current types of payments in the u.s. healthcare system lori weyuker, a.s.a.24 junio 2005, san jose,...
TRANSCRIPT
Current Types of Payments in the U.S. Healthcare System
Lori Weyuker, A.S.A. 24 Junio 2005, San Jose, Costa Rica
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Agenda
Introduction Discussion of Hospital Payment Overview of Risk Adjustment and Risk
Models Applications Conclusion
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Methods of Hospital Payment: United States
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Methods of Hospital Payment: United States
Fee-for-Service: DRG Per Diem Global Fee Capitation Risk-Adjusted Capitation
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Methods of Hospital Payment: United States
Fee-for-Service Hospital Charges Based on Inpatient Services (e.g. DRG) Used in United States
Medicare FFS This is ~80% of Medicare hospitalizations
Advantages and Disadvantages Advantages
Method well understood in all health care systems Idea of little risk for hospital
Disadvantages Requires complex administration for hospitals Encourages hospitals to use more services
Results in spiraling increases in cost of providing inpatient care
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Methods of Hospital Payment: United States
Per Diem Hospital Charges Flat Rate Per Day in Facility
Used in Germany Used in United States
Commercial health insurance < age 65
Advantages and Disadvantages Advantages
Method well understood in many health care systems Creates incentives for financial efficiency in hospital
Disadvantages Some financial risk transferred to hospital
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Methods of Hospital Payment: United States
Global Fee Hospital Charges Flat Rate Per Inpatient Episode,
Given a Specific Disease Examples: normal delivery global fee, heart by-pass
global fee Used in commercial health insurance < age 65 in U.S.
Advantages and Disadvantages Advantages
Method well understood in many health care systems Creates incentive for financial efficiency in hospital
Disadvantages Some financial risk transferred to hospital
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Methods of Hospital Payment: United States
Capitation Hospital Charges Capitation Rate Per Member
Per Month Used in many HMOs in U.S.
HMO “Health Maintenance Organization” Health insurance system which uses capitation in
place of billing for each service
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Methods of Hospital Payment: United States Capitation
Payment on a per-capita basis Usually paid per insured per month to hospital Paid to hospital for each insured person in the
relevant geographic population Usually covers entire cost of hospitalization:
laboratory tests, radiology, inpatient drugs Can also cover cost of doctor in hospital
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Methods of Hospital Payment: United States
Capitation Advantages and Disadvantages Advantages
Can create incentive for financial efficiency in hospital Can help to control budget cost
Disadvantages Method not as well understood Some financial risk can be transferred to hospital Small hospitals with specific demographics may incur
unusually high risk
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Methods of Hospital Payment: United States
Risk-Adjusted Capitation Hospital Charges Capitation Rate Per Member Per
Month Retrospective Risk Adjustment to Hospital, Based on
Actual Disease Burden of Given Hospital Used in Kaiser Permanente HMO in U.S.
Largest Non-Profit HMO in United States
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Methods of Hospital Payment: United States
Kaiser Permanente HMO 9.000.000 Insured
600.000 are > age 65 (Medicare) 300.000 are indigent Remainder are commercial < age 65
Fully-integrated health care system Doctors, nurses, dentists and other health care workers are
employees Paid a salary, independent of number and type of services 90.000 health care workers are employees
Executives, analysts and administrators are employees 10.000 employees
Exists in 8 States in U.S. Hospitals (non-profit) owned and operated by Kaiser
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Methods of Hospital Payment: United States
Capitation Advantages and Disadvantages Advantages
Can create incentive for financial efficiency in hospital Can help to control budget cost Help to prevent cream-skimming Makes hospital indifferent to treating high-risk persons
Disadvantages Method not as well understood Some financial risk can be transferred to hospital Small hospitals with specific demographics may incur
unusually high risk
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Methods of Hospital Payment: United States
FFS plus Capitated Hospital Payment Some hospitals combine methods FFS to pay doctor cost Capitation to pay hospital administration cost
Including laboratory, radiology, in-hospital drugs Used in United States
commercial health insurance < age 65
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Methods of Hospital Payment: United States
FFS plus Capitated Hospital Payment Advantages
Can create incentive for financial efficiency in hospital
Can help to control budget cost Doctors maintain more autonomy in health care
practice modality Disadvantages
Some financial risk can be transferred to hospital Small hospitals with specific demographics not as
much at risk as in fully capitated case
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Risk Models and Risk Adjustment
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Risk
What is Risk Expected health care consumption at some time in future
Risk Assessment Mathematical process of calculating numeric value of
health risk Risk Adjustment
Policy decision How to use risk assessment information to move
money for health care
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Examples of Risk Assessment Methods
By Age and Sex Most common method
By Survey Data Health status questionnaires
By Other Statistics Income Geography
By Disease Burden Use of electronic information on diseases present in
population Use of electronic prescription drug information Use of electronic laboratory and radiology results
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Overview of Risk Models
Johns Hopkins University ( ACGs) Boston University (DCGs, RxGroups) Symmetry (ERGs) CSC-3M Model (CRGs) Risk Model of The Netherlands Others
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Risk Model Applications
High cost patient identification
Hospital payment
Doctor profiling
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Risk Model Applications
Medicare Program, HMOs in 1997
Medicare Program, HMOs in 2000
Kaiser Permanente HMO in 2003
Risk-Adjusters Age-sex Geographic (county) Institutional status Welfare status
Age-sex Geographic (county) Welfare status Principle Inpatient Diagnostic Cost Group (PIPDCG)
Age-sex Geographic Inpatient diagnoses (DCG)
Restriction on Premium Contribution
Community rating Community rating Risk-adjusted community rating, including pool-size adjustment
Risk-Sharing No No No
Number of Health Plans 100s About 50 1
Year of Implementation 1972 2000 1993
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Conclusion
Insufficient resources for health care expected Methods exist to improve efficiency and equity within financial stability
in hospital-provided health care Risk adjustment is a new proposed part of solution
Makes hospital indifferent to treating high-risk persons
Health care data quality and risk models are improving dramatically Better quality electronic data These advances result in more equity, efficiency and stability in
health care systems