health care usa chapter 8

7/24/2019 Health Care USA Chapter 8

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Chapter 8

Financing Health Care


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CHAPTER OBJECTIVES

Understand the scope and magnitude of U.S.health care spending in relationship with otherdeveloped countries

Review how the U.S. health care payment system

evolved, current trends and initiatives of thePatient Protection and Aordable are Act of !"1"

Understand the related roles of government # theprivate sectors in $nancing health care and rolesof respective sector sta%eholders

&iscuss historical eorts to lin% costs with 'uality

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Overview (1

(he AA has immediate eects, especiallyon health insurance regulation) full eects ofpolicy changes to unfold over many years

AA does not change fundamental public*private$nancing mechanisms +of U.S. health care

ost wor%ing Americans- health coverageprovided by employers- private insurance)

some recent declines due to recession) /0purchase coverage privately, relativelystable over past years


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Overview (!

Uninsured numbers increasedsteadily until !"11) decrease by 1,due to AA allowing children on

parents- coverage till !0 years.

Public funding2 edicare2 all 3 04years) edicaid2 low/income

populations 5n6uences on $nancing2 providers,

employers, purchasers, consumers,

politics 4


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Overview ("

a7or tensions among in6uencers

8overnment 9public: versus private roles# responsibilities

;mployers- roles # responsibilities asma7or insurance purchasers

Relationships of costs to 'uality

Payment systems- eects on 'uality Primary issues2 rates of cost growth)

uninsured

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Healthcare E#pen$it%re& inPer&pective (1

ealthand >uman Services

!"112 !.B trillion) C,0C"*capita) 1B.D 8&P

9(able C/1, Eig. C/1:) (op personal2 >ospital9C41 F:) physicians 941.F:) prescriptiondrugs 9!0G F: 95nsert Eigure C/! as ne=t slide:

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Healthcare E#pen$it%re& inPer&pective (!

(op !"11 payment sources2 Privatehealth insurance 9CD1 F:) edicare940B F:) edicaid 9"4 F:) all

public sources H " of totalpayments 95nsert Eigure C/G as ne=tslide:

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Healthcare E#pen$it%re& inPer&pective ("

Rate of U.S. e=penditure growth outstripsgeneral in6ation by large margins

Among !D developed nations, U.S. has

largest of national economy devoted tohealth, but lower life e=pectancy # poorerhealth outcomes) higher U.S. prices, notsuperior 'uality) other nations have universal

coverage while U.S. covers !0 populationswith public funds) other nations use morehealth services with more technology.

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Healthcare E#pen$it%re& inPer&pective ('

!"/" U.S. spending is Iwaste2J servicesof no value or valuable services ine@cientlydelivered) reduction in cost variability,

revised economic incentives needed. Eraud # abuse2 G/1" total spending, B4/

!4" F*year) many federal*state agenciescombat technologically sophisticated

fraudulent schemes2 >ealth are EraudPrevention and ;nforcement Action (eam

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river& )* HealthcareE#pen$it%re& (1 a7or cost drivers2

;=pensive medical technology2 diagnostic #treatment e'uipment # pharmaceuticals2computeriKation) highly trained personnel)incentives for high volume use

Aging population2 longevity increasing2 ma7orconsumers of hospital care, pharmaceuticals

Specialty medical care2 0" L physicianspecialists) patient self/referrals) use of highestcost interventions without paymentrestrictions often unnecessary*inappropriate

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river& )* HealthcareE#pen$it%re& (!

Un/ or underinsured2 delays in obtaining servicesresult in higher cost interventions for late/stagecomplications

Mabor intensity2 large numbers of e=pensive,

highly trained personnel) re'uirements increasewith technology advances

Reimbursement system incentives2 private #government insurance2 until managed care #

prospective payment, fee/for/service piecewor%favored high utiliKation by providers # hospitals)fee/for/service fuels high costs till present time

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Ev)l%ti)n )* Private HealthIn&%rance (1

1C""s2 movement to insure wor%ers againstlost wages due to wor% in7uries) latercoverage added to accident policies forserious illness

5nsurance payments to medical careproviders not until 1DG"s with F hospitalcoverage

Antithetical to IinsuranceJ to guard againstunlikelyevents, health insurance paid forboth routineand unexpectedevents

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Ev)l%ti)n )* Private HealthIn&%rance (!

