Healthcare Delivery

Ch. 6

Development of the U.S. Health Care System

Colonial Times:

• Private practices; infrequent government action

• Few tools for physicians; little to change course of illness

Pre-1800s:

• Hospitals: places for only very poor to receive care

• Patients often died.

• Wealthy had home visits by physicians.

1800s:

• Scientific advances: germ theory, sterilization

• Industrialization: move to cities, away from family

• Improved sanitation, working conditions

• Professionalization of nursing care

• Creation of federal quarantine system

• Marine Hospital Service (later, U.S. Public Health Service)

Early/Current Health Insurance Coverage

• 1929: Baylor U Hospital provides prepayment plans.

• Physicians develop similar plans.

  • Blue Cross (hospital)

  • Blue Shield (physician)

• 1965: Medicare and Medicaid

• 2010: Patient Protection and Affordable Care Act (ACA)

  • Expanded Medicaid in many states

  • Extended coverage to low-income individuals/families

  • Required coverage of preventative care

  • Eliminated preexisting conditions exclusions

  • Allowed to stay on parent’s plan till 26

Healthcare Financial Issues

The Nation’s Health Care: Financial Status (Macro View)

• United States: high spending, much reimbursement

• Medicare expenditures increasing

The Individual Healthcare Organization and Its Financial Needs (Micro View)

• Budget and long-term plans/cost effective

  Importance of nursing management participating in the budget process to control costs

Reimbursement: Who Pays for Health Care?

• Critical, complex topic

• Reimbursement pays the patient’s bills for services provided

• Hospitals close if they cannot cover costs (this is a huge problem for rural hospitals)

  • Effect on access to care

• Crisis in safety net hospitals (hospitals that serve populations who have limited or no resources to pay for services)

• Payment-related stress on patients (bankruptcy #1)

• Healthcare exchanges via the ACA for financial support

The Third-Party Payer System

• Fee-for-service

• Deductibles and copayment: out of pocket

• Underinsured adults and children

History of Health Care Financing

Fee-for-service payment method and economic incentives contributed to increased costs

• The more tests or procedures performed, the greater the physician’s earnings because earnings are tied to procedures

• Economic incentives to provide as much care as possible

• Patients insulated from costs because insurance was paying the bill

• Can you see how this elevated costs? Now insurances have become smarter and don’t cover items or need referral or approval

Some Frightening Information but Some Good…

• The U.S. spends more on health care as a share of the economy — nearly twice as much as the average OECD country — yet has the lowest life expectancy and highest suicide rates among the 11 nations.

• The U.S. has the highest chronic disease burden and an obesity rate that is two times higher than the OECD average.

• Americans had fewer physician visits than peers in most countries, which may be related to a low supply of physicians in the U.S.

• Americans use some expensive technologies, such as MRIs, and specialized procedures, such as hip replacements, more often than our peers.

• Compared to peer nations, the U.S. has among the highest number of hospitalizations from preventable causes and the highest rate of avoidable deaths.

• The U.S. outperforms its peers in terms of preventive measures — it has one of the highest rates of breast cancer screening among women ages 50 to 69 and the second-highest rate (after the U.K.) of flu vaccinations among people age 65 and older.

How Health Care is Paid

Medicare  (65 years and older/ESKD/Disability/ALS)

• Largest health insurance program in the U.S.

• Entitlement program based on age or disability criteria rather than on need

• Part A covers inpatient hospital services, skilled nursing facilities (SNFs), and home health benefits

• Part B covers physician services

• Part C administered by private insurance contracted by Medicare (PPO/HMO)

• Part D provides a prescription medication benefit

Medicaid

• Joint federal-state program to provide health insurance coverage for impoverished families

• Intended to improve access to health care for the poor

• Currently covers 48.6 million people (continues to grow)

• Covers primarily disabled persons, low-income households with children, and those in nursing homes who qualify on the basis of low income

• Primary payer of long-term care nationwide

• For most states, Medicaid represents the fastest growing component in the state budget

• Recipients are not as likely to obtain needed health services

Federal Government Plans

• Military Health Care = Tricare

• Other Federal Health Care Programs

  • Indian health service

Access to Health Care and the Uninsured and Underinsured

Lack of access to health care:

• Primarily reflects a lack of health insurance coverage

• In 2010, 49.9 million people in the U.S. were uninsured (16.3% of the population). This is why ACA was done!

• Primary groups with no insurance:

  • Working poor employed by small firms without insurance coverage

  • Part-time workers and unemployed people until something happened

What does the Patient Protection and Affordable Care Act (PPACA) do?

