Introduction To Healthcare and Public Health in The US

Introduction to Healthcare and
Public Health in the US

Financing Healthcare (Part 1)
Lecture e
This material (Comp1_Unit4e) was developed by Oregon Health and Science University, funded by the Department of Health
and Human Services, Office of the National Coordinator for Health Information Technology under Award Number
[IU24OC000015)].
Learning Objectives
Understand the importance of the healthcare industry in the US economy
and the role of financial management in healthcare. (Lecture b)
Describe models of health care financing in the US and in selected other
countries. (Lecture c)
Describe the history and role of the health insurance industry in financing
healthcare in the United States, and Federal laws that have influenced the
development of the industry. (Lecture a)
Understand 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)
Understand the various roles played by government as policy maker, payer,
provider, and regulator of healthcare. (Lecture d)
Describe the organization and function of Medicare and Medicaid. (Lecture
e)
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Health IT Workforce Curriculum
Version 3.0/Spring 2012
Introduction to Healthcare and Public Health in the US
Lecture e
Goals of Lecture e
Publically funded health insurance
Insurance that is managed by the Centers for
Medicare and Medicaid Services (CMS)
Medicare
Medicaid
Childrens Health Insurance Program (CHIP)
Medicaid/Medicare fraud and abuse
Workers Compensation

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Lecture e
Government Funded Healthcare
Government Health Insurance
Medicare
Medicaid
Childrens Health Insurance Program
Government provided healthcare services
TRICARE
Veterans Health Administration
Indian Health Service
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Lecture e
Medicare
Created by Social Security Act of 1965
Social Security Administration determines
Medicare eligibility, processes premium payments
Partially financed by payroll taxes (Federal
Insurance Contributions Act [FICA])
2.9% deduction (1.45% from employee, 1.45%
from employer)
FICA pays for Medicare Part A (hospital
insurance)

Lecture e
5 5
Medicare Part A
Hospital insurance
Helps cover:
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
Most Americans pay no premiumothers can buy Part A
coverage
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Lecture e
Prospective Payment System (PPS)
System for reimbursing providers under
Medicare Part A
Controls costs
Pays predetermined, fixed dollar rate for most
patients, regardless of services provided
The rate depends on the patients diagnosis-
related group (DRG)
DRG reflects information in the patients chart at
time of discharge
Each type of facility has its own PPS
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Lecture e
Medicare Part B
Medical insurance
Coverage
Doctors services
Outpatient care
Home health services
Some preventive services
Other medical services
Patient pays premium and deductible

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Lecture e
Medicare Part C
Medicare Advantage plans
Offered by private companies that are
approved by Medicare
Companies provide all Part A and Part B; most
also include Part D
May offer extra coverage (such as for vision,
hearing, and dental services)
Patient pays premium and deductible

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Lecture e
Medicare Part C (continued)
Part C options include:
Health maintenance organization (HMO)
Preferred provider organization (PPO)
Private fee-for-service plan
Special needs plan

