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PAM 2350 Prelim 2

Terms in this set (120)

2nd era managed care
-no cost sharing
-kept premiums low
-limited network of providers in exchange for lower hosp/physician prices
-utilization management to ration high cost low value care
-payed some PCPs by capitation (not FFS) so they would ration high cost low value care
traditional insurance
-financial burden on patient
-letting them decide
-high deductible
two ways to limit growth in medical spending without reducing quality (increasing value)
1. demand side
-patients pay a substantial amount of the price of medical care
-let patients choose what treatments are worth it
-"self-rationing"
-traditional and high deductible insurance

2. supply side
-govt/insurer chooses what to pay for and promote
-manage MD's decisions
-negotiates/sets low prices
-"payer/provider-rationing"
-US managed care in 90s
height of managed care in mid 90s
-slowed down growth of premiums
-led to slow down in growth of NHE
-physicians applied practice style
managed care backlash
-consumers forced managed care plans to change
-less utilization management
-broadened provider networks
-capitation used less frequently
-enrollment shifted to PPOs
-when patients wanted broader networks, hospitals and physicians formed larger groups and regained bargaining power over HI --> premiums rose again
4th era: self-managed care
-28% are now in high-deductible health plans (HDHP)
-"patient-managed care"
-substantial cost sharing
-PPOs have increased cost sharing
-when a firm shifted, spending fell by 12% due entirely to reduced quantity not reduced low value
-less visits and drugs but no bad repercussions
-employers reduced spending significantly
insurance breakdown
-63.9% private insurance via employer
-27.2% public (medicare, medicaid, military)
-10.2% uninsured
-6.2% private insurance via individual market
why do we have an employer sponsored HI system
-during WWII, labor shortages and wage controls
-fed decided firms could offer health insurance benefits without violating wage controls
-actions of executive branch during times of war (accidental system)
-100% of employers contribution to HI is shifted to workers in the form of reduced salary
advantages of employer sponsored HI
-risk pooling: less adverse selection bc most employers have a relatively healthy or mixed population (people aren't coming into work just to get HI)
-premiums are community rated within an employer
-lower loading charges with large groups
-employers have incentive to keep their workforce healthy and productive
disadvantages of employer sponsored HI
-in smaller firms, cannot successfully pool risk (ex. one wick worker at a small company will drive up premiums for everyone
-workers don't have the same employer throughout life so risk pool won't stay the same
- some "unfairly" priced premiums due to community rated policies
-some employers don't offer HI
Sources of Health Insurance among the Non-Eldery
-10% of non-elderly are uninsured
- 22.6% get from public insurance (Medicaid, Medicare, Military)
- 70.0% get private insurance (mostly through employer)
Barrier to Health Care
-uninsured people receive about 50% less medical care than insured
Racial/Ethnic Insured rates
-hispanics most likely to be uninsured (16.7%), then blacks (9.6%)
why are 10% of non-elderly uninsured
-people can't afford it -> medicaid doesn't cover all poor people -> states decide if they want to expand
-if you say no to insurance, salary will go up
-younger healthier ppl tend to do this
-community rating within firm isn't worth it
-only 40% of small firms (4-9) offer HI
-insurance is not provided and is voluntary (can pay fee)
individual insurance market
-more expensive to get for just yourself
-higher loading charges
-policies generally much worse than group market
-HI is suspicious and thinks you're more likely to use HI since you're buying it now
-large employers have more negotiating power/ believed to be more representative of overall population
% of Firms offering health insurance by size
• 47% of small companies don't offer insurance to employees
◦ fear for premiums to increase (risk pooling)
who is covered by medicare
- Elderly age 65+ if paid taxes for at least 10 years (48% of elderly had no HI before)
-disabled under 65 after 2 yr waiting period (long work history who become disabled)
-ESRD patients (kidney dialysis)
medicare enrollment trend
-10,000 become eligible for medicare per day
-62.0 mill covered in 2021
effect on uninsured rate and poverty rate
- medicare/aid decreased uninsured rate the mid 60s
- reduced poverty among the elderly
medicare part A
-started in 1965
-covers: hospital inpatient, Skilled nursing (SNF)
-no premium
-100% enrollment
-deductible and co insurance
medicare part B
-started in 1965
-covers: physician care, outpatient
-$134 monthly premium
->95% enrollment
-deductible and co insurance
-heavily subsidized by gov
medicare part D
-started in 2006
-offered by private health plans
-covered: prescription drugs
-$32 monthly premium
-86% enroll
-deductible and co insurance
what is not covered by medicare?