5ndemnity coverage protectedinsureds from costs of care by payingwhatever was billed) prevailed

1DG"s/1DC"s until introduction ofgovernment prospective paymentand managed care.

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Ev)l%ti)n )* Private HealthIn&%rance ("

&evelopment of Flue ross # FlueShield # ommercial >ealth 5nsurance

1DG" Faylor, (N University teachers-

contract with hospital to cover inpatientservices on an annual basis) model forFlue ross development, a private, not/for/pro$t empire dominating healthinsurance for succeeding decades

Flue Shield for physician paymentfollowed in 1D"s with AA support.

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Ev)l%ti)n )* Private HealthIn&%rance ('

&evelopment of Flue ross # Flue Shield # ommercial >ealth5nsurance, cont-d

Flues,J a new era in U.S. health care $nancing2 hospital # doctorcare within reach of all wor%ing Americans) consumers insulated fromcosts) hospital use s%yroc%etedOF subscribers- admissions 4"

higher than nation as a whole) a $nancing alternative that silencedlobbying for national health insurance coverage.

5nitially Icommunity/ratedJ for non/discrimination on ris% factors,ultimately, Ie=perience/ratedJ to compete with commercial insurers

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Ev)l%ti)n )* Private HealthIn&%rance (+

&evelopment of Flue ross # Flue Shield #ommercial >ealth 5nsurance, cont-d

5nitially not/for/pro$t # Icommunity/ratedJfor non/discrimination on ris% factors,ultimately, Ie=perience/ratedJ to competewith commercial insurers

ommercial insurers 9for/pro$t : entered

mar%et in late 1D"s) e=perience/ratedcompetitive premiums) more subscribersthan IFlues,J by early 1D4"s.

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Ev)l%ti)n )* Private HealthIn&%rance (,

anaged are 9?s:

ost increases, 'uality concerns/ ealth

aintenance ?rganiKation Act 9>?: Actof 1DBG with loans, grants for combinedinsurance # health care deliveryorganiKations focused on costcontainment and 'uality) re'uiredemphases on primary care # prevention

5nitially, two ma7or >? types2

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Ev)l%ti)n )* Private HealthIn&%rance (-

anaged are, cont-dSta model2 employed physicians in>?/owned facilities with ancillary

services, some specialties5ndependent practice association2community/based, independent

physicians contracted to provideservices to >? members in theirown o@ce practices

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? payment philosophy2 population/based) lin%s payment with serviceprovision parameters) providers share

$nancial ris% with insurers) populationbasis allows insurer to actuariallydetermine pro7ected service use for age,gender, other factors to estimate e=pected

costs # set premiums.

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Ev)l%ti)n )* Private HealthIn&%rance (.

? goals2 reverse fee/for/service $nancialincentives for high volume2 use pre/paymentfor population groups, paying a pre/set amountin advance for all services a population willneed in a given period to encourage cost/conscious, e@cient care) apitation2 paysproviders a pre/set,per-member-per-monthamount whether or not services are used)physicians spending lesser amounts thanpredicted retain as pro$t, e=ceeding amountspredicted results in penalty

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onsumer $nancial ris% sharing 2 co/payments by visit ) deductibles re'uire apre/determined amount of out/of/poc%et

e=penditures met before insurancecoverage begins) encourage consumercost/consciousness

;arly hybrids2 developed from cost #

'uality concerns2 group practice, networ%,direct contract arrangements.

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Ev)l%ti)n )* Private HealthIn&%rance (1!

anaged are, cont-d

Mater hybrids2 Point of Service Plans 9P?S:allow members to use providers outside

networ%s at increased co/pays # deductibles)D of covered employees) Preferred Provider?rganiKations 9PP?s: formed by physicians #hospitals to serve private payers # self/insuredorganiKations2 guarantee a volume of businessto hospitals # physicians in return for feediscounts) !"1! most popular plans2 40 ofcovered employees.

