PHLT 313 - Exam 2

Module 2.1 to 2.5

What is the largest and most powerful employer in the nation?

The US healthcare industry. It employs more than 13% of the total labor force in the US.

What accounts for the growing demand for health services professionals?

1. Overall growth in population

2. Aging of population (older adults require more care)

3. Expansion of health insurance under the Affordable Care Act (ACA) → Increased the number of people accessing care and shifted focus toward prevention/coordination. More HC professionals are required to meet this need. 

OVERALL: The increase in medical utilization leads to greater demand for health services professionals

What is the trend for the overall population AND the aging population?

Both are increasing.

Problems with the aging population

• Decline in working-age population

• Increase in HC costs

• Increase in dependency ratio

• Changes to the economy

True or false: From 2019 to 2022, more adults ages 18-64 have LESS health insurance. 

FALSE, more people had insurance in 2022 than in 2019. 

Physicians

• All states require physicians to be licensed to practice

• Licensure requirements:

  • Graduate from an accredited medical school

  • Get an MD or a DO

  • Complete licensing exam (National Board of Medical Examiners for MD, National Board of Osteopathic Medical Examiners for DO)

  • Complete supervised internship/residency

Differences/Similarities between MD and DO

Doctor of Medicine (MD)

• Allopathic philosophy (conventional medicine)

• Active intervention to neutralize diseases

Doctor of Osteopathic Medicine (DO)

• Holistic approach to patient care

• Emphasis on musculoskeletal system, such as correction of joint tissues

• Focus on preventative medicine

BOTH:

• Use traditionally accepted methods of treatment, including drugs and surgery. The difference lies in their philosophy.

Generalists/PCPs

• PCP = Primary Care Physician

• Trained in family medicine/general practice, general internal medicine, and general pediatrics

• Provide preventative services, treat frequently occuring and less severe problems

• Make referrals to specialists for problems that occur less frequently or that require complex diagnostic or therapeutic approiaches

Specialists

• Deals with a particular disease or organ system

• Require certification in an area of medical specialization

  • Additional years of advanced residency training + years of practice in that speciality 

Where do health services professionals work?

• Mainly in hospitals (40.5%)

• Nursing care facilities (12.1%)

• Physician offices/clinics (10%)

Imbalance/Maldistribution of PCPs and Specialists

• Geographic maldistribution: Most HC professionals want to work in large urban areas

• Specialty maldistribution: There are too many specialists and not enough PCPs. Many specialists can work in urban cities, which attracts people to that field. They also are paid more and have more prestige. 

Dentists

• Diagnose and treat problems related to teeth, gums, and mouth tissues

• DDS (doctor of dental surgery) or DDM (doctor of dental medicine)

• Growth of dental specialties is influenced by technologic advances

  • There are currently 8 specialty areas

• Require license to practice

Pharmacists

• Prepare/dispense prescriptions

• Drug product education

• Serve as experts on specific drugs, drug interaction, and generic drug substitution

• Promote rational drug use and effective drug management

• Require license to practice

Other doctoral-level health professionals

• Psychologists

• Podiatrists

• Chiropractors

• Optometrists

Nurses

• Major caregivers of sick and injured patients

• Address patient’s physical, mental, and emotional needs

• All states require nurses to be licensed

• Areas of work: Hospitals, nursing homes, private practice, ambulatory care center (outpatient), community, etc. 

• RN (registered nurses) and LPN (licensed practical nurses)

• APN (Advanced-practice nurses) have education/experience beyond a regular RN. 4 specialization areas are available for APNs:

  • Clinical nurse specialists (CNS)

  • Certified registered nurse anesthetists (CRNAs)

  • Nurse practioners (NPs)

  • Certified nurse-midwives (CNMs)

What attributes to the shortage of nurses?

• Increased patient-to-nurse staffing ratios

• New opportunities in alternative settings and roles (health educators, administrative, etc.)