-long-term care/nursing home
-dentures and dental care
-eyeglasses
-hearing aids
supplemental health insurance
-one way to fill in gaps in medicare
-medicare has substantial cost sharing (copays and deducs in A,B,D) which means a lot of out of pocket costs
-81% of beneficiaries had some form of supplemental HI (ex. private medigap plan, medicaid)
-pay premiums for this
two ways to reduce gaps in traditional medicare
-supplemental health insurance
-medicare advantage plan (Part C)
medicare advantage plan (Part C)
-govt pays fixed amount to private HI
-insurer covers same set of services as traditional medicare
-often provides additional services
-pay premium for B and C (part D is covered now)
-usually narrower provider network (Managed care plan)
-42% choose to be in this
how is medicare part A financed
-pay as you go
-current workers pay for current retirees
-future workers pay for current workers
-employees and employers split a 2.9% medicare payroll tax on wages (+0.9% for high income workers) due to ACA
-trust fund expected to run out in 2024
how is medicare part B and D financed
-federal tax revenue cover 72% of each
-elderly pay premiums for remaining
-premiums are higher for wealthier beneficiaries
-subsidized pay as you go
medicare spending rate
-steadily increasing
-22% of US medical spending in 2019
-799 billion
-as baby boomers retire, fewer workers will be paying taxes per each medicare beneficiary
(2.9 in 2020 vs. 2.4 in 2030 (e))
sources of medicare financing
-43% is general taxes (all taxpayers)
-36% is payroll taxes that is split with employer (current workers)
-15% premiums paid by elderly
- 6% other
what will happen if medicare costs continue to grow at historic rates
pressures
-more people are retiring
-elderly are living longer
-medical costs are rising steadily
to finance project part A deficit through 2041, medicare payroll taxes would have to from 2.9% to 3.4%
-if not soon, tax would have to rise to 11%
-if taxes are not raised, part A spending would need to be cut by 13%
-other taxes have to rise to cover part B and D subsidies which will grow over time
-or fed can cut other programs
-or fed can issue more debt
how much of federal budget is used towards medicare and medicaid
24%
restructuring medicare chart
-medicare is a transfer program (transfer from from young to old)
-subsidy gets substantially larger over time
-elderly are putting in a lot less than they get back
possible medicare restructuring policies
-increase eligibility from 65 to 67
-increase part B and D premiums so they cover 35% of the costs
-raise payroll tax by 1%
-turn medicare into a premium support program -> everyone shifts into part C
-change cost sharing rules for medicare and restrict medigap
what fed govt decides about medicaid
-who must be covered
-what types of services are offered
-if ppl are required to face cost sharing
what each state decides about medicaid
-whether to make certain people eligible beyond what is required by fed govt
-how much to pay physicians, hospitals, and providers
-administers its own program
Universal Health Insurance
-US is one of the few high income countries that doesn't provide universal health insurance or truly require it
- there was an incomplete mandate btwn 2014-2018 (ppl could opt to pay a fine and remain uninsured
-mandate eliminated in 2019
federally mandated medicaid eligibility rules (pre-ACA)
1. children in low income households
--> <6 yrs old with family <133% FPL, 6-19 with family <100% FPL
2. pregnant women with family <133% FPL
3. blind or disables with little income
4. parents and adults w/o children depends on state
5. low income medicare beneficiaries
* legal immigrants must wait 5 years after entering US to receive medicaid
restrictive states
-some decide: adults without children are ineligible regardless of how poor they are
-some decide: parents are only eligible of their income is <50% FPL
