Health Services Exam 2: financing systems, medicare, medicaid, drug benefit management & PBMs

what is charity care, how is it provided and how is it funded?

-services offered at reduced fee/no fee for low income individuals

-offered by HC providers

-funded by public and private sources

what is the common payment method for inpatient hospitals?

-*per inpatient stay*

-operating base payment rate (covers labor and supply costs)

-capital base payment rate (covers rent, property ins, taxes)

-adjust rate based on where service was provided (lower wage area = lower rate) then adjust based off procedures, age, complications

-# of days in hospital does *not* figure into cost

-if bad at getting people out (use more resources) then hospital doesn't get reimbursed more by Medicare

-if good then hospital may benefit bc maybe used less resources than base pay rate

-motivation to provide more efficient care but concern that they push people out too fast

what is the common payment method for outpatient physician?

-*per service*

-conversion factor: standard then adjusted for geography, service intensity, professional liability ins, etc.

-downside: physician gives extra service to get more money

what is the common payment method for inpatient physician?

-*per service*

-provider gets reimbursed for taking care of pt

-very similar if not same as outpatient physician

what is the common payment method for outpatient hospitals?

-*per diem (per day)*

-prospective payment system

-must be 3+ services - for mental health/substance use

-not based on cost for particular provider - set amnt determined by the expected costs for day with provider

-starts with conversion factor and us adjusted

-exception: critical access hospitals - can't have more than 25 beds so reimbursed by Medicare differently

what is the common payment method for outpatient pharmacy?

-*per service*

-reimbursed for each med dispensed

-ingreadient cost and dispensing fee

what are the major HC expenditures in the US?

-hospital care

other personal HC

-physician services

-prescription drugs

what are the minor HC expenditures in the US?

-clinical services

-nursing care facilities and continuing care retirement communities

-home health services

who pays for HC expenditures?

-mostly paid by private ins, Medicare, Medicaid and OOP

who qualifies for Medicare?

-elderly (>65)

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describe the covered services, funding, premiums, enrollment periods and late enrollment penalties for Part A

*covered services*: in patient hospital care (excluding meds given), skilled nursing facility care, home health services, hospice

*funding*: mostly payroll tax on earnings paid by employers and employees

*premiums*: only 1% of people enrolled pay premiums

*coverage through*: fed gov

*enrollment periods*: if you pay premium then initial enrollment period is 7 months (3 months prior to 65, month turn 65, 3 months after 65)

-coverage does not start until you turn 65 or 1 month after you sign up if you sign up after turning 65

*late enrollment penalties*: length of penalty contingent on length pt was unenrolled but qualified

describe the covered services, funding, premiums, enrollment periods, and late enrollment penalties for Part B

*covered services*: physician services, labs, X-rays, home health services, preventive care, durable medical equipment, some prescription meds/vaccines

*funding*: funds authorized by Congress and Part B premiums

*premiums*: scale based on income (make more = pay more)

*coverage through*: fed gov

*enrollment periods*:

-initial: 7 months

-general: Jan 1 - Mar 31

*late enrollment penalties*: amnt dependent on time unenrolled in Part B - added to premium when decide to enroll - duration is as long as pt is enrolled in Part B

describe the covered services, funding, premiums, enrollment periods, and late enrollment penalties for Part D

*covered services*: outpatient prescription meds (not over-the counter)

*funding*: funds authorized by Congress and Part D premiums

*premiums*: vary based on chosen plan

*coverage through*: private ins companies

*enrollment periods*:

-initial: 7 months

-open: Oct 15 - Dec 7

*late enrollment penalties*: amnt dependent on time without Part D - duration as ling as unenrolled in Part D

-*credible coverage*: prior coverage that is deemed acceptable (ex. meds covered by VA)

what services are not covered by Medicare?

