1. Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b This material (Comp1_Unit5b) was developed by Oregon Health and Science University, funded by the Department of Health and Human Services, Office of the National Coordinator for Health Information Technology under Award Number [IU24OC000015)].

2. Financing Healthcare (Part 2) Learning Objectives Describe the revenue cycle and the billing process undertaken by different healthcare enterprises. (Lecture a) Understand the billing and coding processes, and standard code sets used in the claims process. (Lecture a) Identify different fee-for-service and episode-of-care reimbursement methodologies used by insurers and healthcare organizations in the claims process. (Lecture a) Review factors responsible for escalating healthcare expenditures in the United States. (Lecture b) Discuss methods of controlling rising medical costs. (Lecture c) Health IT Workforce Curriculum Version 3.0/Spring 2012 2 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

3. Financing Healthcare (Part 2) Lecture b - Goals Review US healthcare expenditures and medical inflation Examine the factors contributing to the increase in health care expenditures in the United States Describe the Emergency Medical Treatment and Active Labor Act (EMTALA) Discuss the cost of care to the uninsured Health IT Workforce Curriculum Version 3.0/Spring 2012 3 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

4. National Health Expenditures and Gross Domestic Product, select years 1960-2009 5.1 Chart: Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip). (CMS, 2011, PD-US, CC BY-NC-SA 3.0)http://www.cms.hhs.gov/NationalHealthExpendData/ Dollars in Billions: 5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6% Health IT Workforce Curriculum Version 3.0/Spring 2012 4 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

5. US National Health Expenditures per Capita, Select Years 1960-2009 5.2 Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip). Available at http://facts.kff.org/chart.aspx?ch=854. (KFF, CMS, 2011, PD- US, CC BY-NC-SA 3.0).http://www.cms.hhs.gov/NationalHealthExpendData/http://facts.kff.org/chart.aspx?ch=854 Health IT Workforce Curriculum Version 3.0/Spring 2012 5 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

6. Per Capita Health Care Expenditures, U.S. and Select Countries, 2008 5.3 Chart: Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data Source: Organisation for Economic Co-operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data-00350-en ( Accessed on 14 February 2011). Available at http://facts.kff.org/chart.aspx?ch=1952. (KFF, CMS, 2011, PD-US, CC BY-NC-SA 3.0).doi: 10.1787/data-00350-en http://facts.kff.org/chart.aspx?ch=1952 Notes: Data from Australia and Japan are 2007 data. Figures for Belgium, Canada, Netherlands, Norway and Switzerland, are OECD estimates. Numbers are PPP adjusted. Health IT Workforce Curriculum Version 3.0/Spring 2012 6 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

7. Concentration of Health Spending in the Total U.S. Population 2007 5.4 Chart: Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008. (HHS, MEPS, KFF, 2008, PD-US, CC BY-NC-SA 3.0). Percent of Total Health Care Spending Health IT Workforce Curriculum Version 3.0/Spring 2012 7 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

8. Factors Contributing to High Healthcare Expenditures Technology Increased demand and utilization –Chronic disease –Aging population Administrative costs Health IT Workforce Curriculum Version 3.0/Spring 2012 8 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

9. Technology and National Healthcare Expenditures Congressional Budget Office Estimates –40-50% of total expenditures Technology in healthcare – procedures, equipment, and processes by which medical care is delivered Health IT Workforce Curriculum Version 3.0/Spring 2012 9 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

10. Technology Previously untreatable conditions –Repair of torn ligament of the knee New medical and surgical procedures –Angioplasty –Joint repairs/replacements Health IT Workforce Curriculum Version 3.0/Spring 2012 10 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

11. Technology Medical devices –CT scanners –MRI imaging –Implantable defibrillators Health Information Technology(HIT) –Electronic medical records –Telemedicine Health IT Workforce Curriculum Version 3.0/Spring 2012 11 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