- restrictive states with both of the above policies
- southern states generally more restrictive
- more low- income uninsured ppl in south
- ACA encouraging these states to become 'expansive' by offering to pick up 90% of cost
expansive states
-adults without children are eligible if income is <133% FPL
what medicaid covers
-hospital care
-outpatient
- (long-term) nursing home care
-home care
-lab tests etc
-optional: prescription drugs
**covers more than medicare
trends in medicaid enrollment and spending
-enrollment quadrupled since 1980 (80 million in 2021)
-spending increased sharply (17% of US medical spending)
what medicaid spends on
-disabled and blind (20,359 per enrollee)
-elderly (15,059 per enrollee)
-adults (approx 5,650 per enrollee)
-children (approx 3,836 per enrollee)
-23% of enrollees (blind and disabled) account for 53% of the costs
beneficial long term effects of medicaid
-compared children from expansion vs non-expansion states
-children who were eligible in their state as a child were:
-healthier when 25-54
-more likely to complete high school and college
-earn higher wages
-pay more cumulative taxes (gov recoups 0.58 for 1.00 spent)
how is medicaid financed
-costs are shared between fed and state govt
-fed govt's share is based on a state's per capita income
-ex. in mississippi, fed pays 77% of cost, but in wealthier states, equal ratio spent
- fed gov pays for 60% of overall Medicaid expenditures nat.
Did ACA affect "Legacy" Medicaid Coverage?
No, all states still have Coverage mandates
How is ACA encouraging restrictive states to become expansive?
by picking up 90% of incremental costs
state spending on medicaid
-spent x2 more on medicaid than higher education
-most spending is k-12
-many people won't eventually get these benefits, unlike with medicare
argument for restrictive states
would rather spend that money on education
how various HI pays hospitals and physicians
-private HI pays the most
-medicare pays physicians 25% less and hospitals 50% less than private HI
-medicaid pays MDs 50% less and hospitals 50% less
-in some states (Alaska, ND, and WY) medicaid pays fairly high fees
- other states (CA, NY, FL, MI) Medicaid reimbursement is esp low
does medicaid really provide access to medical care
-bc of low fees many MDs won't accept new medicaid patients
-36% were not accepting new medicaid patients in 2015
- 2013, ranged from 6% in MN to 61% in NJ
- fewer physicians were not accepting new Medicare (18%) or privately insured (15%) patients in 2015
-
block grant system
-fed gov would provide fixed amount of money to each state
-each state decides who and what to cover
-save 800 billion over 10 years by repealing ACA medicaid expansions and growing block grants at less than medical cost growth rate
-would have resulted in 14-27 million fewer people covered vs ACA expansion
-would allow medical funds to be reallocated to address other health drivers (behavioral, genetic, socioeconomic)
summary of medicare vs medicaid
medicare:
-covers elderly primarily
-popular: all citizens expect to use it eventually
-financed by federal govt
-pay as you go system: wealth transfer from current workers to elderly
-relatively high payment rates
medicaid:
-low income families, disabled, poor elderly
-stigma of welfare -> perception that many won't use it
-financed by state and fed govt
-pay as you go: paid with general and state taxes
-low payment rates
ACA insurance highlights
-expands coverage to 23 mill ppl
-reduced uninsured rate
-subsidized private HI on ACA exchanges
-encourages states to expand medicaid coverage
-fine for not having HI (goes away in 2019) helps with adverse selection
-fine employers for not offering HI
-can't deny ppl for pre-existing conditions
-children under 26 can remain on parents plan
how do exchanges work
-website where many private health insurers offer plans according to generosity (platinum, silver, gold, bronze, high deduct.)
