HSC 220 Study Guide - Final Guide: Congenital Disorder, Medical Home, Saturated Fat
7 May 2018
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Module 8: Components of Private Insurance
I. Fee for Service
a. A system for the payment of professional services in which the practitioner is paid
for the particular service rendered, rather than receiving a salary for providing
professional services as needed during scheduled hours of work or time on call.
II. Paying the Health Care Provider
a. Employee employer
b. Employer insurance company
c. Insurance company health care provider
III. Paying for Insurance
a. Premium
b. Deductible
c. Co-Payment
d. Co-Insurance
e. Out-of-Pocket Maximum
f. Prescriptions
g. Vision/Dental
Module 9: Health Care Organization
I. Modes of Financing Review
a. Out-of-pocket
b. Individual health insurance
c. Employment-based health insurance
d. Government financing
II. One Attempt to Control Cost
a. Change how health care providers and hospitals are reimbursed
i. On any typical day, you may be faced with several different payment
methods that range from simple to complex
ii. Different payment methods depending on setting as well
III. Methods of Payment
a. Fee-for-service
i. Payment per procedure
ii. The unit of payment is the visit or procedure
iii. The physician, PT, APRN are paid for each office visit, ultrasound, IV
fluid or other services.
iv. Example: Roy Sweet, a patient of Dr. Weisman is seen for onset of DM.
1. Dr. Weisman spends about 20 minutes performing an examination,
finger stick glucose test, urinalysis, and ECG.
2. Each service has a fee set by Dr. Weisman.
a. $92 for exam
3. $8 for finger stick
4. $15 for urinalysis
5. $70 for ECG
6. Total = $185
v. Could this method of payment lead to an increase in health care costs?
1. The early years of Medicare and Medicaid
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a. Used Usual, Customary, and Reasonable (UCR) for
payment
b. Costs went up!
2. In the early 1990s Medicare moved to a fee schedule
a. Fees are set for each service by the government
b. Estimate time, mental effort, physical effort, technical skill,
and stress related to the service
vi. What is the economic incentive to health care providers with the Fee-for-
Service method? Is it a bad thing?
b. Payment by episode of illness
i. One lump sum of money is paid to the health care provider per episode
1. Surgeons usually receive a single payment for the surgery and all
pre/post care
2. Home health care receives one payment to manage a case
ii. What are the financial incentives in this payment method? Is it bad?
iii. Risk
1. Risk refers to the potential to lose money, earn less money, or
spend time without being reimbursed
2. With fee-for-service the party paying the bill absorbs all of the risk
3. With bundling services (Payment per Episode for example) a
portion of the risk is transferred to the health care provider
4. General rule; as more services are bundled together more of the
risk is transferred to the provider… Why?
c. Payment per patient: Capitation
i. Per capita means “per head”
ii. Capitation payments are monthly payments made to the PCP for each
patient they have signed up to receive care from them
1. Usually seen with HMO
iii. Risk with Capitation
1. Who has more of the risk with capitation method?
a. All of the short-term risk is shifted to the PCP
i. Long-term: HMO also want to control utilization to
avoid PCP negotiation for higher rates
2. What would health care providers do to help minimize the risk?
What is the financial incentive?
a. Financial incentive to sign up healthy people and avoid sick
people
iv. Risk Adjusted Capitation
1. Provides a higher monthly payment rate for elderly patients and
those with chronic illness
2. Do you see any problem with this? How effective do you think
this would be?
3. What do you know about the predictability of health care?
4. Never know when you are going to need it and how much you
will need!
v. Benefits of Capitation
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1. People have to sign up with a PCP
2. Allows for more flexibility at the practice level
a. Virtual visits
b. Email
c. Phone
vi. Capitation with two-tiered structure
1. The British System uses a two-tiered structure
2. British National Health Service (government financed and run)
a. Each person enrolls with a PCP who receives a monthly
payment per capita
i. More patients on their list, the more money they
make
b. All nonemergency needs are funneled through the PCP who
makes refers to specialists when needed
3. One tier is the health plan and the other tier is the PCP…nice and
simple!
vii. US Capitation System
1. Usually found with HMOs
2. Mostly made from a three-tier system
a. Who is the other tier?
3. Payment is not made to the individual physician but to groups of
PCPs who join together to make Independent Practice Associations
(IPAs)
a. Health plan pays the capitation rate to the IPA who then
manages the money and pays for primary care and
specialists
4. Risk with 3 tier system
a. The financial risk for diagnostic and specialty services is
borne by the IPA
b. In the 1980s and 90s the IPAs often provided a capitation-
plus-bonus payment to the physicians
i. Any extra capitation money that was not used for
diagnostic/specialty services would be given to the
PCPs
c. Do you see anything wrong with this system? Follow the
money.
viii. Capitation-plus-Bonus
1. Less frequent use of diagnostic and specialist the bigger the bonus
at the end of the year
2. Conflict of interest
a. Personal income was increased by denying services
3. Better Idea?
4. Pay for performance
a. Tie bonus to quality measures
d. Payment per time: salary
i. Pros
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Document Summary
Paying the health care provider: employee employer, employer insurance company, insurance company health care provider. Paying for insurance: premium, deductible, co-payment, co-insurance, out-of-pocket maximum, prescriptions, vision/dental. Modes of financing review: out-of-pocket, individual health insurance, employment-based health insurance, government financing. Patient-centered home support: the affordable care act includes several measures to strengthen primary care, increases in medicare fees for primary care, medical homes have shown, improvement in patient satisfaction, quality of care, reduction in ed visits. Four main items of a national health program: free education, this includes health education, best possible work and living conditions, best possible means of rest and recreation, medical care. Causes of death in the us: how many people die in the us each year, 2,424,000, risk factors, tobacco causes 435,000 deaths per year, high-fat diet and inactivity contributes to 365,000, alcohol is responsible for 85,000.