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Lecture e
Medicare Part D
Prescription drug coverage
Created in 2003
Voluntary enrollment
Provided by insurance company or other private
company approved by Medicare
Patients pay premium and deductible
After a certain point, may pay up to 50% of
drug costs themselves (doughnut hole)
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Lecture e
Medicaid
Helps pay medical costs of people with limited income
and resources
Joint federal and state program
Some people on Medicare qualify for Medicaid too
Funded by taxpayers income tax payments
Administered through CMS at state level
States formulate and administer a plan that is subject
to federal regulations and guidelines
The plan outlines the nature and scope of services to
be provided
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Lecture e
Medicaid (continued)
Each state has different eligibility requirements
and co-payments
Must provide payments for hospital and
physician services
May provide payments for pharmacy, dental,
and eye care
Must not provide payments for abortions
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Lecture e
Medicaid (continued)
Medicaid programs have different names in
different states
Federal government reimburses states for
expenditures under Medicaid
States accepting funding for Medicaid must
provide coverage to families and individuals who
receive:
Temporary Assistance to Needy Families
Supplemental Security Income (SSI)
Version 3.0/Spring 2012 14
Lecture e
Childrens Health Insurance Program
(CHIP)
Provides low-cost health insurance coverage
For children in families that earn too much to qualify
for Medicaid but cant afford private health insurance
Each state has its own program and eligibility
criteria
Eligibility is based on childs status (for example,
a child who is a U.S. citizen can qualify even if
the parent is not a citizen)
Also for low-income pregnant women
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Lecture e
Medicaid and CHIP
May Work Together
Typically cover a range of benefits, including:
Doctor visits, emergency care, hospital care
Prescription drugs, vision, hearing, dental
Free preventive care, including vaccinations
Low premiums and cost-sharing may be
available for other services
Lecture e
16 16
Medicare/Medicaid
Fraud and Abuse
Fraud is intentional falsification of information or
deception of Medicare or Medicaid
Abuse occurs when doctors or suppliers dont
follow good medical practices
Unnecessary costs
Improper payment
Services that arent medically necessary
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Lecture e
Medicare/Medicaid
Fraud and Abuse (continued)
Examples of possible fraud/abuse:
Health care provider bills for services or
equipment that the patient never received
Someone uses another persons Medicare or
Medicaid card to get medical care or
equipment
A provider bills for home medical equipment
after it is returned
Lecture e
18 18
Medicare/Medicaid
Fraud and Abuse (continued)
It is not abuse to complain about quality of care
from a physician, hospital, or other provider or
facility
The Medicare Web site offers options to file:
Inquiries
Complaints
Grievances
Appeals

Lecture e
19 19
Methods of Fighting
Medicare/Medicaid Fraud
SMPs (formerly called Senior Medicare Patrols)
Educate older adults receiving Medicare and
Medicaid benefits to prevent, detect, and
report health care fraud
Online brochure (stopmedicarefraud.gov)
Helps older adults spot, stop, and report fraud
HEAT law enforcement activities
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Lecture e
Form of insurance that provides fixed monetary awards
to employees who are injured or become sick during the
course of employment
Regardless of who was at fault
In exchange for monetary award, employee gives up
the right to sue his or her employer for negligence
Workers Compensation is not:
Disability insurance
Unemployment income

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Lecture e
Benefits of Workers Compensation
Plans
Wage replacement (form of disability insurance)
Compensation for economic loss (past and
future)
Medical benefits (form of health insurance)
Benefits to survivors of employees killed in work-
related accidents (form of life insurance)
Lecture e
22 22
Workers Compensation:
Federal and State
Federal government
Provides Workers Compensation for non-military
federal employees
Administered by Office of Workers Compensation
Programs
State governments
Since 1949, all states have required some form of
Most employers are required to offer this insurance
States investigate fraud and abuse