Non-Physician Practitioners (NPPs)

• NPPS include PAs, NPs, and CNMs

  • Receive less training than physicians but more training than RNs

  • They do not engage in the entire range of primary care or deal with cases requiring the expertise of a physician

Value of NPP services

• Efficacy of NPPs as health care providers (similiar outcomes to physicians)

• Provide both high-quality and cost-effective medical care

• Show greater personal interest in patients and they cost less

• Better communication and interviewing skills (trained in patient communication)

Limitations of NPPs

• Legal restrictions on practice

• Reimbursement policies (NPPs cannot bill patients directly)

• Relationships with physicians (competition or undermining)

Allied Health Professionals

• Someone who has received the required training in a science/HC related field and has responsibility for the delivery of health or related services

• Two broad categories:

  • Technicians/assistants

  • Therapists/technologists

Public health professionals

• Focus on the community as a whole

• Five core disciplines of academic public health:

  • Biostatistics

  • Epidemiology

  • Health services administration

  • Health education/behavioral science

  • Environmental health

Health services administrators

• Employed at the top, middle, and entry levels of various types of organizations that deliver health services

• Taught at the bachelor’s and master’s level in many settings. Programs lead to several degrees. 

• Oversees the business/operations/administrative side of HC facilities

Technology

• Raises expectations and increases demand

• Changes organization and financing of health services

• Allows for specialization

• Increases costs

• Complex medical/ethical issues

Medical technology

• Improves the delivery of medical care

• Benefited from developments in other applied sciences (physics, chemistry, etc.)

• Sophisticated machines, pharmaceuticals, biological therapies, procedures, facilities, information systems, and management operational systems

Examples of medical technology

• CT and MRI

• Pacemaker

• Medical procedures like open-heart surgery, tissue transplants, hip and knee replacements

• Electronic medical records, managed care networks, labratories, etc. 

Information technology (IT)

• Computer applications that transform massive amounts of data in useful information

• Main categories include: 

  • Clinical information systems

  • Administrative information systems

  • Decision support systems

  • Internet and e-health

Electronic health records (EHR)

Four basic components:

• Collection and storage of health information on individual patients

• Access to information by authorized users

• Knowledge and decision-support to enhance quality, safety, and efficiency

• Improve efficiency of health care processes

HITECH Act of 2009

• Incentives to providers for adopting meaningful use of EHR technology

• Incentivized healthcare providers with money to adopt EHRs. The program required providers to meaningfully use EHRs to achieve specific goals like transmitting prescriptions electronically, sharing patient data, and engaging patients in their own health management

HIPPA 1996

• Access to and transfer of personal medical information

• Legal use of personal medical information

  • Health care delivery

  • Operation of the health care organization

  • Reimbursement

• Patient rights: Inspect, obtain copies, request corrections, restrict use

Internet and e-health

• E-health: All forms of electronic health care delivered over the internet

  • Information, education, products, services

• The internet has made patients more active in their own health care

• Other applications of e-health:

  • Register patients

  • Order pharamaceuticals

  • Physicians can get a head start on hospital rounds

  • Virtual visits/telehealth

Telemedicine and remote health services

• Distance medicine

• Remote in-home monitoring is providing to be cost-effective

  • Ex: Tele-ICU

What are issues with telemedicine?

• Licensure across state lines (Must be located in state where patient is physically located)

• Who is legally liable (Unclear responsibility)

• Lack of reimbursement (Insurance companies may not fully cover or pay providers for telemedicine visits)

• Unsubstantiated cost effectiveness (Uncertain savings)

Utilization of medical technology

• High tech procedures are more readily-available in the US

• Little is done to limit the expansion of new medical technology

• Other countries use supply-side rationing: Waiting lists, eligibility criteria, budget constraints. Uses criteria rather than price. 

• The US spends more on medical research and development.

