Component 1, Unit 1: Audio Transcript: Lecture c: Introduction to Health Care and Public Health in the U.S.: Audio Transcript: Financing Health Care Part 2, Lecture c
Audio Transcript
Introduction to
Health Care and Public Health in the U.S.
Financing Health Care, Part 2
Lecture D
Health IT Workforce Cu
iculum
Version 4.0/Spring 2016
This material (Comp 1 Unit 5) was developed by Oregon Health & Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number 1U24OC XXXXXXXXXXThis material was updated in 2016 by Oregon Health & Science University under Award Number 90WT00001.
This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. To view a copy of this license, visit
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Slide 1
Welcome to Introduction to Health Care and Public Health in the U.S.: Financing Health Care, Part 2. This is lecture c.
The component, Introduction to Health Care and Public Health in the U.S., is a survey of how health care and public health are organized and how services are delivered in the U.S. It covers public policy, relevant organizations and their inte
elationships, professional roles, legal and regulatory issues, and payment systems. It also addresses health reform initiatives in the U.S.
Slide 2
The objectives for Financing Health Care, Part 2 are to:
Describe the revenue cycle and the billing process undertaken by different health care enterprises.
Explain the billing and coding processes, and standard code sets used in the claims process.
Slide 3
Identify different fee-for-service and episode-of-care reimbursement methodologies used by insurers and health care organizations in the claims process.
Review factors responsible for escalating health care expenditures in the U.S.
And discuss methods of controlling rising medical costs.
Slide 4
This lecture discusses potential methods of addressing rising health care costs in the U.S. through the use of health information technology to coordinate care; the use of electronic health records to improve health information exchange; and the use of evidence-based medicine, or EBM, such as clinical decision support and clinical practice guidelines, to better support providers.
Slide 5
This lecture also describes newer health care delivery models, including retail clinics and urgent care centers, and the use of physician extenders and doctors of nursing practice, or DNPs, as well as the patient-centered medical home and concierge medicine, and their capacity to reduce health care expenditures.
Slide 6
There are many factors driving the increase in expenditures for medical care in the U.S. Among them are the cost of technology, increased utilization, and administrative costs.
According to the Congressional Budget Office, technology costs account for fifty percent of the total annual expenditures on health care.
New imaging devices - such as computerized tomography, or CT scanners and magnetic resonance imagers, or MRIs - and artificial parts and devices - such as artificial joints for knees and hips, or pacemakers for the heart - contribute to major advances in the diagnosis and management of patients with chronic disease. At the same time, they also contribute to increasing costs.
New procedures have led to treatments for previously difficult or untreatable illnesses and injuries, for example the lap-band for mo
id obesity. Use of the da Vinci robot for minimally invasive surgery has the potential to decrease length of stay and reduce the risk of complications, but costs thousands of dollars more per procedure, due to the high cost of the equipment.
Slide 7
Beginning in 2011, the oldest of the sixty-six million people born between 1946 and 1964, known as baby boomers, will reach age sixty-five and become eligible for Medicare. Claims analysis indicates that individuals greater than sixty-five years of age expend over eight thousand dollars per year on medical services. The increases in both the numbers of aging individuals requiring care and the expenditures associated with that care will continue to raise health care expenditures.
The increase in chronic disease in the aging population will result in the use of additional resources in the diagnosis, management, and prevention of disease progression and complications, further straining the health care system.
Slide 8
Administrative costs account for an estimated seven percent of total health care expenditures in the U.S. These costs are more than double the average of other industrialized countries, primarily due to the myriad requirements for claim submission. Payors establish different rules and processes for the submission of claims, and these processes result in additional administrative costs by health care organizations to meet the specific requirements for submission and additional costs by payors to evaluate submissions.
Transparency, or lack thereof, on the part of third party payors about the processes involved in determining the value of health care services and reimbursements, leads to variations in payment amounts for the same service among different insurance companies, and in some cases, within the same company.
Insurance companies have traditionally looked to providers for discounts in order to cut costs. In a fee-for-service reimbursement scheme, physicians may alter their practice patterns by increasing utilization of fee-based services to offset lost income and to pay practice expenses. This leads to an increased need for additional staff and to a cycle of increasing utilization and administrative costs.
Slide 9
Two additional factors driving utilization are defensive medicine and patient preference.
Defensive medicine is the prescribing of diagnostic and/or therapeutic measures to avoid malpractice litigation. The additional diagnostic value to avoid risk may contribute to over-utilization of some services, for example expensive imaging studies.
