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Health Care  Costs  and Payment Models Health Care  Costs  and Payment Models

Health Care Costs and Payment Models - PowerPoint Presentation

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Health Care Costs and Payment Models - PPT Presentation

Fellowship HVC Curriculum 20162017 Presentation 2 of 7 Learning Objectives Define three types of health care costs Describe how traditional payment models promote cost variation and lack of price transparency ID: 680426

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Slide1

Health Care Costs and Payment Models

Fellowship HVC Curriculum 2016-2017

• Presentation 2 of 7Slide2

Learning ObjectivesDefine three types of health care costs.

Describe how traditional payment models promote cost variation and lack of price transparency.

Calculate out-of-pocket expenses depending on insurance status, type of plan, and setting of care.

Weigh the impact of out-of-pocket expenses on the ability to adhere to recommendations.

Describe recent value-based payment reforms.Slide3

Case #1 : Patient Perspective1

Read this brief summary of how a patient balances her need for periodic thyroid biopsies with her out-of

-

pocket costs:

http

://www.costsofcare.org/high-costs-of-important-procedures/Slide4

Health Care CostsCharges

: What hospitals and other delivery systems charge is often much higher than reimbursements; only uninsured patients are billed charges (these are highly variable)

Reimbursement

: Set by

M

edicare and

M

edicaid or negotiated with insurance plans as percentage of charges; may drive charge inflation

Out of pocket

: Hardest number to estimate because it varies based on insurance and geography, but this matters most to patientsSlide5

Case #2 A 65-year-old man is evaluated in

a clinic in Lebanon, NH, for

lightheadedness and found to have a systolic murmur and diminished carotid pulses on

exam.

T

ransthoracic echocardiography

is ordered to look for evidence of aortic stenosis.Slide6

Case #22

Use the calculator below to estimate the patient’s out-of

-

pocket expenses for the echo, and compare the results based on the following three insurance variables: no insurance, Medicare, private high-deductible plan ($5,000 deductible, $75 copay)

http

://

www.dartmouth-hitchcock.org/billing-charges/out_of_pocket_estimator.html

Slide7

Case #2

Identify a commonly ordered test in your

subspecialty,

and compare

out-of

-

pocket

expenses for that test based on the three insurance

variables:

no insurance, Medicare,

private high-deductible

plan ($

5,000 deductible,

$75 co-pay)

Were

you surprised by how much the out-of-pocket expenses varied based on

insurance?

Should

this knowledge impact your clinical recommendations?

If

so, how should it?Slide8

Sources of Health Insurance (2013)3

Medicare and Medicaid spending

39% of national health spending

23% of federal budget

43% of hospital revenues

Employment based 54%

Medicaid 17%

Medicare 16%

Individual private insurance 11%

Military 5%

Uninsured

13%Slide9

Individual Private Insurance3

Individual policies involve

a person

paying a premium directly to a “health plan” or insurance company, which reimburses

providers

Individual policies

provided

health insurance for

approximately

6%

of

the U.S

.

population

in 2014Slide10

Employment-Based Private Insurance3

Employers

often

pay all or part of the premium that purchases health insurance for their

employees (

covers approximately 48% of the U.S. population

)

This is a tax-deductible business

expense,

and the government does not treat the health insurance fringe benefit as taxable income to the

employee

Therefore, the government

is,

in

essence,

subsidizing employer-sponsored health

insurance

This subsidy was estimated at $

200 billion/year in 2006Slide11

Government-Financed Insurance4

Medicare Part

A

Hospital insurance plan for the

elderly

Financed through social security

taxes

At age

65 years

, patients

who have paid >10

years

into SSI

are

automatically enrolled

Those

<65 years of age who are

totally

and permanently disabled

may enroll after 24 months of disability

Those with ESRD on HD usually enrolled without wait period

Medicare Part B Insures the elderly for physicians’ services

Financed by federal taxes and monthly premiums from beneficiariesAvailable to those eligible for Medicare Part A who elect to pay the Medicare Part B premium of

$

147/month

(

2015) adjusted upward according to incomeSlide12

Medicare Prescription Coverage4

Medicare Part

D

Voluntary prescription coverage that is added to original Medicare

Plans have monthly premiums in addition to that paid for Part B

Deductibles vary but may not exceed $360/year (2016)

Beneficiaries may owe a late enrollment penalty if they are without drug coverage for >63 days

Medicare

Advantage Plan

Beneficiaries can enroll in a private health plan to receive Medicare-covered benefits

Plans cover Medicare Parts A and B and usually D

One MUST have Medicare Parts A and B to sign upSlide13

Government-Financed Insurance5

Medicaid (varies by state)