-anyone can use the exchanges, but premium subsidies go to :
---> low income ppl not offered HI from employer
---> or if offered a plan from employer where premium is <9.5% of income
-fines for large employers whose employees choose to use the exchange: encourages better HI
-can't vary by health status only vary by age and smoking ( modified community rating)
The "coverage" Gap
-people who are eligible for "expanded" Medicaid can't receive a subsidy if their state doesn't expand medicare (aka coverage gap)
Enrollment trends
- estimated that 25 mil ppl sign up
-actually, 12 million
-affluent aren't interested
avoid paying ACA fine for not having insurance
-income less than 10,000 year
-premium of the least expensive plan exceeds 8% of their income
could people really keep their plan
-employer HI covered all EHB
-only 49% of plans offered in 2013 in the individual market covered mandated EHBs
-many policies that did not cover all EHBs were then canceled
why is it good to have more insurers
= more competition = lower subsidies (to compete and get customers)
medicaid expansion in ACA
- 11 mill. newly insured
-19 mill if all states expanded
-Income eligibility increased to 138% of FPL for all people (now a lot more adults were eligible if their state expanded)
-fed covered 100% of costs for newly eligible enrollees from 2014-2016
-states now pay 10% and fed pays 90%
-supreme court made expansion optional: gov can't pull existing funding from states that opt out of expansion
--> 12 states opt out
--> expansive states =lowest uninsured rates
Is Private HI on ACA exchange working?
- Private HI lost 2.5 billion collectively on exchanges in 2014: enrollees' medical costs exceeded the total (gov+ enrollee premium)
-HI almost doubled avg. premium of silver plan
- silver premiums fell btwn 2018-2019, est. to fall by 2% by 2021
-deductibles rising
is medicaid expansion working
-increases in coverage and decreases in uninsured rate in expansion states
-improved access to care and use of services among newly insured
-little evidence of increased wait times
-fewer unpaid bills, bankruptcies, evictions
why does ACA forbid poorest people in non expanding states from receiving ACA subsidies on the exchanges
-coverage gap: too rich for medicaid but too poor to qualify for ACA exchange subsidy
-used it as an incentive for states to expand
reasons why refusing to expand medicaid is dumb
-turning down billions of $ from fed
-money would improve health of currently uninsured and would go to phys/hosp in the state
-not saving money: still have to pay income tax, but not getting anything out of it
-why would a state turn down free money from US taxpayers
- increase in medicaid spending subsidized by federal funding
-no evidence expansion made states cut back on spending on other priorities
counter for expanding
-fiscally vulnerable situation
-10% is still a lot to pay
-lead to out of control spending
-welfare trap
-90 mill is still a lot and if that increases, spending will have to be cut elsewhere
prediction: almost all states will eventually agree to expand medicaid
-once citizens realize they are paying for other states to expand medicaid, they will put pressure on their state govts
creative ways to expand:
-MI would have withdrew from expansion if they had not saved enough to offset the 10% they are now paying
-require cost sharing for enrollees (above FPL) which are reduced if enrollees engage in healthy behavior
-using medicaid expansion $ to allow poor to buy private plans on ACA exchange
Health plans must provide 10 essential health benefits/ no co-pay for preventative services
Problems:
- almost all employer health plans already covered 10 EHBs
-49% of plans offered in individual market covered all
- policies that did not cover EHBs were cancelled in fall 2013
what would have happened if republicans repealed the ACA in 2017
-would have increased number of uninsured people by 20 million
-eliminated the individual mandate
-will increase # of uninsured by 9 million btween 2018 and 2027
where private practices get profit
1. seeing patients in practice
-fee is either set by medicare or medicaid or negotiated with private HI (FFS)
2. when treating patient in hospital
-expenses are paid for by hospital (covered by medicare)
-hospitals competing to get patients from this physician, so will offer as many services as they can, then sends bill to medicare
-no explicit payment between hospital an physician -> it provides the MD with supplies and admitting privilege, and MD can charge HI for doing services in the hospital
