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HAP 301 - Chapter 1: An Overview of US Health Care Delivery

by: Andrew Sudwi

HAP 301 - Chapter 1: An Overview of US Health Care Delivery HAP 301

Marketplace > George Mason University > Art > HAP 301 > HAP 301 Chapter 1 An Overview of US Health Care Delivery
Andrew Sudwi
GPA 3.5
Health Care Delivery in the U.S.
Dr. Carolyn Taylor

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Chapter 1 notes
Health Care Delivery in the U.S.
Dr. Carolyn Taylor
Class Notes
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This 6 page Class Notes was uploaded by Andrew Sudwi on Tuesday September 15, 2015. The Class Notes belongs to HAP 301 at George Mason University taught by Dr. Carolyn Taylor in Fall 2015. Since its upload, it has received 68 views. For similar materials see Health Care Delivery in the U.S. in Art at George Mason University.


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Date Created: 09/15/15
HAP301 Chapter 1 An Overview of US Health Care Delivery 4 functional components of the US health care delivery includes quad function model Financing For most privately insured Americans health insurance is employment based Most employers purchase health insurance through an MCO or an insurance company selected by the employer In public programs the government functions as the nancier the insurance function may be carved out to an HMO Insurance The MCO or insurance company also functions as a claims processor and manages the disbursement of funds to the health care providers Delivery The term delivery refers to the provision of health care services by various providers The term provider refers to any entity that delivers health care services and can either independently bill for those services or is tax supported Payment The payment function deals with reimbursement to providers for services delivered Funds for actual disbursement come from the premiums paid to the MCO or insurance company The patient is usually required at the time of service to pay out of pocket such as 30 to see a physician The remainder is covered by the MCO or insurance company In government insurance plans Medicare and Medicaid tax revenues are used to pay providers These 4 functions generally overlap but the degree of overlap varies between a private and a government run system and between traditional health insurance and managed carebased system The blend of public and private involvement in the delivery of health care has resulted in A multiplicity of nancial arrangements that enable individuals to pay for health care services Numerous insurance agencies or managed care organizations MCO that employ varied mechanisms for insuring against risk Multiple payers that make their own determinations regarding how much to pay for each type of service A large array of settings where medical services are delivered Numerous consulting rm offering expertise in planning cost attainment electronic systems quality and restructuring of resources There is little standardization in a system that is fragmented and t loosely together Acceptable health care delivery system should have 2 primary objectives It must enable all citizens to obtain needed health care services The services must be cost effective and meet certain established standards of quality I surance and Health Care Reform Medicare program for elderly and certain disabled individuals Medicaid program for poor people jointly administered by the federal government and state government Children39s Health Insurance Program CHIP program for children from lowincome families which also federal and state funded Some predominant employmentbased nancing system in the US has left some employed individuals uninsured for 2 main reasons Due to economic constraints employers do not offer health insurance Some small businesses are able to receive affordable rates In many work settings health insurance programs is voluntary and does NOT require employees to join therefore they choose not to sign up simply because they could not afford it Employers rarely pay 100 of the insurance premium most require their employees to pay a portion of the cost through premium cost sharing Health care reform the expansion of health insurance to cover the uninsured those without private and public health insurance coverage One of the main objectives of the Affordable Care Act ACA is to reduce the number of uninsured Nevertheless by its own design the ACA would fail to achieve universal coverage that would enable all citizens and legal residents to have health insurance Role of Managed Care Utilization the quantity of health care consumed Managed care is a system of health care delivery that Seeks to achieve efficiencies by integrating the 4 functions of health care delivery Employs mechanisms to control manage utilization of medical services Determines the price at which the services are purchased and how much the providers get paid The primary nancier is still the employer or the government Instead of purchasing health insurance through a traditional insurance company the employer contracts with an MCO such as a health maintenance organization HMO or a preferred provider organization PPO to offer a selected health plan to its employees Health plan the contractual agreement between the MCO and the enrollee member including the collective array of covered health services that the enrollee is entitled to Compare with health services delivery under fee for service managed care was successful in accomplishing cost control and greater integration of health care delivery By ensuring access to needed health services emphasizing preventive care and maintaining a broad provider network effective costsaving measures can be implemented by managed care without compromising access and quality thus providing health care budget predictability unattainable by other kinds of health care deHve es Maior Characteristics of the US Health Care Svstem 10 Characteristics that differentiate the US health care delivery system from most countries 1 No central agency governs the system Global budgets funds to determine total health care expenditures on a national scale and to allocate resources within budgetary limits Standards of participation providers must comply with the standards established by the government to be certi ed to provide services to Medicare Medicaid and CHIP bene ciaries 2 Access to health care service is selectively based on insurance coverage Access the ability of an individual to obtain health services when needed which is NOT the same as having health insurance Americans can access health services if 0 They have health insurance through their employer 0 They are covered under a government health care program 0 They can afford to buy insurance on