-*"age-related* needs*

-hearing aids

-eye exams

-glasses/contacts

-dental

-long-term care

*these will be covered if pt has condition that requires one of these services but not corrections needed due to age

what actions are allowed during the Medicare Part D open enrollment period

-enroll in Part D

-disenroll in Part D

-switch plans (decision effective for following calander year)

describe cost-sharing for Medicare Part A and B

A:

-Part A deductible applies to some services

-coinsurance = some servces

-copayment = some services

-no OOP max

B:

-Part B deductible applied to some services

-cooinsurance = some services (usually 20%)

-copayment = some services

-no OOP max

what is Medigap?

-Medicare supplement insurance

-fills in "gaps" on Medicare coverage

-helps with cost-sharing not necessarily extra vision/dental ins

-provides basic benefits applying to Parts A and B

-option to choose Medigap with additional benefits

-not as good at filling gap of noncovered as covered services

-does not impact outpatient med coverage

-not part of Medicare

who is eligible for Medigap?

someone who is enrolled in Medicare Part A *and* Part B

what is the cost-sharing for Part D?

-varies by plan

-beneficiaries are responsible for paying a portion of the cost of their meds

-*max deductible in 2025 = $590* and coverage gap has gone away

what are the cost-sharing phases of Medicare Part D?

deductible phase --> initial coverage phase --> coverage gap phase --> catastrophic phase

describe the deductible phase

-gets larger each year bc deductibles increase

-100% covered by enrollee

-plans do not have to use this phase

describe the initial coverage phase

-gets a little longer each year

-mostly covered by Part D plan (75%) but enrollee contriburtes some too (25%)

-in 2025, once you pay $2000 OOP, you move to catastrophic phase (no coverage gap in 2025) - lower OOP max than previous years

describe the coverage gap phase

-"donut hole"

-enrollee is responsible for full cost again

-phased out by reducing % that enrollee pays and is now gone in 2025

describe the catastrophic phase

-move into this if OOP spending got high enough

-enrollee does not contribute at all - covered mostly by Part D plan but also drug manufacturers and Medicare (2025)

which vaccines are covered by Part B

-pneumonococcal

-flu

-covid

-hepatits B for medium/high risk individuals (end-stage renal disease, hemophilia, HC professionals in frequent contact with blood/bodily fluids)

-other vaccines if directly related to treatment of injury or direct exposure to disease/condition

which vaccines are covered by Part D

-hepatitis B for low risk individuals

-other vaccines that are preventative (not directly related to injury or direct exposure)

what is medicare advantage?

-offered by private ins

-plans available depending on region that beneficiary lives

-some plans cover meds (Part D) but not all

-all plans have OOP max for Part A and B services

-varies by plan - cost-sharing, noncovered service coverage (at least 1 or more: dental/hearing/vision), premiums

-downsides: provider networks, may need referral to specialist

-part of Medicare

what is common of both Medicare supplemental ins (Medigap) and Medicare advantage?

-must be enrolled in Part A and Part B but not required to select Medigap or Medicare advantage

-premium - but not all advantage plans have premiums

how is funding different for Medicare and Medicaid?

-Medicare: funded by payroll tax/employers and employees, and congress

-Medicaid: funded by fed and state govs

how is administration different for Medicare and Medicaid?

-Medicare: administered by fed gov (CMS)

-Medicaid: administered by states in accordance with fed guidelines

why do Medicaid programs vary by state?

-state participation is voluntary (but all do)

-states get to determine what they want to cover/who they deem eligible but must follow fed guidelines bc they recieve fed funding as well

-do not get to pick which categories they want to cover though

-anybody who wants to enroll must be allowed to if they qualify --> no waitlists

who is eligible for Medicaid through the traditional path?

-financial eligibility: must be low income (based on household income but you as individual must be eligible for Medicaid)

-categorical eligibility: 65+ (can be in Medicare and Medicaid or be eligible and choose not to enroll) or >65 (children, parents, pregnant women, diabled, blind)

-*need to fall into financial and categorical to be covered*

who is eligible for Medicaid through the ACA expansion path?