relationship between physicians and hospitals
capitation
-practice receives a fixed amount of money per enrollee per month, regardless of if the MD sees the patient or what the MD does
-rare MDs get this these days (more common in 1990s)
-now definition of a good practice is empty waiting room and healthy patients
-not feasible for specialists only gen. doctors
fee for service
-A predetermined schedule of fees for each service that a physician performs for a patient: the busier the physician, the greater the revenue to the practice
-71% of physician practice revenue
Most practices provide strong fin. incentives for each physician member to work hard
- 75% =salary w/bonus
- 17% =straight salary
-9% = other
sources of physician practice revenue in terms of insurance
-private HI (43%)
-medicare (29%)
-medicaid (17%)
radiology, anesthesiology, pathology, EMS arrangement
-physician group practice has an exclusive contract with hospital
-practice gives salary to physician
- still paid by insurance
- servicing other physicians patients
-no competition
hospitals that purchase a MD practice arrangement
-hospital purchases practice
-collects revenues, pays all practice expenses, pays physician a salary, and keeps any practice profit
-health system tries to capture most of that physicians hospital admissions
-physicians don't have to run a business and are paid salary
-physicians might make less
HMO as employer model (insurer as Employer)
-staff model HMO pays salary to physician
- eg. insurance pays physician
-MD only treats that insurer's patients
-Insurer pays all practice expenses (ex. Kaiser Permanente)
goals of resource based relative value scale (RBRVS)
-Medicare pays MDs w/ a FFS system called RBRVS
- introduced 1992, replaced "customary and usual charge system"
1. wanted to slow the growth rate of part B spending (SUCCESS)
2. level the playing field between specialists and PCPs (FAILED)
3. limit out of pocket payments for elderly (SUCCESS)
overview of resource based relative value scale (RBRVS)
-patients are categorized into a CPT code
-each CPT is assigned 3 separate RVUs
-congress sets a payment for each RVU unit (with geographic adjustment)
-product of RVUs for the CPT and the payment per unit determines how much MD is paid
-forbids balance billing -> must accept medicares RBRVS payment as final
-MDs can decide whether or not to participate in medicare (96 % do )
3 components of RBRVS
1. Practice Expense RVU
2. Malpractice Expense RVU
3. Work RVU
RBRVs system PCP vs. specialists Medicare Payment
- price from Medicare
-PCP: make $114 per hour
-Specialists: $244/hr
how does medicare RBRVS affect payments from private HI
-medicare physician fee usually becomes benchmark for private HI
-74% of private HI pay physicians by adjusting medicare RBRVS up (but maintain relative payments btwn CPT codes)
-Private plans paid physicians 36% more on avg than medicare RBVS amt
why do some practices receive much higher fees from private HI than others
-physicians can get higher private HI fees if they join a large group practice that is important to the insurer
- In states, where physicians are scarce, they have more negotiating power
-HI might lose enrollees if they don't offer a broad network of high quality physicians, so larger practices have more negotiating power vs private HI
percentage of MDs in smaller practices
-54% in practices w/10 or fewer physicians
breakdown:
-14% solo
-20% 2-4
-20% 5-9
-17% 50+
-solo has decreased from 41% to 29% to 14%
percentage of physicians employed by hospitals/health system
49%, vs. 26% in 2012
why are physicians increasingly selling their practices to hospitals and becoming employees of the hospital
-operating a physician practice is becoming more expensive, complicated, and risky:
-health systems can negotiate higher fees for MD practices
- private HI and Medicare are trying to shift physicians and hospitals away from FFS to take more responsibility for population health and costs
-to succeed under these new reimbursement models, physicians and hospitals need to be more united
-MDs need to install expensive information technology to improve quality and reduce costs; hospitals can help pay to install these systems
-Lifestyle choice: hospitals can help run the practice, allowing physicians to spend more time on patient care
Summary of physicians practice issues
summary of how physician practices work
-MDs get revenue from treating in office and in hospital
-paid by HI regardless of whether or not a hospital owns the practice
-practices can be paid FFS (or capitation but not common)
