Lesson 4 DiscussionWhat are the three roles of the U.S. government in the health care system and in health insurance? Provide some examples of the influence the Federal government has on private health insurance
Component 1, Unit 4, Lecture e: Introduction to Health Care and Public Health in the U.S. Introduction to Health Care and Public Health in the U.S. Financing Health Care, Part 1 Lecture e This material (Comp 1 Unit 4) was developed by Oregon Health & Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number 90WT0001. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/4.0/. Welcome to Introduction to Health Care and Public Health in the U.S.: Financing Health Care, Part 1. This is lecture e. The component, Introduction to Health Care and Public Health in the U.S., is a survey of how health care and public health are organized and how services are delivered in the U.S. It covers public policy, relevant organizations and their interrelationships, professional roles, legal and regulatory issues, and payment systems. It also addresses health reform initiatives in the U.S. Health IT Workforce Curriculum Version 4.0 1 Financing Health Care, Part 1 Learning Objectives - 1 Describe the history and role of the health insurance industry in financing health care in the United States, and Federal laws that have influenced the development of the industry. (Lecture a) Explain the importance of the health care industry in the U.S. economy and the role of financial management in health care. (Lecture b) 2 The objectives for Financing Health Care, Part 1 are: Describe the history and role of the health insurance industry in financing health care in the U.S., and Federal laws that have influenced the development of the industry Explain the importance of the health care industry in the U.S. economy and the role of financial management in health care 2 Financing Health Care, Part 1 Learning Objectives - 2 Describe models of health care financing in the U.S. and in selected other countries. (Lecture c) Explain the differences among various types of private health insurance and describe the organization and structure of network-based managed care health insurance programs. (Lecture d) 3 Describe the models of health care financing found in the U.S. and in selected other countries Explain the differences among various types of private health insurance and describe the organization and structure of network-based managed care health insurance programs 3 Financing Health Care, Part 1 Learning Objectives - 3 Describe the various roles played by government as policy maker, payor, provider, and regulator of health care. (Lecture d) Describe the organization and function of Medicare and Medicaid. (Lecture e) 4 Describe the various roles played by government as policy maker, payor, provider, and regulator of health care And, describe the organization and function of Medicare and Medicaid 4 The Government as Insurance Payor Insurance Managed by the Centers for Medicare and Medicaid Services (CMS) Medicare Medicaid Children’s Health Insurance Program (CHIP) Medicaid/Medicare Fraud and Abuse Workers’ Compensation 5 This lecture discusses the government as insurance payor, including the different insurance that is managed, administered, and delivered through the government at the federal level, at the state level, or both through the Centers for Medicare and Medicaid Services, or CMS. It also describes the three CMS-administered programs: Medicare, Medicaid, and the Children’s Health Insurance Program, or CHIP, and how these programs operate, receive funding, and their relationship to each other. Finally this lecture will discuss Medicaid and Medicare fraud and abuse, and Worker’s Compensation. Health IT Workforce Curriculum Version 4.0 5 Government-Funded Health Care Government-Provided Health Care Services TRICARE Veterans Health Administration Indian Health Service Government Health Insurance Medicare Medicaid Children’s Health Insurance Program 6 Government-funded health care includes programs in which the government acts as an insurance payor for health care services and other programs in which the government, in addition to funding the costs, acts as provider of health care services. The latter include the government-run programs for active and retired military personnel and their families through TRICARE and the Veterans Health Administration, and the Indian Health Service. We will look at the programs where the government acts only as the payor for health care services, either directly or indirectly. This includes Medicare, Medicaid, and CHIP. 6 Medicare Created by Social Security Act of 1965 Determines Medicare eligibility Processes premium payments FICA - Financed by payroll taxes 1.45% from employee + 1.45% from employer 2.9% deduction Pays for Medicare Part A (hospital insurance) 7 Medicare was created by the Social Security Act of 1965 as an amendment to existing Social Security legislation. The Social Security Administration determines Medicare eligibility and processes premium payments. The Federal Insurance Contributions Act, or FICA, mandates the collection of payroll taxes to finance Medicare. If employed, the abbreviation FICA on a paycheck refers to this payroll tax deducted from employees’ gross wages. Employees pay one-point-four-five percent of their gross pay into Medicare, which is matched by their employer for a total of two-point-nine percent. This FICA payment goes to fund Medicare Part A, which is the hospital insurance part of Medicare. The next slides discuss all four parts of Medicare. 