Reasons for high rates of diffusion and utilization in the US

• Cultural beliefs and values (see next flashcard)

• Medical training and practice

• Insurance coverage

• Competition among providers

Cultural beliefs and values

• Capitalism and lack of government intervention

• High expectations of finding cursed through science and technology

• Demand advanced technology

• Technological imperative

  • Society is obligated to accept new technology

Medical training and practice

• Specialists use more technology than primary care physicians

• American medical graduates increasingly choose specialization over primary care

Insurance coverage

• Insurance insulates both patients and providers from the utilization and cost of health care

• Lack of checks and balances in the US to determine the appropriateness of high-cost services

• How do other countries curtail the use of high-tech procedures?

  • Fixed payments to providers (salary)

  • Limited payments to hospitals so they prioritize essential care

Competition

• Specialization has been used as an enticement to attract insured patients and to recruit specialists

  • Such practices have results in unnecessary duplication of services/staff

• Competition between hospitals

Mechanisms to control the growth of technology

• Implement central planning to determine how much technology will be made available and where

• Withdraw federal funding for R&D

• Change the patterns of medical training, placing greater emphasis on primary care practice

• Reduce the number of specialty residency slots for medical graduates

• Curtail insurance payments for expensive medical treatments

• Impose controls on pharmaceutical prices, which in turn will make less money available for R&D and development of new drugs

Role of government in technology diffusion

• Mainly focus on issues related to safety, benefits, and risks associated with medical technology

• Funding R&D

Regulation of drugs and devices

• FDA under US. Dept. Health and Human Services

• FDA ensures drugs and medical devices are safe and effective for their intended use

• FDA does NOT carry out its own testing of new drugs, but evaluate the drug studies conducted by pharmaceutical companies

3 classes of medical devices

• The FDA has jurisdiction over medical devices. There are 3 classes of devices:

  • Class I: Poses the lowest risk. Requires general controls regarding fraudulent claims.

  • Class II: Subject to labeling and performance standards, and post-market surveillance.

  • Class III: Devices that support life or present a potential risk of illness or injury. Require premarket approval regarding safety and effectiveness

Safe medical devices act of 1990

• The law required health care providers to report all injuries and deaths resulting from medical devices

Legislation to regulate biologics

• Biologics: A class of drugs derived from living organisms

• Public Health Service Act of 1944 (legislative basis for public health provision in the US)

• Safety and effectiveness are regulated according to the Food, Drug, and Cosmetic Act of 1938

Research on Technology

• The agency for healthcare research and quality (AHRQ) and NIH provide financial support to private and public institutions for biomedical research

• The AHRQ also supports research on quality, cost, and access

Impact of medical technology

• The effects of advanced scientific knowledge and medical technology have been far-reaching and pervasive

• The effects often overlap

Impact of quality care

• Technology does not always lead to high quality of care

• Quality is enhanced only when…

  • Provides a quicker/more complete cure, prevents or delays disease onset, provides more accurate diagnosis than is possible with current options, increases treatment safety, minimizes safety effects, provides for faster recovery from surgery, increases life expectancy, and adds to quality of life

Impact of quality care

• Technology produces quality care only when certain outcomes are achieved

• Innovations may actually be wasteful if they do not improve quality

• Some innovations may actually cause harm

• Examples:

  • Ability to do things in spite of disablement

  • Ability to manage chronic conditions

  • Relief from pain and suffering

  • Fast recovery and return to normal life

Cost Escalatation

• Technology is the most important factor in medical cost inflation

• Factors that contribute to cost escalation

  • Capital costs

  • Training or hiring

  • Facilities

  • Utilization

Impact of health care costs

• Three main areas in which technology has saved health care costs:

  • Replacement of earlier, more expensive procedures

  • Minimally invasive procedures that eliminate the need for overnight hospital stays

  • Technologies that shorten hospital stays

Impact on Access

• Geographic access can be improved

  • Ex: Mobile cardiac catheterization laboratories

Impact on structures and processes

• Transformation of hospitals into medical centers

• Development of outpatient services and technology available in patients’ homes

Impact on global medical practice

• The US is the world leader in R&D

• Other countries benefit because they do not incur high R&D costs (they can just import from U.S.)