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Ev)l%ti)n )* Private HealthIn&%rance (1"

anaged are, cont-d

(rends2 Rise of PP?s2 payers- #providers- negotiating power in fees #

use monitoring with more consumerchoice) Sta model decline2 high facilitycapitaliKation costs, consumer choiceissues, competition with independent

practices) &isease managementguidelines2 ;vidence/based guidelines indisease management programs2

communications # interventions toromote self/care for hi h/ris%!


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Ev)l%ti)n )* Private HealthIn&%rance (1'

anaged care, cont-d2 Fac%lash/1DDC/present?rganiKed medicine, other providers, consumers

contested ? policies on provider choice,physician referrals, other restrictive practices

States led with consumer # provider rightslegislation in all 4" states

;mployers implemented Ionsumer/driven >ealthPlansJ 9&>Ps: with Ihealth reimbursementarrangements 9>RAs: or Ihealth savings accountsJ9>SAs: enabling consumer bene$t # cost choices

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Ev)l%ti)n )* Private HealthIn&%rance (1+

anaged care, cont-d2 (rends in osts

1DC"s/ 1DD"s2 prospective payment 9&R8s: #?s stalled national health e=penditure

growth while mar%ets ad7usted !""!/!"1!2 average premiums for

employment/based family health insuranceincreased DB) singles contribute 1C,

families !C) employees drop coverage ;mployers use Ibene$t buy/downsJ to reduce

premiums2 co/pays, deductibles, drop riders

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Ev)l%ti)n )* Private HealthIn&%rance (1,

anaged care, cont-d2 ?s and Quality


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Ev)l%ti)n )* Private HealthIn&%rance (1-

anaged care, cont-d2 ?s and Quality,cont-d erti$cation for provider organiKations to verify

provider credentials, physician organiKations,P>s, disease management programs)Recognition for physician performance e=cellence.


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Healthcare E/ectivene&& ataan$ In*)r0ati)n Set (HEIS

(1


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Healthcare E/ectivene&& ataan$ In*)r0ati)n Set (HEIS (!

!"1! ;&5S datacovering 1!4 Americans disclosed'uality gaps informing policyma%ers,

purchasers, plan administrators onavoidable illnesses and deaths

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Sel**%n$e$ In&%rancePr)gra0& (1 Marge employers collect premiums and pool

funds into accounts to pay medical claimsinstead of using a commercial carrier

Use actuarial $rms to set premium rates #third/party $rms to administer bene$ts, payclaims, collect utiliKation data) third partiesmay provide case management services

;mployer advantages2 avoid commercialcarrier administrative charges, premiumta=es) accrue interest on cash reserves,e=emption from ;R5SA

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Sel**%n$e$ In&%rancePr)gra0& (!

;R5SA controversies, e.g.2 states-responsibilities for consumers-protections through regulation of

employer/sponsored plans) states-losses of premium revenue ta=es)prohibition of employees- suits againstemployer/sponsored health plans about

insurance coverage decisions urrently, organiKations administering

employer/based health insurance planshave legal immunity for withholdinginsurance coverage or for failing to G!


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2)vern0ent a& a S)%rce )* Pa30ent4A S3&te0 in 5a0e Onl3 (1

Earl3 *)c%&4military, governmentemployees, special populations, e.g.ealth Service hospitals, state, local,long/term psychiatric facilities,

eterans Aairs, military #dependents, wor%ers- compensation,public health protection, service

grants 33


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2)vern0ent a& a S)%rce )*Pa30ent4 A S3&te0 in 5a0e Onl3 (1

osaic of reimbursement,vendors*purchaser relationships, matchingfunds, direct services, e.g.

ontracts with providers, not direct serviceprovision 9edicare, edicaid, grants:

Eederal with State matching funds 9edicaid:

&irect services 9eterans Aairs:

AA2 federal support programs foruninsured) not a comprehensive, universalIsystemJ

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6e$icare4 Hi&t)rical


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6e$icare4 Hi&t)ricalSigni7cance

1D042 (itle N555 of Social Security Act All Americans 304 yrs. entitled to

health insurance bene$ts) !" million

entered system in 1D04) today, 4"million covered.

