Finding

a way to pay for something

BUSINESS

FINANCE PERSONAL FINANCE PUBLIC FINANCE

refers to a system that pays even first peso/dollar health care costs on a collective basis via employer or government funding

 creates its own set of incentives for

patients and providers reduce the cost of such a system is to lower down payments to providers adverse on the quality of service provided

ratio the amount of healthcare available to patients

MODES OF HEALTH FINANCING

Government

Private

Sources

National Local

Social

Insurance

Medicare Employees Compensation

Out-of-Pocket Private insurance HMOs Employer-Based Plans Private Schools

Others

National
the government spent more than P28.6 billion for the health sector in 2008

Local

defined as a program where risks are transferred to and pooled by an organization, often governmental, that is legally required to provide certain benefits.

 the

benefits, eligibility requirements and other aspects of the program are defined by state explicit provision is made to account for the income and expenses it is funded by taxes or premiums paid by participants the program serves a defined population

 Equity

vs Adequacy Voluntary vs. Mandatory Contractual vs. Statutory Funding

Out-of-Pocket

The most dominant mode of private health financing

Out-of-Pocket

Minimum Cost Advantages No gatekeeper High-out-of pocket cost Disadvantages

Less Coverage

benefits of the service accrue directly to the user consumers are willing and able to pay on a fee-for-service basis particularly suited for those aspects of health care that are considered private goods

is most appropriate for those aspects of healthcare benefits which are widely spread and therefore not quite amenable to any system of user charges

has been demonstrated to be effective not only to mobilizing resources for healthcare, but also evoking improved health consciousness among community and stimulating collective action to achieve common health goals

 Simply

taking out your wallet and paying for the health goods and services that you utilize Examples: Doctors consultation, medicines from the pharmacy, diagnostic procedure The most dominant mode of private health financing

 bought by individuals for themselves or their families maybe also be bought by employers as medical benefits for their employees

Medical Specialists

Insurance Company Government Hospital

General Practice Physician

Pharmacy

Laboratory

C O N S U M E E R

Private Hospital

TYPICAL SET STRUCTURE OF AN INSURANCE SETUP

 is term used to described any number of contractual arrangement that integrates the financing and delivery of medical care

Purchasers (employers) contract with a select group of providers to deliver a specific package of medical benefits at predetermined price

The Theory Of Managed care Cost saving

The

medical care costs and spending may be affected by changing

Patient utilization Physicians practice styles Introduction of new technology

Managed care

Provider side provisions

Managed care limits the patients choice of provider for a given medical care Limits include the 1. Use of gatekeeper 2. Close panels 3. Preferred providers

1. Selection of Providers

GATEKEEPER
Is

a physician responsible for providing all primary medical care and coordinating access to high cost hospital and specialty care Patients who wish to see specialist must first get a referral from the gatekeeper

CLOSE PANEL
A

designated network of providers that serve the recipient of health care plan Patients are not allowed to choose a provider outside the network

PREFERRED PROVIDER
Allows

the patient to choose a provider who is not a part of the panel Patients who use physician who are not part of the panel usually pay higher coinsurance rates Further discouraging off-panel utilization

ANY WILLING PROVIDER

A

situation in which a managed care organization allows any medical provider to become part of the network of providers for the covered group

2. Cost Sharing Arrangement

MC

utilizes various reimbursement schemes with common goal of shifting some of the financial risk to providers Shifting risk discourages over Utilization of services Primarily the use of expensive technology Prescription drugs Referrals to specialist In patient hospital procedures

2. Cost Sharing Arrangement

Primary

Physician receive fixed payment Determined in advance to provide all medically necessary primary care for specific group of patients It control utilization and cost Subject to strict budgets for hospital services, specialty referrals, and Rx drugs Primary Physician who provide care within predetermine budgets receive bonuses

3. Practice Guidelines and Utilization Review

Directly

control clinical decisions Encourage providers to evaluate the marginal benefit of prescribed care more carefully Determine the relative efficacy of treatment options and in turn their cost effectiveness

Techniques for controlling utilization in hospital

1.

Pre admission review Establishes the appropriateness of a procedure Either the admitting physician or the patient must receive approval prior to the hospital admission

Techniques for controlling utilization in hospital

2.