-medicare RBRVS fee schedule bases MD payment on time/effort/intensity/skill or treatment + malpractice costs
-private HI pay MDs by adjusting the medicare fees schedule -> larger and more powerful practices get higher fees
-MDs increasingly giving up independence and becoming employees of hospital
Overview of Physician's Career
- Medical School = 4 years
- Residency Training= 3 to 5 years
- Practicing= 30+
number of physicians per capita
-doubled since 1930 (OECD health)
-Active Physicians = 100,000 per population
-US has fewer physicians than most high income (2.6 per 1000) countries
-US physician supply has been growing slowly (0.8%)
med school spots vs applicants
-2-3 x as many people apply to US med schools per available position
- 40 new med school opened in the 60s
-very few more opened until recently
-currently 155
why are medical schools expanding
-trying to address a future shortage of physicians
- 2017: AAMA says shortage of 40,000- 100,000 by 2030
-2006: AAMC recommended a 30% increase in capacity of US med schools to increase supply of MDs
-30 new schools have opened since 2002, existing have expanded class sizes
-1st year med school enrollment is now 31% higher than it was in 2005
-# of osteopaths (DOs) has increased by 68% since 2007
-physician "extenders" are likely to take on a greater role to ease shortage
counterargument to a physician shortage
-won't have a shortage, or it will be minor
-avg time to schedule an appointment w/ PCP has gone down was 20 days, now 19.5
-if every PCP cares for 1,500 patients, care could be provided to more than our current population (583 mill)
-system is relying more heavily on nurses and PAs, more added than physicians (150,000)
- MDs may respond to shortage by delegating more tasks to physician extenders
overview of matching program
-developed in 50s to bring organization to chaotic process of placing students in residency
-4th yr med students interview and rank favorite programs in order of preference
-programs likewise rank students
-algorithm assigns them to positions,
-obligated to attend
- 2 days before, unmatched students scramble
residency positions vs grads of med schools
more residency positions available in match than med school grads in match
Lying in interviews
- applicants/ programs may volunteer their interest in one another
--> can't suggest that its ranking depends on the level of interest of the other party
- rule often broken
Residency positions per grad of US Allopathic Medical Schools
- there are enough residency positions for all graduates of U.S. Allopathic Medical Schools
how number of residency spots affects physician shortage
-could be a bottleneck for preventing/minimizing physician shortage
-number of newly trains MDs is determined by number of residency positions offered, NOT # of graduating med students (if we expand med schools but not residency programs, this might not do anything)
-medicare pays teaching hospitals 70,000 pre resident per year to train them, but capped the number of hospitals it does this for since 1998
-residency positions are still increasing, but hospitals claim they need more fed funding to train enough physicians to solve impending physician shortage
percentage of med students who receive a match based on where they went to school
-92.8% of US med school students
-60% of international med school students who are a US citizen
-55% of international med school students who are not a US citizen
- DO students: 89%
percentage that gets top choice in 2021
-46% get 1st, -15.7% get 2nd, - 10.2% get 3rd choice
-72.3% get 1st,2nd, or 3rd
% of U.S medical school grads who did not match to top-ranked speciality
- Unmatched rate=7.2%
- Unmatched rates are higher in high-paying specialties
why don't all US med school grads receive a match or match to their top program
-high income specialties attract more students -> more competitive
-orthopedics: 24% did not match to this as their preferred specialty
-highest rate of not matching is ENT, then Plastics, then ortho, then derm
most lucrative specialty
-orthopedics
-cardiology
-radiology
-anesthesia
-derm
-plastics
-gen surgery
-PCP is at the bottom
step 1 exam
-getting high step 1 scores helps enter competitive and high income specialties
highest mean step 1 scores:
-plastics
-derm
-ENT
-ortho
-radiology
-surgery
-internal
-PCP also at the bottom
-overall average: 233
can med students with debt afford to enter low paying PCP specialties
-avg private school debt: 215k
-avg public school debt: 193k