Einanced by payroll ta=es

onceded accreditation,administration to private sector/

A>?Oospital payments by local Flue35

n t a e care


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n t a e careC)0p)nent&

Part A4andatory hospitalcoverage, outpatient diagnostics,e=tended care facilities, home carepost/hospitaliKation) funded by Social

Security payroll ta=es. Part B4voluntary & coverage,

tests, medical e'uipment, homehealth) funded by bene$ciarypremiums matched with federalrevenues

C)&t &haring2 deductibles, co/

insurance) medi/gap policies36


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A$$iti)nal6e$icare C)0p)nent&

Part C4anaged are ?ptions forPrivate >ealth Plan ;nrollment

91DDB: Part 4Prescription &rug overage

9!""G:

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6e$icare C)&t C)ntain0entan$ %alit3 Initiative& (1

osts rose much more rapidly thane=pected

Fy 1DB02 ost cost growth due to

added hospital personnel, non/personnel costs and pro$ts

;arly amendments added covered

services, increased costs) 'ualityconcerns escalated through B"s andC"s.

Mater amendments addressed cost

growth reductions and 'uality38

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6e$icare C)&t C)ntain0ent 9%alit3 Initiative& (!

omprehensive >ealth Planning Act91D00:2 organiKe local healthplanning

Professional Standards Review?rganiKations 91DB!:2 reviewedicare hospital care.

>ealth Systems Agencies 91DB:2plan for health resources based onpopulation needs 9replaced >P:)

plans based on local population39


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6e$icare C)&t C)ntain0ent 9%alit3 Initiative& ("

OBRA 1.8:; 1.81amendments toreduce hospital lengths of stay,advocating home care

Ta# E


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6e$icare C)&t C)ntain0ent 9%alit3 Initiative& ('

&R8s 91DCG:2 Shifted edicare from

Pre/set hospital case reimbursementbased on diagnoses of the 5nternational

lassi$cation of &isease 95&A: codes91","""L, grouped into 4""L categories:

Rewarded e@cient care) $nanciallypenaliKed ine@ciency

?ther insurers followed lead

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6e$icare C)&t C)ntain0ent 9


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6e$icare C)&t C)ntain0ent 9%alit3 Initiative& (+&R8s, cont-d

Eederal prospective Payment Assessmentommission 9ProPac: established to review'uality

ospitals realiKed increased pro$ts

?FRA 91DC4:2 penalties for $nancially/motivated transfers) ;(AMA 91DC0:

re$ned ?FRA 42

6 $i C t C t i t 9


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6e$icare C)&t C)ntain0ent 9%alit3 Initiative& (,

Physician Eees2 Rapid rise inedicare payments and specialtyservices prompted political action2

1DCB/1DCD2 price freeKe

ineective) results oset byincreased service volume

1DD!2 RFRS2 Pay same amountfor o@ce procedures whether

provided by specialist or primaryphysician) incentives for primarycare practice) continued updatesby AA # specialty societies

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Health In&%rance P)rta=ilit3 an$


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ea &% a ce ) a= 3 a $Acc)%nta=ilit3 Act )* 1.., an$ theBalance$ B%$get Act )* 1..- (1

>5PAA 9Tennedy/Tassenbaum Fill:Reaction to concerns raised in debates

about the linton ealthSecurity Act, e.g.

;nsured continued coverage betweenemployers) prohibited e=clusions forpre/e=isting conditions

;stablished IportableJ edicalSavings Accounts

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H l h I P =ili $ A =ili


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Health In&%rance P)rta=ilit3 an$ Acc)%nta=ilit3Act )* 1.., an$ the Balance$ B%$get Act )* 1..-(!