7 Medicare Part A Hospital insurance Inpatient care (including psychiatric hospital) Hospital outpatient care Skilled nursing facility or rehabilitation facility Long-term care facility Hospice (end-of-life care) Patient pays deductible No premiums after 10 years of payments Can purchase through premiums 8 Medicare Part A is hospital insurance, but is not limited to just hospital care. Part A also covers skilled nursing facilities, rehabilitation centers, long-term-care facilities, home health care, hospice programs, and certain outpatient care. Like most insurance, there is a deductible for this coverage. Americans who have paid FICA for at least ten years pay no premium for Part A coverage. Those who have not paid for ten years can purchase Part A coverage through premiums. 8 Prospective Payment System (PPS) System for reimbursing providers Controls costs Pays predetermined, fixed dollar rate regardless of services provided The rate depends on the patient’s diagnosis-related group (DRG) Age Gender Principal diagnosis Other conditions Surgical procedures 9 Medicare uses a prospective payment system to reimburse providers of Part A services. The goal is to make providers more cost-effective by paying them a pre-determined, fixed rate per patient no matter what services are actually performed. The rate is determined by the patient’s diagnosis-related group, or DRG. The DRG is assigned based on factors such as patient age, gender, principal diagnosis, other conditions, and surgical procedures performed. 9 Medicare Part B Medical insurance Coverage Doctors’ services Outpatient care Home health services Some preventive services Other medical services Patient pays premium and deductible 10 Medicare Part B is medical insurance for physicians and other providers. It covers doctors’ services, outpatient care, home health services, some preventive services, and certain other medical services. Patients are required to pay a monthly premium and annual deductible. The patient is responsible for 20 percent of the coinsurance for health care services after the annual deductible. Many individuals have employer-provided supplemental insurance that covers coinsurance expenses. In addition, private supplemental policies may be purchased individually. 10 Medicare Part C - 1 Medicare Advantage plans Offered by private companies approved by Medicare Provide all Part A and Part B Vision Hearing Dental Most plans include Part D Patient pays premium and deductible 11 Medicare Part C refers to the Medicare Advantage plans. These are offered by private companies that are approved by Medicare. The plans provide Medicare parts A and B, and may offer extra coverage, such as vision, hearing, and dental care. Most of these plans include Part D, which is prescription drug coverage. Enrollees in Medicare Advantage plans pay a premium to the private companies for their coverage and also pay a deductible. 11 Medicare Part C - 2 Differences in Advantage Plans: Out-of-pocket costs Rules for services Change each year Part C options include: Health maintenance organization (HMO) Preferred provider organization (PPO) Private fee-for-service plan Special needs plan 12 Each Medicare Advantage Plan charges different out-of-pocket costs and has different rules for services, which can change each year. A Medicare Advantage plan can take the form of a health maintenance organization, or HMO, a preferred provider organization, or PPO, a private fee-for-service plan, or a special needs plan. 12 Medicare Part D Created in 2003 Prescription drug coverage Voluntary enrollment Pay premium to company approved by Medicare Patients pay deductible & co-payment After certain point, may pay up to 50% of drug costs themselves (“doughnut hole”) 13 Medicare Part D was created in 2003 and provides prescription drug coverage. Enrollment is voluntary, and enrollees pay a premium to an insurance company or other private company that is approved by Medicare. Enrollees also pay a deductible and co-payment. After a certain point, enrollees may have to pay up to fifty percent of their prescription drug costs themselves for a portion of the year. This controversial coverage gap in Medicare Part D, known as the “doughnut hole”, has been addressed in the Patient Protection and Affordable Care Act, passed in 2010. 13 Medicaid - 1 Helps pay costs for people with limited income and resources Joint federal and state program Some Medicare patients qualify for Medicaid Funded by taxpayers’ income tax payments Administered through CMS at state level Formulate and administer plan subject to federal regulations and guidelines Outlines nature and scope of services provided 14 Another program jointly administered by the federal government through the CMS and the states is Medicaid. It helps pay medical costs for people with limited income and resources. Some people qualify for Medicare and Medicaid together. Medicaid is funded by taxpayers’ income tax payments. States are not required to offer Medicaid, although all fifty states now have a program. Each state formulates and administers their own Medicaid plans, subject to federal regulations and guidelines. In these plans, each state outlines the nature and scope of services to be provided, then selects vendors to provide the services outlined in their plan. 14 Medicaid - 2 Differs by State Eligibility requirements Co-payments Counting income and resources Must provide payments for hospital and physician services May provide payments for pharmacy, dental, and eye care Must not provide payments for abortions 15 Medicaid programs vary from state to state, each having different eligibility requirements and different co-payments. The rules for counting income and resources vary from state to state and group to group; however, some rules are mandated by the Federal government. States must provide payments for hospital and physician services; they may provide payments for pharmacy, dental, and eye care. No state may provide payments for abortions. 15 Medicaid - 3 Programs have different names in different states Federal government reimburses states for expenditures States accepting funding must provide coverage to people who receive: Temporary Assistance to Needy Families Supplemental Security Income (SSI) 16 Medicaid programs have different names