (MCO)?

- bend the cost curve
- ensure quality care is still provided
- keep the enrollees (patients happy)

What are the main things that managed care attempts to do?

- reduce cost
- improve outcomes

How do MCOs negotiate better rates?

- negotiating for large patient populations
- controlling access of population
- using a PCP as a Gatekeeper

How do MCOs develop unique payment models?

- shift from Fee-For-Service

- Use 1. capitated and 2. bundle payments models

How do MCOs encourage Evidence Based Medicine (EBM)?

Restrict access to cost effective treatments

What is the Fee-For-Service Model?

- Individual fee for each service
- Perverse incentive to provide more care
- Focus often on providing care to increase payments
- Rely on discounted rates and providers making sound decisions
- Providers may be more short-term focused

What is the Capitated Payment Model?

- 1 payment to provide "all" care (Per Member Per Month, PMPM)
- Perverse incentive to avoid providing care
- Focus often on finding most cost-effective treatments
- Rely on clinicians providing evidence-based medicine to ensure short and long-term health

What is the Bundle Payment Model?

- most frequently used to pay hospitals
- set fee for medical care/procedures

What are pros and cons of the Bundle Payment model?

Pros:
- encourages flexibility in care
-encourages efficient care
Cons:
- Creates the risk of care being withheld
- Creates the risk of patients being discharged before they should be

What is the Staff Model of HMO?

employs the health care providers

What is the Group Model of HMO?

contract with a single multi-specialty group of physicians who may agree to only provider services for theHMO's members

What is a Closed Panel HMO?

contract with physicians who can only see that HMO's members

What is an Open Panel HMO?

only contract with physicians who are a member of an independent practice association. Physicians can see other patients, and do not have to accept the HMO's members

What does HMO stand for?

Health Maintenance Organization

Which are characteristics of HMOs

- focus on use of low-cost PCPs
- places PCPs in a gatekeeper position
- Higher use of prior authorization for healthcare services and prescriptions
- Higher control over care patients receive
- Typically receive payment solely off of a capitated payment model (PMPM)

What are characteristics of PPOs?

- Insurer/payer gets better rates with preferred providers

- Patients pay less when using preferred providers, but can use outside providers if they are willing to pay more

- Don’t typically require PCP use as a gatekeeper

- Can jump to specialist without referral

- Are paid using a Fee For Service model

What is a Point of Service (POS) Plan?

- managed care plan where the can choose an in-network provider as their PCP, but can use an out-of-network provider if they want
- member needs to get a referral from the PCP to see a specialist
- member has to pay more for out-of-network and may need to submit receipts for reimbursment

What is the Community Rated in Large Group Rating Methodology?

uses a standard base rate for a pool of large employer groups and additional factors specific to that employer group, such as geographic region or industry

What is the Blended in Large Group Rating Methodology?

calculates rates using a blend of rates determined via community rating and experience rating

What is the Experience Rated in Large Group Rating Methodology?

uses the actual claims experience of an employer group to determine rates for a given employer group

What is an Accountable Care Organization?

- A group of doctors, hospitals, and other health care providers who work together to coordinate high quality care to their patients
- expenses and revenues are shared which is incentive to keep patients health as a way to reduce cost and improve care

What is a Patient Centered Medical Home?

- provides the vast majority of a member's physical and mental health care needs
- member has a PCP who coordinated the member's care with a team of other providers

Which type of Managed Care Organization has the highest cost control and quality control?

Closed Panel HMOs

Note: PPO has the least cost control and quality control

What are Essential Benefits?

- health insurers have a perverse incentive to limit costly care
- In a capitated model: less care = most profits
-This perverse incentives led some insurers to:
a. Eliminate coverage for expensive treatments
b. Eliminate specific categories of care

What is done to avoid patient unknowingly lacking necessary coverage?

- ACA created a list of Essential Benefits
- All insurance plans must provide these essential benefits

What is a PBM?

Company that sets up and administers a drug benefit

What was the initial goal of PBMs?

- Process claims prospectively in real-time
- Serve as a cost containment measure

What is the goal of the MCO's pharmacy benefit program to provide?

- Appropriate Medications
- Affordable Medications
- Accessible Medications

What is the primary outcome of MCO's pharmacy benefit program?

Ensure cost-effective use of prescription medications

With the development of PBMs, what increased pharmacy spending?

- Expansion of available prescription products
- Increased use of electronic billing processes
- Overall increase in the complication of prescription drug benefits

Where is there potential for cost savings with improved utilization?

- Increase generic utilization
- Establish payment models to improve evidence-based prescribing
- Establish preferred products

What is a formulary?

- a list of preferred products
- can be open (all drugs included) or closed (some not covered)
- Typically tier products

What is the standard formulary tiering system?

Tier 1: Lowest Cost Preferred products (Generics)
Tier 2: Higher Cost Preferred products (Brand-name agents)
Tier 3: Non- Preferred products (Brand-name agents)
Tier 4: Specialty Pharmaceuticals

How are patient set prices changed based on the drug tier?

- Tier 1 generics tend to have low copayment & allow 90 day supplies
- Tier 2 brands have increased copayment & allow 30 days supply only
- Tier 3 brands have significantly increased copay & allow 30 days supply
- Tier 4 specialty drugs have highest copayment & restrict to 30 days supply or less

Who is apart of the Pharmacy and Therapeutics Committee and what is it responsible for?

- physicians, pharmacists, administrators, and other professionals
-responsible for developing, managing, updating, and administering the formulary

True or False: P&T Committees are to be knowledgeable of rebated and financial considerations are a primary focus.

FALSE!

Focus should be on clinical review. Knowlege of rebates should be limited, and financial considerations are NOT a primary focus.

What is Step Therapy:

Must fail preferred products before using non-preferred

What is the Prior Authorization Process?

Must submit additional paperwork to rationalize use of a non-preferred product

What can the decision of Prior Authorization impact?

- Coverage versus no coverage
- Coverage at a lower or higher tier

What are day supply limits?

- Limits the number of tablets over a certain timeframe
- May be clinically driven
(safety and effectiveness)
- May be cost focused (limit cost per month for a single product, require more patient cost sharing, prevent waste)

How do PBMs negotiate with manufactures to get better prices?

- PBMs can't negotiate on the "sticker price"
- Pharmacies pay the "sticker price"
- Use this price to bill the PBM & patient
- Manufacturers can't customize this for each PBM

How do negotiations rely on post-dispense debated?

- each prescription dispensed is kept track of
- these records are submitted to the manufacturer
- they repay the PBM a set amount based on the rebate contract

How do PBMs affect community pharmacies through contracts?

- Pay community pharmacies the lowest amount possible
- Push pharmacies to buy cheaper
- Reduce profit for pharmacy on each individual prescription

True or False: Many PBMs own their own pharmacies

True! ie. CVS- Caremark