FFA

Reduce edicare spending growth rateover 4 years through direct and indirect

cost reductionsEund State hild >ealth 5nsurance

Program 9S>5P: to enroll 1"L millionedicaid/eligible children

5ntroduce edicare Part /managed care

ombat fraud and abuse

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Health In&%rance P)rta=ilit3 an$ Acc)%nta=ilit3Act )* 1.., an$ the Balance$ B%$get Act )* 1..-("

Strong resistance to the FFA2

Falanced Fudget Re$nement Act91DDD: to restore 1B.4 F in cuts,

delay implementation of FFAprovisions

Fene$ts Protection and

5mprovement Act 9!""": increasedhealth plans- and providers-payments

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Re&p)n&e& t) BBA

Str)ng re&i&tance4

Falanced Fudget Re$nement Act91DDD: to curtail ? withdrawals

from edicare Lhoice 9Part :onsolidated Appropriations Act of

!"""2 restored 1B F in cuts,

postponed*ad7usted new paymentschemes

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Balance$ B%$get Act )* 1..- (!

Reduce edicare spending growthrate over 4 years through directand indirect cost reductions

Eund State hild >ealth 5nsuranceProgram 9S>5P: to enroll 1"Lmillion edicaid/eligible children

5ntroduce edicare Part /managed care

ombat fraud and abuse

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6e$icare C)&t C)ntain0ent an$%alit3 I0pr)ve0ent (1

!""12 S IQuality 5nitiativeJ tomonitor conformance with standardsof care2

>ospitals, nursing homes, home healthcare agencies, physicians, otherfacilities

edicare Quality onitoring System2 onitors 'uality of care delivered to

edicare fee for/service bene$ciaries

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6e$icare C)&t C)ntain0ent an$%alit3 I0pr)ve0ent (!

!""42 I>ospital ompareJ website2 criteriaassessing hospital conformity withevidence/based practice and consumerassessments of hospital care

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6e$icai$ an$ the SCHIP (1

1D042 (itle N5N of Social Security Act

andatory 7oint federal/stateprogram Shared state support based on state-s

per capita income

Fasic insurance coverage for 0! low income individuals

1D of personal health servicespending) G1 of nursing home care

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6e$icai$ an$ the SCHIP


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6e$icai$ an$ the SCHIP(!

Eederal government establishes broadguidelines with minimum criteria, e.g.pregnant women # children) statesmay use broader eligibility criteria2

Mow income families and childrenMong/term care for older and disabled

individuals

Supplemental coverage for low/income edicare bene$ciaries fornon/edicare covered services

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$i i$ $ h SC ("


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6e$icai$ an$ the SCHIP ("

Eederally andated edicaid Services 5npatient, outpatient hospital services

Physician services

&iagnostic services

ome health care

Preventive health screening Pregnancy related # child health services

Eamily planning services

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6e$icai$ an$ the SCHIP('edicaid Eunding

Personal income ta=, corporate ande=cise ta=es

Unli%e edicare

no entitlement) a transfer paymentfrom more auent to needyindividuals) direct reimbursementto providers, no intermediaries

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6e$icai$ an$ the SCHIP(+edicaid anaged are

1DD"s2 States e=perimented withedicaid managed care to slow rapid

cost growth 1DDG2 Eederal waivers allowed

mandatory managed care

accelerated enrollment. 1DDB2 FFA lifted all waiverre'uirements

4" states participate) ma7ority of

recipients in managed care 55



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6e$icai$ an$ the SCHIP(,FFA established State hild >ealth5nsurance Program targetingenrollment of 1" children with

federal matching funds, 1DDC/!""B C children enrolled by !"1") !"112

D.C V 1C years 9D.C: remaineduninsured

Renamed Ihild >ealth 5nsuranceProgram)J re/authoriKed !""D/!"1G)AA reauthoriKed !"1"/!"14.