12. Pharmaceutical Costs Estimated 10% of total expenditures –$234 billion 2008/$40.3 billion 1990 –Average ~12% increase over the last 10 years –Drug costs inflated above CPI/other healthcare sectors Increased availability –Medications for chronic disease e.g. cholesterol, diabetes Increased demand –Cancer chemotherapy Health IT Workforce Curriculum Version 3.0/Spring 2012 12 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

13. Administrative Costs Administrative costs –Approximately 7% of annual US healthcare expenditures –Administrative costs more than twice average of other western industrialized nations –Estimated excess expense = $91 billion Health IT Workforce Curriculum Version 3.0/Spring 2012 13 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

14. Physician/Hospital Costs Increased demand –Utilization Positron emission tomography Magnetic resonance imaging –Techniques Minimally invasive surgery –daVinci robotic surgery Imaging techniques Health IT Workforce Curriculum Version 3.0/Spring 2012 14 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

15. Chronic Disease Chronic disease –Affects 1 of 2 adults in the US –Accounts for 7 of 10 deaths –Daily activity limitations for 1 in 4 with chronic disease –Obesity major concern and contributor 1 in 3 adults 1 in 5 children between ages 6 and 19 Health IT Workforce Curriculum Version 3.0/Spring 2012 15 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

16. Chronic Disease and Health Risk Behaviors CDC - four health risk behaviors –Lack of physical activity –Poor nutrition - obesity –Tobacco use –Excessive alcohol consumption Health IT Workforce Curriculum Version 3.0/Spring 2012 16 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

17. Chronic Diseases Chronic Disease –Asthma –Chronic obstructive pulmonary disease –Chronic renal failure –Congestive heart failure –Coronary artery disease –Diabetes –Mood disorders/senility –Cancer –Hypertension Health IT Workforce Curriculum Version 3.0/Spring 2012 17 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

18. Chronic Disease and Increased Demand for Services Increased utilization of services –Management/treatment to decrease risk of complications e.g. aggressive treatment of diabetes to avoid such complications as heart disease, kidney failure or blindness –Early intervention at risk groups e.g. weight loss, smoking cessation Health IT Workforce Curriculum Version 3.0/Spring 2012 18 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

19. Early Detection and Prevention Increased preventive services –Detection Screening mammograms Colonoscopy –Prevention Immunizations Health IT Workforce Curriculum Version 3.0/Spring 2012 19 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

20. Spending by Age Group 5.5 Table: Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008. HHS, MEPS,, KFF, 2008, PD-US, CC BY-NC-SA 3.0). Health IT Workforce Curriculum Version 3.0/Spring 2012 20 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

21. Increased Demand: Aging Increased utilization of services for chronic illness above age 64 1946-1964 – 66 million children Medicare eligibility beginning in 2011 –Additional 10 million enrollees by 2018 –Projected costs > $13,000 per capita with comparable increase in Medicare costs Health IT Workforce Curriculum Version 3.0/Spring 2012 21 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

22. The Uninsured Uninsured receive –Less preventive care –Diagnosed at more advanced disease states –Once diagnosed, received less therapeutic care –Have higher mortality rates Cost of care for insured twice as much as uninsured Health IT Workforce Curriculum Version 3.0/Spring 2012 22 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

23. The Uninsured 2009 17% of the population = ~50 million people The Kaiser Commission on Medicaid and the Uninsured 2010 –In 2004 - $125 billion $40.7 billion uncompensated –In 2008 - $87 billion $57 billion uncompensated –Government pays the majority of uncompensated care Health IT Workforce Curriculum Version 3.0/Spring 2012 23 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

24. Number of Nonelderly Uninsured Americans, 2000 – 2009 5.6 Chart: Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of 2001-2010 ASEC Supplements to the CPS. (KFF, PD-US, CC BY-NC-SA 3.0). Health IT Workforce Curriculum Version 3.0/Spring 2012 24 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