their own 0 They are able to pay for services privately 0 They can obtain charity or subsidized care Primary care continual basic and routine care Universal access the ability of all citizens to obtain health care when needed Still remain only as a theoretical concept Having coverage DOES NOT necessarily mean access 3 Health care is delivered under imperfect conditions Since health care services in the US in largely in private hands it is only partially governed by free market forces Hence the system is best described as quasi market or an imperfect market In a free market multiple patients buyers and providers sellers act independently and patients can choose to receive from any providers Providers neither collude to x prices nor are prices xed by an external agency Rather prices are governed by the free and unencumbered interaction of the forces of supply and demand Demand the quantity of health care purchased At casual observation it may appear that multiple patients and providers do exist Most patients however are now enrolled in either a private health plan or governmentsponsored programs These plans act as intermediaries for the patients and the consolidation of patients into health plans has the effect of shifting the power from the patients to the administrator of the plans The result is that the health plans NOT the patients are the real buyers in the health care service market Moral hazard a situation in which one party gets involved in a riskyshady situation knowing that they are protected against the risk and the other party will incur the cost Once enrollees have purchased health insurance they will use health care services to a greater extent than if they were to pay for these services out of pocket which in turn defeats the purpose of health insurance in a true free market sense which is to protection against quotunforeseenquot illness 2 factors that limit the ability of patients to make decisions 0 Decisions about the utilization of health care are often determined by need the amount of medical care that medical experts believe a person should have to remain or become healthy rather than by pricebased demand which drives the idea of free market 0 The delivery of health care can result in demand creation This follows from selfassessed need coupled with moral hazard leads to greater utilization creating an arti cial demand because price has not been taken into consideration Practitioners who have nancial interest in additional treatments also create arti cial demand referred to as provider induced demand Phantom providers function in an adjunct capacity bill for their services separately These are additional expense incurred outside of the service discussed but is still a part of the operationservice Outside of the surgery cost a patient may incur charges for supplies hospital facilities service performed by other providers Package pricing a bundled fee for a package of related services Its purpose is to overcome the drawbacks of phantom providers 4 Third party insurers act as intermediaries between the nancing and delivery functions The insurance company intermediary does not have the incentive to be the patient s advocate on either price or quality 5 The existence of multiple payers makes the system cumbersome A national health care is sometimes also referred to as singlepayer system the government Multiple payers make the system cumbersome in several ways 0 Dif culties in keeping up with tabs on numerous health plans 0 Since billing services are not standardized providers must hire claim processors to bill for services and monitor receipt of payments 0 Payments can be denied for not precisely following the requirements set by each payer o Denied claims require rebilling 0 When only partial payment is received some health plans may allow the provider to balance bill the patient for the amount the health plan did not pay 0 Lengthy collection effort Administrative costs cost associated with billing collections bad debts and maintaining medical records 6 The balance of power among various players prevents any single entity from dominating the system Due to the fragmented selfinterest amongst key players in the health care system has been con ned to health insurance coverage and payment cuts to providers rather than how care can be better provided 7 Legal risks in uence practice behavior of physicians To protect themselves providers from the possibility of litigation it is not uncommon for practitioners to engage in what is referred to as defensive medicine prescribing additional diagnostic tests return checkup visits and maintaining copious documentation 8 Development of new technology creates an automatic demand for its use 9 New service settings have evolved along a continuum Medical care services are classi ed into 3 broad categories 0 Curative drugs treatments and surgeries o Restorative physical occupational and speech therapies 0 Preventive prenatal care mammograms and immunization Health care settings are no longer con ned to hospital and physician s of ce additional settings such as home health subacute care units and outpatient surgery centers have emerged in response to the changing con guration of economic incentives 10Quality is no longer accepted as an unachievable goal Trends and Direction 0 The focus is changing from illness to wellness The ACA is shifting focus from disease treatment to disease prevention Health Care Systems of Other Countries 0 Canada and Western European nations have used 3 basic models for structuring their national health care systems 1 National health insurance NHI the government nances health care through general taxes but the actual service is delivered by private providers Delivery is characterized by detached private arrangements In the quad function model NHI requires a tighter consolidation of the nancing insurance and payment functions coordinated by the government 2 National health system NHS in addition to NHI the government manages the infrastructure for the delivery of medical care The government operates most of the medical institutions Most health care providers are government employees or a tightly organized publicly managed infrastructure In the quad function model it requires a tighter consolidation of all 4 functions 3 Socialized health insurance SHI government mandated contributions by employers and employees nance health care The government exercise overall control The System Framework System consists of a set of interrelated and interdependent ogicay coordinated components designed to achieve common goals The main elements of the system frameworks are System resources inputs human and nonhuman resources System structure System processes System outputs outcome


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