Concurrent Review
Utilizes established guidelines to determine whether a hospital stay should be continued

Techniques for controlling utilization in hospital

3.

Retrospective review
Examines the appropriateness of care after it has been completed In addition, second surgical opinions and case management are used to control costs associated with surgery

Case Management
A

method of coordinating the provision of medical care for patients with specific high-cost diagnoses such as cancer and heart disease

Third Party Transactions

What does the 3 parties in an insurance contracting network gain?

1.

2.

Patients Gain by pooling risks to eliminate financial uncertainty and make expensive treatments affordable Providers Gain from an increase in demand and regularity of payment

Third Party Transactions

3.

Insurance Companies Benefit from profits Even when the underwriting gains (the difference between premium paid in and benefits paid out plus administrative costs) are negative, an apparent loss, companies may still make money because they will hold the premium for six to 24 months before paying out benefits

THIRD PARTY CONTRACTING

Insurance, Government Manage care PREMIUM REGULATIONS MONEY PATIENTS, PUBLIC Medical care services HOSPITALS, DOCTORS Reimbursement

Who Pays? And How Much?

There

is a popular misconception when insurance pays for something, IT IS FREE We may not realize who pays because third party transactions are INDIRECT Every peso spent on medical care is paid by YOU, or by ME, by SOMEONE just like us Individuals pay for medical care by paying taxes There are no free lunches

Managed care Plans

The

difference between traditional indemnity insurance and managed care is that a manager intervenes to monitor and control the transaction between doctor and patient The management company acts as patients agent, trying to get better care and lower prices The manager examines the process of care and controls the flow of funds, facilitating payment in some circumstances and holding back in others

INSURANCE

MANAGER

PATIENTS

PROVIDERS

FLOW OF FUNDS WITH MANAGED CARE

 HMOs Health Maintenance Organizations

PPOs Preferred Provider Organizations

POS Point-of-service Plans

Health Insurance Involvement of Private sector

 is

an offshoots of health insurance control over the use of healthcare benefits and are therefore able to make utilization of health goods and services more cost effective comprehensive healthcare program through a package benefits prevent plan holders from having direct links with the providers in hospitals and clinics

 Is one type of managed care service that provides healthcare to members for a fixed, usually monthly payment
Organizations can be either nonprofit or profit Are very active on the prevention side of medicine. Because of their emphasis on disease prevention, disease risk reduction and self care by the patient

C O N S U M E R S

Health Maintenance Organization

Medical Specialist
General Practice Physician

Medical Claims: Actuarial Risk

Package of Benefits

Government Facility Private Facility

consumers will have to pass throughthe system of

the HMO to be able to get the providers

HMOs will then choose the most cost effective healthcare provider

 HMOs are able to control the costs of medical claims

by limiting the probability of getting ill by covering only a list of illnesses with specific limitations by controlling the costs of getting ill by forging contracts with providers and making them part of the HMO setup, providers

Package of Benefits
Annual Physical Examination Out-patient benefits, mainly consultation but NOT medication

Preventive care, well baby visits (cost of vaccines not included)

In-patient coverage, hospitalization including professional fees, laboratory, medications, surgery if needed) Emergency coverage Dental, tooth extraction, prophylaxis, and cleaning Maternal Benefits, seen only in group plans

Executive checkup
Insurance benefits

Types of HMOs 1. Group Model

A

group of physician, often a large multi specialty group practice, that agrees to provide medical care to a defined patient group in return for a fixed per capita fee or for discount fees

Types of HMOs 2. Staff Model

Physicians

are employees of the HMO Their incomes are usually paid in the form of a fixed salary but may include supplemental payments based on some measure of performance

Types of HMOs 3. Network Model

A

managed care organization that contracts with several different providers, including physicians practices and hospitals, in order to make a full range of medical services available to its enrollees

Types of HMOs
4.Independent Practice Association (IPA)

An

organized group of health care providers that offers medical services to a specified group of enrollees of health plan

Types of HMOs 5. Direct Contract Model

A

managed care organization that establishes contractual relationship with individual physicians to provide care for a specific group of patients

