Questions and Answers
What is Medicare?
It is an entitlement program where people contribute through income taxes and are entitled regardless of income and assets.
Which of the following is a part of Medicare coverage?
What is Medicaid?
A means-tested program that qualifies individuals based on income and assets below a state set threshold.
What drives U.S. healthcare costs?
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The U.S. spends less on healthcare compared to the OECD average.
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What is fee-for-service?
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What is the purpose of shifting healthcare costs to the individual?
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What is bundled pricing?
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What does the Resource-Based Relative Value Scale determine?
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Study Notes
Medicare
- Entitlement program funded through income tax contributions, accessible regardless of assets or income level.
- Administered by the Centers for Medicare & Medicaid Services (CMS).
- Beneficiaries include individuals aged 65 years and older, disabled persons, and those with end-stage renal disease.
Parts and Coverage of Medicare
- Part A: Covers hospital inpatient care, limited skilled nursing facility days, home health services, and hospice for terminal illnesses.
- Part B: Medical insurance for outpatient services, including physician visits, diagnostic tests, emergency care, rehabilitation, ambulance services, dialysis, and radiation therapy.
- Part C: Medicare Advantage plans, which include Health Maintenance Organizations (HMO), Fee-for-Service (FFS), and Preferred Provider Organizations (PPO).
- Part D: Prescription drug coverage, includes the "donut hole" coverage gap.
Medicaid
- Means-tested program, qualifying individuals based on income and asset thresholds set by state governments.
- Joint federal-state program, with federal matching funds contingent on providing essential health services.
- Beneficiaries primarily include children (1 in 3), parents with dependent children, seniors, expectant mothers, and individuals with significant disabilities.
- Medicaid expansion allows coverage for parents of SCHIP children and low-income adults.
- Federal government mandates certain service coverage, while states can implement additional services.
Role of States in Healthcare
- States manage government-sponsored healthcare programs, including Medicaid and State Children's Health Insurance Program (SCHIP).
- State laws govern various health-related areas, such as insurance regulations, provider rates, and medical malpractice.
- Promote consumer choice through information on pricing and quality, ensuring market competition.
- Authority to enact public health initiatives and engage in major policy changes with stakeholders.
Health Care Costs
- Healthcare expenditures in the U.S. account for 17.6% of every dollar spent.
- The U.S. healthcare spending is 2.5 times higher than the OECD average.
- Higher spending noted particularly in ambulatory care and administrative costs compared to other OECD countries.
Importance of Addressing Health Care Costs
- Rising costs reduce real family incomes and contribute to national debt.
- Higher healthcare expenses can detract from essential investments in education and research.
- Competes disadvantageously with international businesses due to elevated procedure costs in the U.S.
Factors Driving U.S. Healthcare Costs: Medical Model and Practice Variation
- Elevated physician, facility, and medication costs.
- Americans utilize a larger share of expensive medical interventions and technologies.
Factors Driving U.S. Healthcare Costs: Complex System and Market
- Fragmented and uncoordinated care leads to inefficiencies.
- High administrative expenses attributed to a multi-payer system and provider consolidations.
- Fee-for-service model amplifies fragmentation and incentivizes higher spending.
Factors Driving U.S. Healthcare Costs: Patients
- Consumers often do not consider costs in healthcare choices.
- Demographic changes and unhealthy lifestyle choices exacerbate healthcare burdens.
- End-of-life care in the U.S. is notably expensive.
Shifting Healthcare Costs to Individuals
- Aims to minimize misuse of insurance benefits.
- Types of costs in private health insurance include premiums, deductibles, copayments, coinsurance, stop-loss provisions, and COBRA provisions.
Fee-for-Service Model
- Providers charge per procedure, billing each service separately.
- Insurers limited payments to "usual, customary, and reasonable" costs (UCR).
- Patients may be responsible for the balance between actual charges and insurers' payments.
- Associated risk: provider-induced demand, leading to unnecessary service provision.
Packaged (Bundled) Pricing
- Single price for a group of related services, fostering payment per episode or illness.
- Includes per diem payments and capitation payments per patient.
- Addresses provider-induced demand by consolidating fees within bundled services.
Resource-Based Relative Value Scale (RBRVS)
- Developed by Medicare to reimburse physicians based on the relative value of each service, taking into account time, intensity, and skill required.
- Medicare Fee Schedule published annually, detailing reimbursement rates based on current procedural terminology codes.
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Description
Test your knowledge on Medicare and its components with these flashcards from Managed Care Chapter 4. Learn about the entitlement program, its beneficiaries, and the different parts and coverage options available. Perfect for anyone studying healthcare management or policy.