Federal program administered by the

states

F

ederal

government

P

ays

between

50% and 76%

of total Medicaid

costs

R

equires

that a broad set of services be

covered,

including hospital, physician, laboratory, x-ray, prenatal, preventive, nursing home, and home health

servicesSlide14

The Affordable Care Act of 20106

Affordable Care Act (

ACA = Obamacare

)

Aims: To decrease the number of uninsured Americans and reduce health care costs through insurance reform

Expansion of coverage:

Medicaid expansion:

S

ets

the Medicaid minimum income eligibility

across

the

U.S.

to <

138%

of the federal poverty

level

Includes District

of Columbia and 28 states as of March 2015Health insurance exchanges:

Competitive markets with clear information to assist persons in purchasing insurance; subsidized for families with income <400% of the poverty levelFor the first time, low-income adults without children are guaranteed coverage without needing a waiverSlide15

Pre-ACA: Who Were the Uninsured?6

Adults without dependent children

Low- or moderate-income families (income <400% of the poverty level)

Working families without access to employer-sponsored insurance coverage

Undocumented personsSlide16

Access to Health Care6Slide17

Does Health Insurance Make a Difference?

6,7

Uninsured

Fewer regular medical visits and preventive health

screening tests

Higher rates of undiagnosed and uncontrolled HTN,

diabetes,

and hypercholesterolemia

Lower survival rates for breast and colorectal

cancers

Increased mortality (likely owing to greater morbidity from chronic medical conditions like diabetes, HTN, and cardiovascular disease

)

Worse clinical outcomes during hospitalization

May lead to underuse and/or overuse

Higher in-hospital mortality ratesSlide18

Traditional Methods of Payment(Health Provider Reimbursement Models)

Diagnosis-Related Groups

(DRGs

)

Physician or hospital is paid one sum for all services delivered during one illness; there is a different set case-price for each of approximately 750 distinct DRGs (Medicare

).

Per

Diem

The hospital is paid for all services delivered to a patient during

1

day (private insurance, PPOs/HMOs

).

Fee-For-

Service

The physician or hospital is paid a fee for each service

(for example,

medication, IV fluids,

ECG

, surgical procedure) provided (uninsured, some private insurance

).

Capitation

One payment is made for each patient’s treatment during a month or year

(has now virtually disappeared; previously,

largely

HMOs).Slide19

New Methods: ACOs

Accountable Care Organizations (ACOs

)

Realign value with payment incentives (“

pay for performance

)

F

inancial

incentives to improve the coordination and quality of care

In 2010, a portion of the ACA authorized CMS to create an ACO program to service CMS users (Medicare and Medicaid

)

Shared

savings/risk

approach that sets aside a financial reward to groups of providers or large

health care

organizations that attain a yearly

“benchmark” spending goal and meet predefined quality standardsSlide20

New Methods: Pay for Performance

A

pay-for-performance

(P4P)

model provides a financial incentive to providers who meet defined performance goals

Often used as a first step in transitioning toward more value-based care; easily combines with current fee-for-service methodology

Traditionally has been implemented as an “upside only” (bonus) approach to promote increased quality; more recently, the developing trend is to add a downside (penalty) component for poor performance on defined measures

 Slide21

New Methods: Pay for PerformanceLiterature reflects potential ethical “pitfalls” and unintended consequences of this approach. For

example, this model:

Creates a potential incentive to deselect patients who are difficult to treat and would make meeting the performance goals more

difficult

Creates a potential incentive to provide unnecessary

care—care

unnecessary for appropriate patient

care

but helpful to meet the performance

goalSlide22

Example of Pay for PerformanceIn 2008, Medicare reduced payments to hospitals for hospital-acquired infections

In the short term, there were hospital-level decreases in numbers of hospital-acquired infections, but these were difficult to sustain

In 2012, there was no measurable effect on rates of central line–associated infections or catheter-associated urinary tract infections nationallySlide23

New Methods: Bundled Payment

Bundled payment

is a single payment to

a provider for

all

services associated with a treatment or condition (for example, knee replacement or all outpatient services for a patient with type 2 diabetes for

1

year)

Provider assumes risk; can profit if cost of care is below bundled payment or lose money if above bundled payment

Important for provider to ensure bundle is appropriately priced (that is, adequately risk adjusted)

Often linked to meeting certain quality

measures to

ensure

delivery of high-quality care is maintainedSlide24

Example of a Bundled Payment

Mr. Jones has a heart attack for which he

i

s evaluated in the office, sent to the emergency department, and admitted to the hospital. He undergoes cardiac catheterization and stent placement.