Advantages of HMOs
1. Low out-of-pocket costs
With most type of insurance, patient are responsible for paying a percentage of the bill every time receives medical care
HMO members pay a fixed monthly fee, regardless how much care is needed in a given month. Instead of deductibles, HMOs often have nominal co-payment

Advantages of HMOs
2. Focus on wellness and preventive care
By reducing out-of-pocket costs and paperwork, HMOs encourage members to seek medical treatment early, before health problems become severe Additionally, many HMOs offer health education discounted health club memberships

Advantages of HMOs
3. Typically no lifetime maximum pay out

HMOs generally do not place a limit on your lifetime benefit

HMOs will continue to cover your treatments as long as you are a member

Disadvantages of HMOs
1. Tight controls can make it more difficult to get specialized care HMO member, you must choose a PCP Your PCP provides medical care and must be consulted before seeking care from another physician Screening helps to reduce costs both HMO and members, but it can allow complications if the PCP does not provide the referral you need

Disadvantages of HMOs
2. Care from non-HMO provide generally not covered
Except for emergency occurring outside the HMO treatment area

HMO members are required to all treatment from HMO physicians

HMO will not pay non-emergency care provided by the physician Additionally, there may be a strict definition of what constitutes an emergency

 Health

packages that companies administer for the medical benefits of their employees Examples: Meralco put up its own hospital for its employees PAL has both an upscale medical facility and hospital referral system PLDT follows hospital referral system

required to put up clinics and set budgets for the healthcare needs of their students manned by health officers, usually doctors or school nurses all expenses or budgets for these are reflected in the private schools segment.

 serves as intermediary or broker between the purchaser of medical care and the provider Establishes a network of providers who agree to provide medical services to a specific group of enrollees at discounted rates

 risk sharing more complex and structure form of health financing based on system Collective savings as means of protecting members from the catastrophic cost of an unpredictable event such as serious illness or injury

 Hybrid MC plan that combines the features of a prepaid plan and a fee-for-service plan Enrollees use network physicians with minimal out-of-pocket expenses and may choose to go out of the network by paying a higher coinsurance rate

Company financed health benefits for employees and dependents Sponsorship of medical bills of needy patient philanthropies societies, individuals and groups Spontaneous or inspired public donations disaster victims

Special lotteries to raise funds to support the medical operation

 Services and benefits offered by GSIS Retirement Loan Privileges Benefit Life Insurance Benefit Claims Settlement Additional Social Security Benefits Other GSIS Programs

 Laws Governing General Insurance

P.D. 245 - renamed General Insurance Fund R.A. 656 Property Insurance Fund

Section 11, Article XIII of the 1987 Constitution of the Republic of the Philippines

Declares that the state shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all people at affordable costs. Example: NHIP refers to a compulsory health insurance program of the government (RA 7875) Shall provide universal health insurance coverage and ensure affordable, acceptable, available and accessible health care services for all citizens of the Philippines

NHIP shall adopt the following guidelines

The

NHIP shall underscore the importance for government to give priority to health as a strategy for bringing about faster economic development and improving quality of life The NHIP shall provide all citizens with the mechanism to gain financial access to health services, in combination with other government health programs

NHIP shall adopt the following guidelines

The

NHIP shall give highest priority to achieving coverage of the entire population with at least a basic minimum package of health insurance benefits The NHIP shall adequately meet the needs for personal health services at various stages of a members life.

Inpatient Hospital Care

Room and board Services of health care professionals Diagnostic, laboratory, and other medical examination services Prescription drugs and biologicals, subject to the limitations Inpatient education packages

Outpatient Care
Services of health care professionals Diagnostic, laboratory, and other medical examination services Personal preventive services Prescription drugs and biological, subject to the limitations described in Section 37 of RA 7875 Emergency and transfer services

 RA 7875

An act instituting a national Health Insurance program for all Filipinos and establishing the Philippine Health Insurance Corporation for the purpose

Allocation of National Resources for Health Universality Equity Responsiveness Social Solidarity Effectiveness Innovation Public services Quality of services Cost containment

Devolution Fiduciary Responsibility Informed Choice Maximum Community Participation Compulsory Coverage Cost sharing Professional Responsibility of Health Care Providers Care for the indigent