• Telemedicine can be taken to other countries

Impact of bioethics

• Ethical and moral challenges posed by:

  • Gene mapping of humans

  • Genetic cloning

  • Stem cell research

  • Genetic engineering

  • Genetic testing

  • Life-support technologies

Health technology assessment (HTA)

• The evaluation of medical technology to determine: Efficacy, safety, and cost-effectiveness

• The objective of HTA is to establish the appropriateness of medical technology for widespread use

• Efficacy and safety are the basic starting points

Efficacy

What is efficacy?

• How effective technology is in diagnosing or treating a condition

• The health benefit to be derived from technology

Safety

Safety considerations:

• Protect patients against unnecessary harm from the use of technology

Primary benchmark:

• Benefits must outweigh any negative consequences

Cost effectiveness

• Cost-effectiveness or cost-efficiency

• Initial medical treatment — benefits generally exceed costs

• Additional treatments begin to lower the benefits in relation to costs

• At some point (optimal point), additional benefits equal the additional costs

• Beyond the optimal point, additional interventions become wasteful

Benefits of technology assessment

• Delivering REAL value

  • Improved benefits at lower cost

  • Value is enhanced by improving quality, reducing cost, or both

    • Improve quality (better outcomes, fewer errors)

    • Reduce cost (use resources wisely)

    • Do both (which is ideal)

• Cost containment

  • Technological change should be influenced by reducing cost without sacrificing quality

• Standardized practice protocols

  • Medical practice guidelines

  • Development of protocols

  • Cost effectiveness

Financing

• Mechanism to purchase health care services

• Often necessary to get access to health care

• Some uncompensated or charity care

Sources of financing health care

• Provide health insurance

• Public insurance programs (Medicare and Medicaid)

• Uncompensated or charity care

Complexity of financing

• Many payers

• Many plans

• Many programs

• Many payment mechanisms (cash, check, credit card)

Economic perspective of financing

• Working Americans finance their own health care and subsidize it for those who cannot afford it

• Employer-paid insurance is an exchange for more salary

  • The cost of your health insurance comes out of what could have been your paycheck

• Taxes support public programs, like Medicare and Medicaid

Effects of financing and insurance

• Health care financing provides access to services and pays HC providers

Undesirable effects of current financing practices

• Demand for services

• Growth of medical technology (causes inflation)

• Covered services expand rapidly

• Moral hazard (excessive demand from consumers; once they have insurance, they are more likely to use services)

• Provider-induced demand (doctors encourage services to get paid more)

HC flow chart

Financing → health insurance → moral hazard & provider induced demand → access to HC services and payment to HC providers → health care expenditure

Effects of financing and insurance

• End results: Certain behavior leads to waste of resources and rising cost

• Supply-side rationing is not as widespread in the US

• Uninsured and demand-side rationing (Ability to pay determines who gets care.

Principles of insurance

• Risk is unpredictable for individuals

• Risk can be predicted with some accuracy for a large group

• Insurance can shift risk from the individual to the group by pooling resources (collecting premiums from everyone to protect chronically ill)

• Losses are shared by all members

Cost sharing (copayments/deductibles)

• The share of costs covered by insurance that enrollees pay out of pocket

  • The insured assumes at least part of the ris

  • Reduces the misuse of insurance benefits

• Cost sharing (deductibles/copays) makes patients pay part of their healthcare costs, which shares risk and reduces overuse of services.

3 types of cost sharing

1. Premium cost sharing: Often through payroll deductions.

2. Deductibles: Amount the insured pays first before benefits are paid by the plan. Paid annually.

3. Copayments: Money paid out of pocket each time health services are received. Percent share is referred to as coinsurance. 

“Stop loss” Provision under Copayment

• Limits total out of pocket costs in a year

• Protection against catastrophic or unpredictable losses

• After reaching the limit, no copayments are required and the plan pays 100% of any additional expenses.

• AKA: Financial safety net/out of pocket maximum

Example of stop loss provision

• A plan requires the insured to pay a $675 deductible.

