US Healthcare Delivery System

• The US healthcare system is not designed to center on patient outcomes or align incentives to achieve the Quintuple Aim.
• Healthcare professionals need a basic understanding of the healthcare delivery system, including desired outcomes, forces of system change, and anticipated challenges.
• Focus is given to topics with highest yield on standardized tests and building a foundation for competent, compassionate physicians equipped to face healthcare landscape challenges.

Healthcare Delivery System Defined

• Encompasses all organizations, professionals, and activities that promote, restore, and maintain health.
• Objective is to integrate care across levels and ensure access, quality, and efficiency to meet health outcomes.
• Structure and function significantly affect patients' access to care, quality of services, and health outcomes.
• The US has a mixed model of healthcare delivery, a mix of public and private entities.
• WHO defines quality healthcare as safe, effective, people-centered, timely, equitable, integrated, and efficient.
• Quality healthcare should avoid harm, provide evidence-based services, and respond to individual needs.
• Services must be timely, reduce wait times, equitable regardless of gender, ethnicity, location, or socioeconomic status.
• Care should be integrated, providing a full range of health services, and be efficient, maximizing resources.

US Healthcare Payers

• The US has a mixed model healthcare delivery system with various payers.
• Three main categories are commercial health insurance, government-sponsored health insurance, and self-pay.

Frequently Used Terms in Health Insurance

• Terms are consistent between commercial and government-sponsored health insurance plans
• The healthcare.gov is an official online marketplace for health insurance established under the Affordable Care Act.

Key Terms

• Premium: Payments to the health insurance company to ensure coverage, set annually but paid monthly.
• Deductible: Predetermined amount paid out of pocket for healthcare services before insurance pays.
• Co-payment (Co-pay): Fixed amount paid by the patient at the time of service.
• Co-insurance: Predetermined percentage of healthcare expenses the individual pays after the deductible is met.
• Out-of-pocket maximum: Limit on the amount an individual pays for covered healthcare services in a year.
• In-network: Healthcare professionals, hospitals and medical services who have a contract with the insurance company.
• Out-of-network: Healthcare professionals, hospitals and medical services who do not have a contract with the insurance company.

Managed Care Organizations

• Commercial health insurance plans are classified as managed care organizations (MCOs).
• Use managed care to limit costs while maintaining quality of care by establishing provider networks, provider oversight, and prescription drug formularies.
• A formulary is a list of prescription drugs covered by an insurance plan with discounted pricing.
• Formulary changes can disrupt treatment plans if a medication is no longer covered.

Commercial Health Insurance

• Commercial health insurance is utilized by approximately 65% of the US population.
• Often employer-sponsored, or school sponsored, but can also be individually purchased.
• Requires a premium paid to the insurance company for coverage, paid by a sponsoring entity (employer) or individual.
• Delivers medical care through networks of physicians and hospitals.

Types of Commercial Health Insurance Plans

• Lower member costs have more restrictions on where care is received and require referrals from a primary care physician.
• HMOs generally have the lowest premiums due to these plan restrictions.
  • Health Maintenance Organization (HMO): Requires members to receive healthcare within a designated network, select a primary care physician (PCP) for referrals.
  • Preferred Provider Organization (PPO): Offers a broader network, encourages in-network use for lower costs, allows out-of-network at higher costs, no referrals typically needed.
  • Point of Service (POS): Combines HMO and PPO features, PCP manages care and provides referrals, in-network care has highest benefits, out-of-network available at higher cost.
  • Exclusive Provider Organization (EPO): Covers services only within the plan's network, except emergencies, no referrals needed, more affordable but less flexible than PPOs.

Government Sponsored Health Insurance Programs

• Six main government-sponsored health insurance programs.

Medicare

• Medicare is funded entirely by the federal government.
• The US spent $944 billion on Medicare in 2022, about 21% of the total national health expenditure.
• Individuals eligible if 65+ years old, or a citizen/lawful permanent resident, who worked and paid Medicare tax for 10+ years.
• Exceptions: those with end-stage renal disease, ALS, or a qualifying permanent disability.
• Has two main coverage options, broken up into four parts.
  • Part A: Hospital insurance, covering inpatient care, hospice, skilled nursing facilities, and home health.
  • Part B: Medical insurance, covering outpatient medical services.
  • Part C (Medicare Advantage): Allows beneficiaries to receive Medicare benefits through private health plans.
  • Part D: Provides prescription drug coverage through private insurance plans.

Medicaid

• Jointly funded by federal and state governments.
• Provides healthcare for low-income individuals and families.
• Low reimbursement rates often limit provider participation.
• In 2014, the Affordable Care Act increased Medicaid eligibility to 133% of the federal poverty level, expansion was optional and not fully upheld by all states.

Children’s Health Insurance Program (CHIP)

• A separate program providing health insurance for children and families who earn too much for Medicaid but cannot afford private insurance.
• States administer Chip and Medicaid together.
• Designed to provide health care to underserved populations.
• Medicaid focuses on low-income individuals and families.
• Chip focuses specifically on children and pregnant women in families with modest incomes.

Other Government Sponsored Health Insurance Programs

• Veterans Health Administration: Provides comprehensive care for military veterans, access may be limited by location or capacity.
• Military Health Insurance (TRICARE): Healthcare for active-duty service members and their families, ensuring readiness and well-being.
• Indian Health Services: Focuses on healthcare for American Indians and Alaska Natives, addresses health disparities but struggles with resource limitations.