Tort reform and the use of clinical guidelines discussed later in this lecture may help to lower costs in the future.
Demand for new technology can be driven through the media’s direct-to-consumer advertising about products and services that may imply additional health benefits through their adoption and use. The cost of this new technology may not be justified based on the marginal increase in value of care and treatment of patients. However, providers may begin using more expensive treatments due to patient demand.
Slide 10
Health care costs are increasing for a myriad of reasons. What methods can be used to increase access to care, improve quality, and control costs? Who becomes responsible for keeping costs under control – the patient, the physician, the hospital, the third-party payor, or the employer? How does one determine the value of new technology in improving patient outcomes? How do we slow or avoid the development of chronic disease in an aging population?
There are no easy answers to these questions. One potential cost control method includes limiting the available resources, or rationing. Another method involves decreasing utilization patterns by increasing the patient share of the costs, or by investing in wellness and prevention.
Both rationing and increasing the patient share of costs raises ethical questions about care for the disadvantaged, the potential for creating a two-tiered health care delivery system, and the appropriate utilization of services by untrained consumers. In addition, while wellness and prevention programs may result in fewer complications and longer periods of health, the additional consumption of health resources needed in wellness and prevention programs may offset potential savings.
Perhaps the best method of controlling costs is to increase the efficiency of health care delivery using health information technology, evidence-based medicine, and clinical practice guidelines. Additional savings may be achieved through new models of health care delivery and tort reform.
Slide 11
Health information technology, or HIT, in conjunction with evidence-based medicine, offered an opportunity to slow health care expenditures. The Health Information Technology for Economic and Clinical Health Act, or HITECH, authorized the federal government to take a leadership role in developing standards to allow for the nationwide electronic exchange and use of health information to improve quality and coordination of care. It will provide savings through the reduction of medical e
ors and duplicate care.
The HITECH Act set meaningful use of interoperable electronic health record, or EHR, adoption in the health care system as a critical national goal and incentivized EHR adoption. The goal is not adoption alone but 'meaningful use' of EHRs—that is, their use by providers to achieve significant improvements in care. In order to receive the EHR stimulus money, the HITECH act requires doctors to show meaningful use of an EHR system. As of October 2016, there are no penalty provisions for Medicaid. Since 2015, hospitals and doctors not using electronic health records have been subject to financial penalties under Medicare.
An EHR facilitates the coordination of care and can support providers through the use of clinical decision support, or CDS, based upon the clinical practice guidelines applicable in a particular clinical situation.
CDS is the real-time delivery of information that could aid in the diagnosis or management of the patient as the physician uses the electronic medical record. Physicians receive reminders that may help them make appropriate decisions regarding the use of health care resources for the diagnosis and management of the patient.
The use of CDS has the potential to lower costs by avoiding diagnostic expenses such as duplicate testing and/or procedures that have only a marginal value in aiding the decision-making process. It aids management of patients by avoiding e
ors, for example, prescribing a medication to which the patient has an allergy or which may adversely interact with another medication the patient is already taking. Real-time decision making may avoid the additional expense associated with these e
ors.
HIT, further supports lowering costs through health information exchange by permitting access to records through the sharing of information among providers, and decreasing the potential of duplication of procedures and services.
Slide 12
Evidence-based medicine, or EBM, involves the review of published research studies in evaluating the value of a treatment. Using the results or evidence of these reviews to design clinical practice guidelines, practitioners can treat patients based on an established standard of care. This has the potential to lower costs, since patients are treated according to a standard based on evidence of the effectiveness of a treatment. It also has the potential to stop the practice of defensive medicine by establishing a standard for care.
Some physicians have criticized clinical practice guidelines as cookbook medicine, but the goal of clinical practice guidelines is to establish a benchmark from which a physician can initiate treatment under a particular set of circumstances. It does not prevent a physician from altering the treatment plan in the future, based upon the results of the standard of care.
Evidence-based medicine can be used to establish the value of new technology. For example, the additional cost of minimally invasive surgery using the da Vinci robot has been justified by the lower complication rate and decreasing length of stay, thus lowering overall costs of care. By comparing the overall costs of minimally invasive surgery using the da Vinci system, including its complications, against those of standard minimally invasive surgery, evidence can be gathered to support or disprove the cost savings assumption.
Slide 13
Attempts to