• The plan starts paying for benefits only after the cost of medical services has exceeded $675

• Each time health services are received, the insured has to pay out of pocket copayment (for example: $25 for PCP and $35 for specialist). Both contribute to the out of pocket maximum. 

Is cost sharing effective?

• A study in the 1970s (Rand Health Insurance Experiment) shows that cost sharing had a material impact on lowering utilization without any significant negative health consequences (moral hazard)

Private insurance

• Generally available in a single or family plan

  • Government programs like Medicare and Medicaid do not offer family plans

• In 2011, 60% of employers offered health insurance

• Certain employer characteristics are associated with health insurance rates

  • Large vs small employer, number of high-wage vs low-wage earners, full time workers versus part-time workers, unionized versus nonionized employers, smaller percentages of young workers versus older workers

What are the 5 main types of private insurance?

• Group insurance

• Self insurance

• Individual private insurance

• Managed care plans

• High-deductible health plans (HDHPs)

Group insurance

• Offered through an employer, a union, or a professional organization

• Anticipates large numbers of people in a group will buy insurance through a sponsor

• Cost and risk are shared among the insured

Self insurance

• Large employers’ workforces are large and diversified enough

• Employers can predict their own medical experience

• Employers can assume risk and pay all claims

• High losses covered through reinsurance (protects from extreme financial risk)

Individual private insurance

• For those who do not have group coverage

• Risk is individually determined

• High-risk people are often unable to get insurance (before the ACA)

• This market grew by 5.3 million in 2014, but the effects of the ACA are unclear (The Affordable Care Act added reforms, like prohibiting insurance denial for pre-existing conditions)

Managed care plan

• MCOs assume the responsibility for obtaining health care serviced by contracting with providers

• MCOs monitor utilization and use a variety of methods to reimburse providers

• MCOs offer managed care plans:

  • Health maintenance organization (HMOs)

  • Preferred provider organizations (PPOs)

• Assume the risk in exchange for an insurance premium

High deductible health plans (HDHPs)

• Low premium cost

• Link savings account to high-deductible plan, giving consumers greater control on how to use the funds

ACA mandates and private insurance

• All US residents must have health insurance that offers “minimum essential coverage.” Not having insurance incurs tax penalties. (repealed)

• Health insurance can be purchased through government-run exchanges, with subsidies for low-income people.

• Exchanges offer four categories of plans

• Employers must offer insurance to those working 30 hours or more per week

• Coverage cannot be denied for preexisting medical conditions

• Children and adults can be covered under their parents’ plans until age 26

• Recommended preventative services and immunizations must be without cost sharing

• No lifetime limit on benefits

Public insurance

• Government financing programs

  • Around 37% of Americans were covered by public insurance as of 2023

• Categorical programs

  • Provide benefits to defined categories of people who meet the eligibility criteria to become beneficiaries

• 3 public health insurance programs:

  • Medicare

  • Medicaid

  • Children’s health insurance program (CHIP)

Medicare

• Title 18 of Social Security Act

• An entitlement program

  • People contribute through taxes and are entitled regardless of income and assets

• A federal program

  • Administered by Centers for Medicare and Medicaid Services, an agency under the US Department of Health and Human Services

Which agencies are responsible for Medicare?

• Social Security Administration (SSA)

  • Enrolls most people in Medicare

• Railroad Retirement Board (RRB)

  • Enrolls railroad retirees in Medicare

• Centers for Medicare and Medicaid Services (CMS)

  • Administers the Medicare program

• SSA and RRB = Handle enrollment, premiums, and replacement medicare cards

• CMS = Handles the rest

Who does Medicare cover?