Self-Pay

• Some patients use self-pay to cover medical expenses.
• Offers flexibility in provider choice, but can place a heavy financial burden on patients.
• May deter patients from seeking necessary care.

Reimbursement of Medical Services

• One of the most complex and rapidly evolving aspects of healthcare today.
• The early 2000s marked a significant shift when CMS launched alternative payment models through the CMS Innovation Center.

Fee-for-Service

• Traditional healthcare payment model, reimbursement for each individual service.
• Payment based on quantity and type of services, not quality or outcomes.
• Does not inherently reward care coordination or efficiency.
  • Pros: Simple, widely understood, reimburses providers for services, flexible.
  • Cons: Incentivizes volume over quality, lacks incentives for care coordination, may drive up costs.

Pay for Performance

• Providers are financially incentivized to meet specific quality and efficiency benchmarks.
• Focuses on rewarding measurable improvements in care.
• Often tied to preventive care, chronic disease management, and patient satisfaction scores.
  • Pros: Incentivizes quality and outcomes, encourages preventive care, improves transparency.
  • Cons: May encourage cherry-picking healthier patients, requires robust data collection, may not account for patient variability.

Capitation

• Pays providers a fixed amount per patient, often monthly, regardless of services provided.
• Commonly used in managed care organizations.
• Shifts financial risk to providers, encouraging preventive care and cost management.
  • Pros: Encourages cost containment, promotes preventative care, provides predictable revenue.
  • Cons: Providers bear financial risk if costs exceed payment, may incentivize substandard care, complex patients may be rejected.

Bundled Payments

• Providers receive a single, predetermined payment for all services related to a specific episode of care.
• Incentivizes care coordination and reduces unnecessary spending.
  • Pros: Encourages care coordination, reduces unnecessary services, aligns incentives for cost-effective care.
  • Cons: Limited applicability to chronic conditions, financial risk to providers, requires strong communication.

Hospital Value-based Purchasing

• Medicare program adjusting hospital payments based on performance in clinical outcomes, patient satisfaction and efficiency
• Hospitals are rewarded or penalized based on ability to meet or exceed benchmarks.
• Promotes accountability for quality and patient outcomes.
  • Pros: Rewards hospitals for improving quality, encourages reduced readmissions, drives improvements in patient satisfaction.
  • Cons: Penalties can hurt under resourced hospitals, metrics may not account for patient complexity, data collection adds burden.

Merit-based Incentive Payment System (MIPS)

• MIPS adjusts reimbursements based on four performance categories: quality, interoperability, costs, and improvement activities.
• Replaced older Medicare alternative payment models.
• Focuses on performance evaluation, rewarding high quality care and penalizing low quality care.
  • Pros: Rewards high quality care, combines multiple metrics, encourages adoption of technology.
  • Cons: Complex scoring system adds administrative burden, may disadvantage small practices, focus on metrics can divert attention.

Global Payment Model

• Features a single payment that is made to cover all healthcare services for a defined population over a set period of time, typically a year.
• Emphasizes population health management, integrating care across providers and services to control costs and improve outcomes.
  • Pros: Promotes population health management and care coordination, encourages providers to address cost drivers and improve efficiency, and allows flexibility in how providers deliver care to meet patient needs.
  • Cons: Providers assume significant financial risk if costs exceed the payment, that it requires robust infrastructure to manage care for large populations, and that risk adjustment challenges can lead to underfunding for complex patients.

US Healthcare Spending vs. Life Expectancy

• US healthcare spending is nearly double that of other similarly large and wealthy nations.
• The US has the lowest life expectancy among its peers.

Challenges in the US Healthcare Delivery System

• Fragmentation of care: Lack of coordination between providers.
• Rising costs and inefficiencies: High costs but lagging health outcomes.
• Health disparities and inequities: Unequal outcomes for marginalized groups.
• Social Determinants of Health: Factors like income, education, and housing affect access.
• Provider burnout: Administrative tasks and heavy caseloads contribute to burnout.
• Slow adoption of innovation: Resistance to adopting new models of care, such as telemedicine.

Driving Progress in the Quintuple Aim

• Agents of systems thinking: Understand how systems work and advocate for integrated, patient-centered care.
• Leaders in value-based care: Transition to care that prioritizes quality over quantity.
• Champions for health equity: Address disparities by identifying and addressing social determinants of health.
• Promoters of provider well-being: Lead initiatives to improve team-based care and reduce administrative burdens.
• Adopters of innovation and technology: Embrace tools that improve care delivery, such as telemedicine and wearable devices.

Quintuple Aim

• Enhancing Patient Experience
• Improving Population Health
• Reducing Healthcare Costs
• Improving Provider Well-being
• Advancing Health Equity

Embracing Innovation and Technology

• Supports the Quintuple Aim by improving efficiency, accessibility, and quality of care.
  • Enhancing Patient Experience:
    • Telemedicine increases access to care, reducing wait times and improving convenience.
  • Improving Population Health:
    • AI and big data analytics help identify trends in public health, allowing for early disease detection and targeted interventions.
  • Reducing Healthcare Costs:
    • Automation and AI reduce administrative burdens and streamline workflows, cutting down inefficiencies.
  • Improving Provider Well-being:
    • AI-powered documentation tools and decision-support systems minimize paperwork, reducing burnout.
  • Advancing Health Equity:
    • Telehealth bridges gaps for rural and underserved populations, ensuring better access to specialists.