-must be 19-64 and not eligible via traditional path

are the traditional and ACA expansion paths of Medicaid available in all states?

-traditional: available in all states

-ACA: not available in all states - they choose if they want to permit the path

what is the lowest cutoff for Medicaid eligibility allowed by fed guidelines for children and pregnant women?

133% FPL (138%)

compare and contrast traditional and ACA path Medicaid funding

traditional:

-how much fed gov pays is determined by formula

-min 50%

-higher % for states with lower per capital income

ACA:

-mostly paid for by fed gov, started with 100% by fed gov and in 2025 it has gone down to 90% but thats still a lot

both: jointly funded by state and fed govs

who is affected by limited Medicaid coverage options?

people with a household income

why are there limited coverage options for low-income individuals?

-employer-sponsored ins

-may not be eligible, or if eligible may not be able to afford with income

how does Medicaid address gaps in Medicare Part A and B?

-provides options for people who are eligible based on income and resources

-Medicaid is final payer, so Medicare is billed, and coinsurance is applied then Medicaid is billed and fills in the gaps of cost-sharing

-it pays for long-term care, glasses, and other services that may not be covered by Medicare

-it pays the Medicare Part A and/or B premiums

describe the impact of ins coverge for prescription drugs on outpatient pharmacies

-need a system to submit claims electronically

-recieve partial payment/no payment from ins at point of sale (pt pays thier share at POS)

-need to verify if the payment arrives and is correct amnt

how does coverage for prescription drugs impact insurers?

-need to process prescription claims

-need to manage prescription drug utilization and spending

what is a formulary and how are they used in conjunction with cost-sharing?

-formulary: listing of drug pdts that are covered under an ins plan

-lower tier = cheaper/less pt cost-sharing

-under most plans, pt contributes toward cost of at least some covered prescription drugs to manage moral hazard

what is a prior authorization?

criteria must be met before an insurer will pay for a drug

what is step therapy?

failure on one or more drugs before insurer will pay

what is daily supply limit?

-limit number of days of therapy that can be obtained in one fill and limit when insurer will pay for drug again -ex. daily limit of one tablet - for a 30-day supply, the max number of tab filled is 30

what is quantity limit?

-limit amnt of medicaation that will be paid for for a given number of days

ex. will cover 30 in 30 days but not 60 in 30 days

ex. limited to nine tablets every 30 days and ins will not cover more than that amount within timeframe

what are specialty drugs?

-tend to be high cost drugs (depends on ins company)

-may be covered - if covered: may use same drug utilization management tools with traditional drugs

-may see formulary tier entirely for specialty drugs with specific cost-sharing

what are pharmacy networks? why would pharmacies agree?

-how insurer gets pharmacy to agree to accept lower payment (offer inclusion into network)

-pharmacy agrees bc more business - pt would rather pay lower cost-sharing thatn cash price

why do pharmaceutical manufacturers give rebates?

to get favorable placement on formularies (lower tiers) so thier pdts get sold

what is a pharmacy benefit manager (PBM)?

an organziaion that provides administrative and other services associated with processing prescription drug claims for payment and managing drug utilization and spending

-not an insurer

-hired by health ins companies and self-ins employers

what services are provided by PBMs?

-processing of prescription drug claims

-drug utilization management

-pharmacy network management

-rebate negotiation

what is the PBM market?

-dominated by 3 companing: CVS caremark, Express Scripts, Optum Rx

-there are smaller ones too (often bought out by big 3)

what are the PBM sources of revenue?

-*administrative fees*: emnt insurer pays PBM per claim

-*"spread differences"*: difference btwn what PBM pays pharmacy and what PBM charges client for dispensing drug

-*rebates from other manufacturers*: PBM negotiated rebates and keeps part of the rebate recieved

-*other sources*