Transcript DxCG® - Blue Shield of California Training Session

Current Types of Payments in the U.S.
Healthcare System
Lori Weyuker, A.S.A.
24 Junio 2005, San Jose, Costa Rica
Agenda
 Introduction
 Discussion of Hospital Payment
 Overview of Risk Adjustment and Risk
Models
 Applications
 Conclusion
2
Methods of Hospital Payment:
United States
3
Methods of Hospital Payment:
United States
 Fee-for-Service: DRG
 Per Diem
 Global Fee
 Capitation
 Risk-Adjusted Capitation
4
Methods of Hospital Payment:
United States
 Fee-for-Service


Hospital Charges Based on Inpatient Services (e.g. DRG)
Used in United States

Medicare FFS
 This is ~80% of Medicare hospitalizations
 Advantages and Disadvantages

Advantages



Method well understood in all health care systems
Idea of little risk for hospital
Disadvantages


Requires complex administration for hospitals
Encourages hospitals to use more services
 Results in spiraling increases in cost of providing inpatient care
5
Methods of Hospital Payment:
United States
 Per Diem
 Hospital Charges Flat Rate Per Day in Facility
 Used in Germany
 Used in United States
 Commercial health insurance < age 65
 Advantages and Disadvantages
 Advantages
 Method well understood in many health care systems
 Creates incentives for financial efficiency in hospital
 Disadvantages
 Some financial risk transferred to hospital
6
Methods of Hospital Payment:
United States
 Global Fee
 Hospital Charges Flat Rate Per Inpatient Episode,
Given a Specific Disease
 Examples:
normal delivery global fee, heart by-pass
global fee
 Used in commercial health insurance < age 65 in U.S.
 Advantages and Disadvantages
 Advantages
 Method well understood in many health care systems
 Creates incentive for financial efficiency in hospital
 Disadvantages
 Some financial risk transferred to hospital
7
Methods of Hospital Payment:
United States
 Capitation

Hospital Charges Capitation Rate Per Member
Per Month


Used in many HMOs in U.S.
HMO


“Health Maintenance Organization”
Health insurance system which uses capitation in
place of billing for each service
8
Methods of Hospital Payment:
United States

Capitation





Payment on a per-capita basis
Usually paid per insured per month to hospital
Paid to hospital for each insured person in the
relevant geographic population
Usually covers entire cost of hospitalization:
laboratory tests, radiology, inpatient drugs
Can also cover cost of doctor in hospital
9
Methods of Hospital Payment:
United States
 Capitation Advantages and Disadvantages
 Advantages
 Can create incentive for financial efficiency in hospital
 Can help to control budget cost
 Disadvantages
 Method not as well understood
 Some financial risk can be transferred to hospital
 Small hospitals with specific demographics may incur
unusually high risk
10
Methods of Hospital Payment:
United States
 Risk-Adjusted Capitation
 Hospital Charges Capitation Rate Per Member Per
Month
 Retrospective Risk Adjustment to Hospital, Based on
Actual Disease Burden of Given Hospital
 Used in Kaiser Permanente HMO in U.S.
 Largest Non-Profit HMO in United States
11
Methods of Hospital Payment:
United States
 Kaiser Permanente HMO

9.000.000 Insured




600.000 are > age 65 (Medicare)
300.000 are indigent
Remainder are commercial < age 65
Fully-integrated health care system

Doctors, nurses, dentists and other health care workers are
employees
 Paid a salary, independent of number and type of services
 90.000 health care workers are employees

Executives, analysts and administrators are employees
 10.000 employees


Exists in 8 States in U.S.
Hospitals (non-profit) owned and operated by Kaiser
12
Methods of Hospital Payment:
United States
 Capitation Advantages and Disadvantages
 Advantages
 Can create incentive for financial efficiency in hospital
 Can help to control budget cost
 Help to prevent cream-skimming
 Makes hospital indifferent to treating high-risk persons
 Disadvantages
 Method not as well understood
 Some financial risk can be transferred to hospital
 Small hospitals with specific demographics may incur
unusually high risk
13
Methods of Hospital Payment:
United States
 FFS plus Capitated Hospital Payment
 Some hospitals combine methods
 FFS to pay doctor cost
 Capitation to pay hospital administration cost


Including laboratory, radiology, in-hospital drugs
Used in United States

commercial health insurance < age 65
14
Methods of Hospital Payment:
United States
 FFS plus Capitated Hospital Payment
 Advantages




Can create incentive for financial efficiency in
hospital
Can help to control budget cost
Doctors maintain more autonomy in health care
practice modality
Disadvantages


Some financial risk can be transferred to hospital
Small hospitals with specific demographics not as
much at risk as in fully capitated case
15
Risk Models and Risk
Adjustment
16
Risk
 What is Risk

Expected health care consumption at some time in future
 Risk Assessment
 Mathematical process of calculating numeric value of
health risk
 Risk Adjustment
 Policy decision
 How to use risk assessment information to move
money for health care
17
Examples of Risk Assessment Methods
 By Age and Sex

Most common method
 By Survey Data

Health status questionnaires
 By Other Statistics


Income
Geography
 By Disease Burden



Use of electronic information on diseases present in
population
Use of electronic prescription drug information
Use of electronic laboratory and radiology results
18
Overview of Risk Models
 Johns Hopkins University ( ACGs)
 Boston University (DCGs, RxGroups)
 Symmetry (ERGs)
 CSC-3M Model (CRGs)
 Risk Model of The Netherlands
 Others
19
Risk Model Applications
 High cost patient identification
 Hospital payment
 Doctor profiling
20
Risk Model Applications
Medicare Program,
HMOs in 1997
Medicare Program,
HMOs in 2000
Kaiser Permanente
HMO in 2003
Risk-Adjusters
Age-sex
Geographic (county)
Institutional status
Welfare status
Age-sex
Geographic
Inpatient diagnoses
(DCG)
Restriction on Premium
Contribution
Community rating
Age-sex
Geographic (county)
Welfare status
Principle Inpatient
Diagnostic Cost Group
(PIPDCG)
Community rating
Risk-Sharing
No
No
Risk-adjusted
community rating,
including pool-size
adjustment
No
Number of Health Plans
100s
About 50
1
Year of Implementation
1972
2000
1993
21
Conclusion
 Insufficient resources for health care expected
 Methods exist to improve efficiency and equity within financial stability
in hospital-provided health care
 Risk adjustment is a new proposed part of solution
 Makes hospital indifferent to treating high-risk persons
 Health care data quality and risk models are improving dramatically


Better quality electronic data
These advances result in more equity, efficiency and stability in
health care systems
22