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6e$icai$ %alit3


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6e$icai$ %alit3Initiative& (1

S and State ?perations develops# implements edicaid # >5P'uality initiatives with state

programs &ivision of Quality, ;valuation #

>ealth ?utcomes provides technical

assistance to states for 'ualityimprovement initiatives

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6e$icai$ %alit3


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6e$icai$ %alit3Initiative& (! Quality Assessment riteria

Prevention and health promotion

anagement of acute conditions

Eamily e=perience of care

Availability of services

&ivision of Quality ;valuation and

>ealth ?utcomes provides technicalassistance to states on 'ualityimprovements eorts

4C

Prel%$e t) Pa&&age )*


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Prel%$e t) Pa&&age )*the ACA !""C presidential election2 voter concerns

on health care second only to 5ra' war

?bama promised swift action on health

reform !""D/!"1" bitter debates, public

outcries

&eath of Sen. ;dward Tennedy lostSenate ma7ority by replacement withRepublican

arch !"1" AA passed in ?bama-s

1th month in o@ce) unparalled reforms4D

H lth Fi i P i i


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Healthcare Financing Pr)vi&i)n&)* the ACA (1

5ndividual mandate and insurance e=pansion2beginning !"1, most Americans must carry healthinsurance or pay a penalty 9ta=:, e=cept those2

Eor whom the cost would e=ceed C of income

With income is below federal ta= $lingre'uirement

Religiously e=empt

Undocumented immigrants

5ncarcerated embers of 5ndian tribes

0"

H lth Fi i P i i


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Healthcare Financing Pr)vi&i)n&)* the ACA (!

edicaid e=pansion2 states may e=pandeligibility levels for non/elderly parents #childless adults with incomes X 1GG of EPM. State funds e=pansion Y 1"", !"1/!"10) D4,

!"1B) D, !"1C) DG, !"1D) D", !"!" #future.

!"1! Supreme ourt decision2 state participationvoluntary) une !"1G2 !0 states will participate,

1G will not participate) B are undecided) willpursue alternative plans

01

Healthcare Financin Pr) i&i)n&


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Healthcare Financing Pr)vi&i)n&)* the ACA ("

Health in&%rance e#change& (HIE& States must establish health bene$t

e=changes 9American >ealth Fene$t;=changes: # create separate e=changes forsmall employers of up to 1"" employees.9Small Fusiness >ealth ?ptions Program: orEederal government will establish withinstates

une !"1G2 1B states accept) !C decline) 0states elect partnership arrangement withfederal government

0!

Healthcare Financing Pr)vi&i)n&


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Healthcare Financing Pr)vi&i)n&)* the ACA ('

Health in&%rance e#change&; c)nt>$Web/based, consumer/friendly, comparativeinformation in standard formats to facilitateconsumer choice on bene$ts, pricing

Eor e=change participation, health plans must meetfederal re'uirements for minimum coverage, Itenessential bene$ts2J

1.Ambulatory patient services

!.;mergency servicesG.>ospitaliKation

0G



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Healthcare Financing Pr)vi&i)n&)* the ACA (+

. aternity and newborn care

4. ental health and substance usedisorder services, including behavioral

health treatment0. Prescription drugs

B. Rehabilitative and habilitative servicesand devices

C. Maboratory services

D. Preventive and wellness services #chronic disease management

1". Pediatric services, including oral and 0



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Healthcare Financing Pr)vi&i)n&)* the ACA (,

Health in&%rance e#change&; c)nt>$ ;=changes must be governmental entities or not/

for/pro$t corporations

;ligibility2 American citiKens, legal immigrants

whose employers do not provide coverage or forwhom the cost of employer/supplied coverage isprohibitive) guaranteed consumer acceptance

Eederal government provides premium # cost/

sharing subsidies by advance # refundable ta=credits based on personal income of 1""/"" ofthe EPM

04



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Healthcare Financing Pr)vi&i)n&)* the ACA (-

Penaltie&; Ta#e& an$ Fee& help Pa3 *)rACA

;mployer health insurance2 no re'uirement

to provide, but ;mployers of 3 4"2 assessed !,"""* E(employee if do not oer coverage # at least 1employee receives a premium credit through an>5;) if do oer coverage # at least one employee

receives a premium credit through >5; assessedlesser of G,""" for each premium credit receiveror !,""" per non/enrolled employee

00



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Penaltie&; Ta#e& an$ Fee& help pa3 *)rACA Marge employers oering coverage must

automatically enroll employees into lowest costplan if employee does not enroll in employercoverage or does not opt out of coverage.

