Week 6: Structure and Economics of Community Health Services

Professional Associations and Sector Collaboration

• Key organizations like the ANA, NLN, APHA, and AMA shape clinical standards, research, and policy through member dues and contributions.

• Driven by the 2002 Institute of Medicine (IOM) guidelines, public and private sectors increasingly collaborate to support community health.

Local Level of Care

Direct community health service delivery via Community Health Networks (CHNs); funded by local taxes and state/federal grants.

State Level of Care

Manages core public health functions, health statistics, epidemiology, WIC, and CHIP. State Boards regulate professional licensure and nursing schools.

National Level of Care

Organized under the Department of Health and Human Services (HHS) and Public Health Service (PHS), including the CDC (surveillance, disease control), CMS (Medicare, Medicaid, CHIP, CLIA, HIPAA), and the Administration on Aging.

International Level of Care

Global initiatives through the WHO (international health standards), PAHO (Americas regional office), UNICEF (maternal/child health and immunization), and MSF/Doctors Without Borders (humanitarian crisis relief).

Private Sector Categories

• Not-for-Profit: Hospitals and care facilities that reinvest revenues to maintain operations.

• Special Interest Groups: Disease- or population-specific advocacy groups (e.g., ADA, ACS, AHA, Planned Parenthood).

• Philanthropic Foundations: Private funders of public health research and education (e.g., Gates, Robert Wood Johnson, Kellogg).

Legislative Acts

• Social Security Act (1935): Established foundational federal welfare and public health grants.

• Heart Disease, Cancer, and Stroke Amendments (1965): Partitioned the country into 56 regional planning districts.

• HMO Act (1973): Promoted prepaid healthcare models, establishing modern Managed Care Organizations (MCOs).

• Social Security Amendments (1983): Replaced retrospective fee-for-service reimbursement with the Prospective Payment System (PPS) using Diagnosis-Related Groups (DRGs).

• COBRA (1985): Provided up to 36 months of continuation of group coverage after employment termination.

• HIPAA (1996): Enacted protected health information (PHI) rules and curtailed pre-existing condition limits.

• PRWORA / Welfare Reform (1996): Created TANF with a 55-year lifetime benefit cap alongside work assistance.

• Affordable Care Act (2010): Banned pre-existing condition denials, mandated dependent coverage up to age 26, eliminated copays for preventive care, enforced an 85% Medical Loss Ratio, expanded Medicaid eligibility, and phased out the Medicare Part D donut hole by 2020.

Healthcare Delivery/Insurance Models

• Indemnity (Fee-for-Service): Retrospective payment for every individual service provided; maximizes provider choice but lacks incentives for cost containment.

• Health Maintenance Organization (HMO): Features capitated payments and closed provider networks; mandates an assigned Primary Care Physician (PCP) gatekeeper for specialist visits with no out-of-network coverage.

• Point of Service (POS): Hybrid HMO enabling patients to use out-of-network care at significantly elevated out-of-pocket costs and premiums.

• Preferred Provider Organization (PPO): Negotiated discount networks permitting direct specialist access without referrals, with higher cost-sharing outside the network.

• HDHP & HSA: Low monthly premiums coupled with high annual deductibles; paired with tax-advantaged Health Savings Accounts.

Medicare Overview

• Medicare Overview: Federal entitlement enacted in 19651965 for individuals aged 65+ (who worked 10 years / 40 quarters) and those under 65 with permanent disabilities or End-Stage Renal Disease (ESRD).

  • Part A (Hospital): Payroll tax-funded; covers inpatient hospital stays, skilled nursing, home health, and hospice.

  • Part B (Medical): Optional program requiring a monthly premium; covers outpatient care, physician visits, DME, and diagnostic testing.

  • Medigap: Standardized private supplemental policies designed to cover Medicare deductibles and the 20% Part B coinsurance.

  • Part C (Medicare Advantage): Private managed care plans (HMO/PPO) bundling Parts A, B, and usually D; limits out-of-network care.

  • Part D (Prescription Drugs): Standalone outpatient drug coverage administered by private plans.

  • Medicare Exclusions: Routine dental care/dentures, eyeglasses/refraction exams, hearing aids, acupuncture, cosmetic procedures, and routine podiatry.

Medicaid & CHIP

Means-tested federal-state partnership serving low-income families, children, pregnant individuals, and people with disabilities.

Military Healthcare

• TRICARE: DoD health benefit for active duty, retirees, and dependents, delivered via private civilian networks.

• CHAMPVA: VA healthcare program for dependents and survivors of veterans with permanent, total service-connected disabilities.

Value-Based Care

• Transitions provider compensation from volume to clinical outcomes and quality metrics.

• Bundled Payments: Single prospective episode payments distributed among facilities and clinical teams.

• Accountable Care Organizations (ACOs): Coordinated clinician networks that share financial risk, retaining savings achieved below benchmark expenditure while absorbing costs exceeding targets.