-debt bubble would happen earlier in other professions: ex. vets, pharma, dentistry, law
PCP and psych do have highest ratio of debt to income
-debt payments as % of after tax income is relatively small
evidence that hospitals have become less important since 1980
-was 47% of personal health care spending, is now 37% in 2019
structure of a typical hospital
-hospital grants admitting privileges to physicians and provides tech
-MD admits some or all of patients, volunteers to be on call periodically for clinical consults
medical arms race
-before managed care, Insurer's paid whatever hospital charged
-hospitals needed MD loyalty in order to attract patients and make money
-hospitals competed with one another to provide physicians with most productive environment, offering highest quality care to MD's patients
-invested advanced med tech
-before managed care, insurers paid whatever hospital charged for this med tech
-resulted in increase in medical expenditures that was driven by hospital spending (1960-1980)
response to medical arms race
-DRG (diagnosis related group) payment system
-estimates the avg cost of treating medicare patients in each of the 750 DRGs across US hospitals
-govt pays each hospital 90% of estimated national avg cost for that DRG (so hospitals lost money on avg)
-payment is the same regardless of how long hospital stay is, how many services they receive
- hospitals with high costs will lose $
-incentivizes them to get patients out of hospital so that they can keep the extra money they were given for DRG but didn't spend
-hospital stays shorter now (4.5 days currently)
how private HI vs public HI pay hospitals
-private HI pay hospitals more than medicare and medicaid (from 75% to 250%)
-medicare aims to pay hospital just above breakeven point
- medicare payment system favors complex surgical procedures over medical treatment
ways insurers are trying to shift hospitals and MDs from volume based (DRGs) to value based reimbursement methods
-bundled payments
--> ask MD and hospitals to divide a single payment, foster coordination
-accountable care organizations
--> an insurer shares cost savings with a health system and its MDs
-pay for performance (P4P)
--> higher pay for higher quality (opp. applies)
-medicare has moved 60% of its contracts to value based payment models
why is medicare shifting to value based payment models
-goal is to turn health care providers into population health managers
-manage a defined population for a fixed amount of money
bundled payments
-encouraged by ACA but still voluntary
-focuses on 50 health conditions (DRGs)
-mandatory for hip/knee replacement in 35 cities
-medicare will make a single bundled payment for an episode of care instead of separate payments to physicians and hospitals
-money is shared between MDs, hospitals, nursing facility, and home care
how to succeed with bundled payments
-keep patients from being readmitted
-reduce expensive post hospital facilities
-get paid same amount for DRG no matter what, so if there is less spending then they get to keep the extra
what is an accountable care organization (ACO)
-broader, value based system
-network of MDs and hospitals that share the financial and medical responsibilities for providing coordinated care to patients
-hope to limit unnecessary spending
-each patients care is managed by PCP
how are ACOs paid
-incentive to be more efficient by offering bonus payments when providers keep costs down
-providers get paid more when patients are healthy and out of the hospital
what are the incentives for an ACO
-change incentives so that its is in the providers best interest to maximize patient health, rather than simply increase the volume of services rendered
results of ACO
-34% of ACOs earned shared savings bc they spent less than medicare expected them to
-avg payment of 2 mill per organization (small)
-payouts skewed (some large, some small)
-ACOs led by physician group have been the most successful than one's led by health system
-physician led ACO reduced medicare spending by 4.9% btwn 2012-2014 compared to control
-most of the savings is coming from reduced hospital and physician visits
-helps explain why hospitals want to buy practices and employ physicians
Is Hospital/physician cooperation more effective?
- health systems that can gain the cooperation of physicians and work effectively with physicians are more likely to reduce costs, improve quality, and thrive under VBRS
- helps explain why hospitals have been buying physician practices and employing physicians recently
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