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Lecture e
at State Level
Administration differs by state
Some states operate state fund
In most states, Workers Compensation
is provided by private insurance
companies
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Lecture e
Summary lecture e
Government health insurance programs operate on
the federal level, state level, or both
Major government
Programs sometimes work together, e.g. Medicaid and
CHIP, Medicare and Medicaid
All programs are subject to legislative change over
time
Fraud and abuse challenge for government
programs
Workers compensation provides coverage to injured
workers
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Lecture e
Summary
There are two types of health insurance in the US private and
public/government
The US government has three roles: pass laws, provide services,
pay for service
The US has both private and public health insurance systems;
healthcare insurance is an important factor in healthcare spending
The UK and Canada have primarily public-funded healthcare
systems; the UK has a multipayer system and Canada has a single
payer system
Insurance spreads the financial risk of healthcare; it can be private
or public or a combination as seen in the US, UK and Canadian
systems
State and Federal laws regulate US healthcare insurance recent
laws include: ERISA, COBRA, HIPAA and the Affordable Care Act )
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Lecture e
References Lecture e
References
American Association of Preferred Provider Organizations. PPO resources.
http://www.aappo.org/index.cfm?pageid=10. Accessed April 10, 2011.
American Association of Preferred Provider Organizations. PPO Toolkit.
http://www.aappo.org/AAPPO_Toolkit_FINAL.htm. Accessed April 2, 2011.
Bihari M. Understanding the Medicare Part D donut hole: learn about the Medicare Part D coverage gap.
http://healthinsurance.about.com/od/medicare/a/understanding_part_d.htm. Accessed April 7, 2011.
Centers for Medicare and Medicaid Services. Childrens Health Insurance Program (CHIP).
http://www.cms.gov/home/chip.asp. Accessed April 7, 2011.
Centers for Medicare and Medicaid Services. http://www.cms.gov. Accessed April 7, 2011.
Congressional Budget Office. Statement of Douglas W. Elmendorf, Director. CBOs analysis of the major health
care legislation enacted in March 2010 before the Subcommittee on Health, Committee on Energy and
Commerce, U.S. House of Representatives. March 30, 2011. www.cbo.gov/ftpdocs/121xx/doc12119/03-30-
HealthCareLegislation.pdf. Accessed April 3, 2011
Cornell University Law School. Workers Compensation: an overview.
http://topics.law.cornell.edu/wex/Workers_compensation. Accessed April 7, 2011.
Kaiser Family Foundation. Health care costs: a primer. August 2007. www.kff.org/insurance/upload/7670.pdf.
Accessed April 2, 2011.
Kaiser Family Foundation. How private health care coverage works: a primer2008 Update. April 2008.
www.kff.org/insurance/upload/7766.pdf. Accessed April 2, 2011
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Lecture e
References
Levey NM. Questions and answers about new rules on appealing rejections of health insurance claims. Los
Angeles Times. July 23, 2010. http://articles.latimes.com/2010/jul/22/nation/la-na-health-rules-qa-20100723.
Accessed April 12, 2011.
Marcinko DE. Understanding the Medicare Prospective Payment System. September 17, 2009.
http://medicalexecutivepost.com/2009/09/17/understanding-the-medicare-prospective-payment-system. Accessed
April 7, 2011.
MCOL. Managed care fact sheets. http://www.mcareol.com/factshts/factnati.htm. 2011. Accessed April 9, 2011
Medicare.gov. Medicare Advantage (Part C). http://www.medicare.gov/navigation/medicare-basics/medicare-
benefits/part-c.aspx. Accessed April 7, 2011.
National Association of Workers Compensation Judiciary. http://www.nawcj.org. Accessed April 7, 2011.
National Bureau of Economic Research. Prospective Payment System (PPS) data.
http://www.nber.org/data/pps.html. Accessed April 7, 2011.
Obringer LA, Jeffries M. How health insurance works.
http://health.howstuffworks.com/medicine/healthcare/insurance/health-insurance.htm. Accessed April 2, 2011.
Partners Human Research Committee. Overview of the HIPAA final privacy regulations.
http://healthcare.partners.org/phsirb/hipaaov.htm. Accessed April 10, 2011.
Purcell P, Staman J. Summary of the Employee Retirement Income Security Act (ERISA). Congressional
Research Service report RL34443. May 19, 2009. http://aging.senate.gov/crs/pension7.pdf. Accessed April 3,
2011.

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Lecture e
References
Tufts Managed Care Institute. Managed care models and products. 1998.
www.thci.org/downloads/ModelsProducts.pdf. Accessed April 10, 2011.
U.S. Department of Health and Human Services and U.S. Department of Justice. Stop Medicare fraud: learn more
about fighting fraud. http://www.stopmedicarefraud.gov. Accessed April 7, 2011.
U.S. Department of Labor. Health plans and benefits. http://www.dol.gov/dol/topic/health-plans. Accessed April 11,
2011.
U.S. Department of Labor. Workers Compensation. http://www.dol.gov/dol/topic/workcomp/index.htm. Accessed
April 7, 2011.
WorkersCompensation.com. http://www.workerscompensation.com. Accessed April 7, 2011.

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Lecture e

Introduction To Healthcare and Public Health in The US

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