A bundled or global payment means that all of those settings and providers of care will be given a lump sum payment for the episode of care, and the payment will need to be divided up

This incentivizes all the providers to work more efficiently to integrate and coordinate careSlide25

Future Methods: MACRA LegislationM

edicare

A

ccess and

C

HIP

R

eauthorization

A

ct of 2015 (

MACRA

)

Applies to Medicare Part B—physician billing reimbursement ONLY

Replaced the sustainable growth rate (SGR) physician payment patchSlide26

Future Methods: MACRA (Continued)

Goals:

I

mprove the quality of care for Medicare patients and transition clinicians from volume-based to value-based payments by 2019

Many of the specific rules are still being worked out; 2017 data most likely will count for 2019 payments, so

START NOW

!

Very well aligned with the provision of high

v

alue

c

are and the patient-centered

m

edical home/neighborhood model

To learn more about how to participate as

a

subspecialist,

go to

https://www.acponline.org/running_practice/delivery_and_payment_models/pcmh/understanding/specialty_physicians.htmSlide27

Case #38

Go to

http

://costofcancercare.uchicago.edu

/

, and in a small group, review the online survey about financial toxicity for cancer patients

Answer the following questions:

Should we screen our patients for financial harm from medical bills?

If so, how?

Which questions might be helpful for patients in your specialty? Slide28

Steps Toward High Value,

Cost

-Conscious

Care

9

Step

1:

Understand the benefits, harms, and relative costs of the interventions that you are considering

Step

2:

Decrease or eliminate the use of interventions that provide no benefits and/or may be

harmful

Step

3:

Choose interventions and care settings that maximize benefits, minimize harms, and reduce costs (using

comparative effectiveness

and cost-effectiveness data

)

Step

4:

Customize a care plan with the patient that incorporates his or her values and addresses his or her

concerns Step 5: Identify system-level opportunities to improve outcomes, minimize harms, and reduce

health care wasteSlide29

SummaryInsurance status and type of coverage

affects

adherence to recommended treatment

plans

Given large differences in coverage/affordability, we must all seek to individualize patient care to improve quality and safety and decrease

waste

There are new models of clinician reimbursement that reward the practice of high value care/patient-centered medical home and neighborhood modelsSlide30

Commitment in Your Practice

Can you think of a time when your patient didn’t comply with

your recommendations

because of cost?

How could you have tailored your treatment plan to improve outcomes

?

Write

down at least one thing to

start

doing and one thing to

stop doing.

START

:

STOP

:Slide31

References

Vignette courtesy of Costs of Care. High costs of important

p

rocedures. Costs

of

Care Web site.

http://

www.costsofcare.org/high-costs-of-important-procedures/

. Accessed March 17, 2016.

Calculator courtesy of Dartmouth-Hitchcock Medical Center. Out-of-pocket

e

stimator. Dartmouth-Hitchcock Web site.

http

://

www.dartmouth-hitchcock.org/billing-charges/out_of_pocket_estimator.html

. Accessed March 17, 2016.

The

Henry J Kaiser Family Foundation. Health

insurance

coverage of the total

 population. The Henry J Kaiser Family Foundation Web site. http://kff.org/other/state-indicator/total-population/

. Accessed March 17, 2016.Centers for Medicare and Medicaid Services. Medicare Web site. www.medicare.gov

. Accessed March 17, 2016.Centers for Medicare and Medicaid Services.

Medicaid Web site.

www.medicaid.gov

. Accessed March 17, 2016.

The

Henry

J

Kaiser Family

Foundation. Key

f

acts

about

the uninsured

p

opulation.

The Henry

J

Kaiser Family Foundation Web site.

http://kff.org/uninsured/fact-sheet/key-facts-about-the-uninsured-population

/

.

Published

October 15,

2015. Accessed

March 17, 2016.

McWilliams

JM. Health consequences of

uninsurance

among adults in the

United States

: recent evidence and implications. Milbank Q. 2009 Jun;87(2):443-94.

[PMID

:

19523125]

Financial toxicity survey courtesy of The University of Chicago. Cost of cancer

c

are: understand your

f

inancial

t

oxicity. The University

of

Chicago Web site

.

https://

costofcancercare-sites.uchicago.edu

. Accessed March 17, 2016.

Adapted from Owens

, D,

Qaseem

A, Chou R,

Shekelle

P; Clinical Guidelines Committee of the American College of Physicians. High-value, cost-conscious health care: concepts for clinicians to evaluate the benefits, harms, and costs of medical interventions. Ann Intern Med. 2011 Feb 1;154(3):174-80. [PMID: 21282697

]