5mposed ta= on high/cost health plans, annualfee on health insurers as of premiums)

annual fees*ta=es on medical devicemanufacturers) ta= on indoor tanning services)!"1"/!"1D revenue2 1! F

0B



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Penaltie&; ta#e& 9 *ee& help pa3 *)r ACA 5ncreased edicare payroll ta=es for high income

earners) modi$cations to health savings and6e=ible spending accounts) increase in 6oor for

ta= deductions for medical e=penses2 !D F ?ther revenue producers2 4.1 F) totalH GD0.1

F

F? estimate2 total cost of insurancee=pansion appro=. 1.1 trillion

0C

Rei0=%r&e0ent


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Rei0=%r&e0entE#peri0entati)n (1 AA pilot programs conducted over

several years e=periment withpayment reforms with dual goals of

slowing spending growth # improving'uality Pilot results will provide information

valuable for planning and re$ne futureinitiatives with the same goals

0D

Rei0=%r&e0ent


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Rei0=%r&e0entE#peri0entati)n (! Accountable care organiKations 9A?s:

8roups of providers, suppliers of health care,health/related services, others voluntarily 7ointo coordinate services for edicare patients

Avoid fragmentation across multiple providers)timely, appropriate care to reduce serviceduplication, unnecessary hospitaliKations #costs based on edicare per/capita

benchmar%s ombine fee/for/service with shared savings #

bonus payments

B"

Rei0=%r&e0ent


71/76

Rei0=%r&e0entE#peri0entati)n (" >ospital value/based purchasing program

9FP:S began pilot pro7ects in !""G) replicated by

private insurers

AA re'uires FP for G,"""L edicare/participating hospitals) incentive paymentsbased on clinical outcomes # patientsatisfaction) discourages inappropriate,

unnecessary, costly care.

Eunded by annual reduction in hospitaledicare payments

B1

Rei0=%r&e0ent


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Rei0=%r&e0entE#peri0entati)n (' Fundled Payments for are

5mprovement 5nitiatives 9FP5: reated by the AA-s enter for

edicare # edicaid 5nnovation, willtest whether reimbursing providers onthe basis of the full spectrum ofedicare patient/ re'uired services for

an episode of illness, rather thanpiecemeal for individual services, canachieve lower costs # improved patientoutcomes.

B!

Rei0=%r&e0ent


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Rei0=%r&e0entE#peri0entati)n (+ 5ndependent Payment Advisory Foard 95PAF:

Purpose2 decrease edicare spending growththrough recommendations on care coordination,waste elimination, best practices, primary care

14 Presidentially/ appointed e=pert memberscon$rmed by Senate) recogniKes need to osetpolitical interest group in6uences onongressional members

Recommendations in form of legislation withongressional deadlines for action

BG

Rei0=%r&e0ent


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Rei0=%r&e0entE#peri0entati)n (, 5ndependent Payment Advisory Foard 95PAF:, cont-d

Absence of ongressional action allows &>>SSecretary to implement legislation, not sub7ectto reversal by the ;=ecutive Franch or courts

Periodic public reports2 standardiKed, system/wide information on health care costs, access tocare, service utiliKation, 'uality of care withcomparisons by region, types of services, types

of providers for edicare and private payers

B

Rei0=%r&e0ent


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Rei0=%r&e0entE#peri0entati)n (- 5ndependent Payment Advisory Foard

95PAF:, cont-d 5PAF cannot recommend policies to2

ration care, raise ta=es, increaseedicare premiums or cost/sharing,restrict bene$ts, modify eligibility

Feginning in !"142 Fiennialrecommendations to President #ongress on slowing national healthcaree=penditure growth.

B4


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C)ntin%ing Challenge&

Payment reforms entail an array ofchallenges issues for policyma%ers ost di@cult issues may be changing

prior philosophies, value systems #politics that resulted in the parado= ofpro$t, rather than value/ driven rewardsystems) IWhy are the bills so highZJ

rather than IWho should pay themZJ U.S. costs un7usti$able compared with

other developed nations- health status #

health care usa chapter 8

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