• Persons 65 years and older

• Disabled individuals of any age who are entitled to Social Security benefits

• People of any age who have permanent kidney failure (end stage renal disease)

• Does not cover: Vision, eyeglasses, dental care, hearing aids, and many other long term care services

Medigap

• Medicare supplemental insurance policy

  • Supplemental insurance that helps to cover all or some of medicare deductibles and copayment, and may pay for services not covered by medicare (like prescriptions)

Hospital insurance (Medicare Part A)

• Financed by payroll taxes

  • Paid by all working individuals

  • Paid on all income earned

  • Paid equally by both employer and employee

• Covers…

  • Impatient services

  • Short-term convalescence and rehabilitation in a skilled-nursing facility (SNF)

  • Home health

  • Hospice

• The structure of Medicare Part A benefits is complex

• The timing of benefits is determined by a benefit period

• Different benefit period for:

  • Hospital

  • Skilled nursing facilities (SNF)

  • Home health agencies

  • Hospice

True or false: Almost all Part A beneficiaries choose to also enroll in Part B.

True.

Supplementary medical insurance (Part B)

Covers…

• Physician services

• Hospital outpatient services (surgery)

• Diagnostic tests

• Radiology and others

• Cover certain screening and preventative services

• Annual wellness exam (under ACA of 2010)

Participants must pay…

• Monthly premium (income based)

• An annual deductible

• 80:20 coinsurance

Medicare advantage (part C)

• Offered by private companies approved by Medicare

• Beneficiaries choose to remain in the original program or sign up for Part C

• Additional benefits (basic vision and dental) may be offered by the private managed care plans

• Beneficiary receives all Part A, Part B, and D services through the MCO

Prescription drug coverage (Part D)

• Available to those who have Part A or B

• Voluntary program; monthly premium must be paid

• Annual deductibles apply

• Coverage gap or “donut hole” before catastrophic coverage begins

2025 changes to Part D

• Medicare has closed the donut hole by December 31, 2024 and replaced it with a cost gap

• New 3 stages of drug coverage

  • Deductible state: Pay out of pocket cost until reach deductible (max. $590 in 2025, $615 in 2026)

  • Initial coverage stage: After meeting deductible, pay 25% of the cost (co-insurance) until reaching $2,000

  • Catastrophic coverage stage: After reaching $2,000 out of pocket cost, you enter the catastrophic coverage stage, and you pay $0 for covered drugs for the rest of the calendar year

Medicaid

• Title 19 of the Social Security Act

• Finance healthcare for the indigent, but not all poor

• Jointly financed by state and federal governments

Medicaid varies by state

• Each state establishes its own eligibility criteria according to:

  • Income and assets

  • Medicaid is a means-tested program (based on financial need)

• Each state administers its own Medicaid program

  • Must provide federally mandated services

Medicaid coverage

Coverage:

• Meet the financial eligibility

• People who are disabled receiving SSI

• Medically needy (some states) Means you have too much income to meet financial eligibility but have very high medical expenses that reduce their income to the eligibility level.

CHIP Overview

• Children’s health insurance program

• Title 21 of the social security act

• Available to families with incomes up to 200% of the federal poverty level

• On January 22, 2018 Congress passed a six-year extension of CHIP funding

CHIP - What is it?

• States can use existing Medicaid, create a separate CHIP program, or use a combined approach

• Federal and state funds finance the program

ACA and public insurance

• Enrollment in medicare advantage has increased

• States choose whether to expand Medicaid

• States can establish a basic health program to obtain health insurance through the states

• The ACA expanded public insurance options by growing Medicare Advantage Part C enrollment, giving states the option to expand Medicaid, and allowing creation of Basic Health Programs for those between Medicaid and private coverage.

Reimbursement methods

Third-party payer:

• Insurance companies, MCOs, BCBS, and the government 

Reimbursement: 

• Payment made by third-party payer to the providers of services

Private payers and government have devised various methods aimed at limiting the amount of reimbursement

Fee for services

• Charges (prices) set by provider

• Each service is billed separately

• Insurers started to limit reimbursement to a “usual, customary, and reasonable” (UCR) amount that is determined by eacher payer

• Provider-induced demand is the main drawback

Fee-for-service means providers get paid for each service they perform, which can encourage more services and higher costs, so insurers use UCR limits to control spending.