• Expands health insurance coverage access to uninsured Americans while controlling costs and improving the quality of health care

• Addresses many issues including employer requirements, health insurance exchanges, and prevention and cost-reduction approaches

Trends and Issues Influencing Health Care Economics

• High cost of health care in the United States

• Cost-control measures

• Access to health services

  • Uninsured

  • Underinsured

  • Underserved

• Medical bankruptcies

• Health care rationing

• Managed care

Health Care Rationing

Allocation of fixed or limited health care resources

• Social justice view:

  • Health care as a right  (Is it a right or a privilege?)

  • Equitable distribution according to clinical need

  • Not based on income or where one lives

  • Focuses on needs of population more than individual

• Free market economy view:

  • Health care as a product  (It is a business after all)

  • Rationing as government control, limiting choices

  • Concern over decline in quality, increased waiting

What are the types of Managed Care?

• Health maintenance organizations (HMOs)

• Preferred provider organizations (PPOs)

• Point-of-service (POS) plans

• High-deductible health plans (HDHPs)

Payment Concepts

Retrospective:

• Fee-for-service

• Reimburse after service rendered

• Abused through the requesting and ordering of unnecessary tests

• Encouraged sickness rather than wellness

Prospective:

• External authority sets rates

• Rates derived from predictions set in advance

• Fixed rates rather than cost coverage

• Imposes constraints on spending

• Providers at risk for losses or surpluses

Surprise Medical Billing:

• Individual unaware of provider not being in-network

• Receives surprise bill 

  • UPDATE: 1/22 Effective January 1, 2022, the No Surprises Act, which Congress passed as part of the Consolidated Appropriations Act of 2021, is designed to protect patients from surprise bills for emergency services at out-of-network facilities or for out-of-network providers at in-network facilities, holding them liable only for in-network cost-sharing amounts. The No Surprises Act also enables uninsured patients to receive a good faith estimate of the cost of care.

Capitation:

• Fixed fee per person paid to a managed care organization for a specified package of services

Claims payment agents (e.g., Blue Cross/Blue Shield) (Medicare Part C):

• Private fiscal agents contracted by government

• Handle claims payment process

• Function as intermediaries

What are Forces Stimulating Change in the Demand for Health Care?

• Demographic trends

• Social and economic trends

• Health workforce trends

• Technological trends

Demographic Trends

Aging Baby Boomer generation:

• 77 million babies born between 1946 and 1963

• Expected to live on average to 83 years of age, with many surviving into their 90s

• Cost of Medicare expected to rise astronomically

• Fewer workers paying taxes into the Medicare system

Rise in foreign-born population:

• Mexico largest source, followed by Asia

• United States more diverse than ever

Social and Economic Trends

• Changing lifestyles

• Growing appreciation of quality of life:

  • Health seen as an irreplaceable commodity

• Changing composition of families

• Changing household incomes:

  • Growing gap between richest and poorest

• Revised definition of quality health care:

  • Rise in complementary and alternative therapies

Health Workforce Trends

• Nursing shortage (particularly minorities)

• Periodic shortages in primary care providers

Technological Trends

Examples:

• Telehealth

• Electronic health record (EHR)

Benefits:

• 24-hour availability

• Increased coordination and quality of care

• Improved quality measurement and monitoring

• Reduced medical errors

Drawbacks:

• Privacy and security concerns

• Inconsistent quality of online resources

• Expensive equipment that requires higher training

Health Care Reform Possibilities

Managed Competition:

• Pros: acceptance of all; competition on price; tax incentives; tight regulation; minimum benefits package; outcome management standards board; improved access; expenditure reduction

• Cons: untested; limited consumers’ choices; increased out-of-network costs; failure to provide equitable and universal coverage; opposition from many professional groups

Universal Coverage and Single-Payer System:

• Pros: universal coverage; emphasis on prevention; control of costs; increased access; incentives for efficiency; administrative simplicity; combination of private/public; no tie to employment

• Cons: removal of competition model, which ensures a free market, individualism, and the right to choose

Effects of Health Economics on Community Health Practice

• Disincentives for efficient use of resources

• Incentives for illness care

• Conflicts with public health values (health promotion and disease prevention) and the culture of our healthcare in the US.

Implications for CHN

• Need to adapt to constantly changing system

• Development of innovative modes of service delivery

• Variety of practice settings (what is cheaper)

  • Hospital 2,500-3,500/day; Home average cost of in-home care in the United States is $4,957 a month.

• Development of skills in teamwork, leadership, and political activism

• Recognition of importance of outcomes for both client and agency