25. The Recession and Uninsured, 2008- 2009 5.7 Chart: Source: Based on John Holahan and Bowen Garrett, Rising Unemployment, Medicaid, and the Uninsured, prepared for the Kaiser Commission on Medicaid and the Uninsured, January 2009. (KFF, 2009, PD-US).Rising Unemployment, Medicaid, and the Uninsured Health IT Workforce Curriculum Version 3.0/Spring 2012 25 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

26. The Uninsured: Spending (2008) Annual Spending per person –Uninsured: $1686 One third out of pocket –Insured (non-elderly): $4463 Total spending (uninsured) –$87 billion $57 billion uncompensated –75% uncompensated paid by government Health IT Workforce Curriculum Version 3.0/Spring 2012 26 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

27. EMTALA Emergency Medical Treatment and Active Labor Act of 1986 –Legal mandate to offer medical care to all patients regardless of ability to pay –Anyone presenting to an emergency department (ED) Must be examined to determine if there is an emergency Treated until stabilized, discharged to self care or continuing care Transfer to a facility capable of providing care if the facility is unable to provide the required care Health IT Workforce Curriculum Version 3.0/Spring 2012 27 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

28. ED Utilization and Uninsured Is uninsured care cause for overcrowding of the ED? –Uninsured poor use the ED as a safety net for care 2008 – Weber et al examined ED use –Percent of uninsured using the ED did not change over 10 years –Non-poor insured with PCP accounted for most increase in ED visits Health IT Workforce Curriculum Version 3.0/Spring 2012 28 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

29. Emergency Department Overcrowding Lack of key clinical staff also has been cited as a driver of ED overcrowding Care provided to the uninsured and patients with non-urgent conditions is not a driver of ED overcrowding Evidence links ED overcrowding to reduced health care quality and patient safety Health IT Workforce Curriculum Version 3.0/Spring 2012 29 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

30. Financing Healthcare (Part 2) Summary – Lecture b US healthcare expenditures highest worldwide –Both per capita and % GDP Factors –Increase demand and utilization Aging and chronic disease –Technology –Pharmaceutical costs –Administration costs Health IT Workforce Curriculum Version 3.0/Spring 2012 30 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

31. Financing Healthcare (Part 2) Summary – Lecture 5b EMTALA –Not resulted in increased utilization by the uninsured –Not a major cause of increased utilization of the ED Uninsured costs –7% of total healthcare expenditures in 2004 –Receive less care and treatment, sicker, higher mortality rates Health IT Workforce Curriculum Version 3.0/Spring 2012 31 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

32. Financing Healthcare (Part 2) References – Lecture b References Adapted from: DeLia, D., Cantor, J., Emergency department utilization and capacity; The Synthesis Project, Robert Wood Johnson Foundation. Research Synthesis Report 17, July 2009. Centers for Disease Control and Prevention>Chronic Disease Prevention and Health Promotion>Tools and Resources. Recommendations, Best Practices, and Guidelines. Available from: http://www.cdc.gov/chronicdisease/resources/guidelines.htm. Last accessed December 12,, 2011. http://www.cdc.gov/chronicdisease/resources/guidelines.htm Fisher E, Bynum J, Skinner J. The Policy Implications of Variations in Medicare Spending Growth. The Dartmouth Atlas: The Dartmouth Institute for Health Policy and Clinical Practice Center for Health Policy Research, February 27, 2009. [cited 2010 July 31]. Available at: http://www.dartmouthatlas.org/downloads/reports/Policy_Implications_Brief_022709.pdf. Last accessed March 22, 2011. http://www.dartmouthatlas.org/downloads/reports/Policy_Implications_Brief_022709.pdf Fisher E, Goodman D, Skinner J, Bronner K. Health Care Spending, Quality, and Outcomes More Isn’t Always Better. The Dartmouth Atlas: The Dartmouth Institute for Health Policy and Clinical Practice Center for Health Policy Research, February 27, 2009. [cited 2010 July 31]. Available at: http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709.pdf Last accessed March 22, 2011. http://www.dartmouthatlas.org/downloads/reports/Spending_Brief_022709.pdf McKinsey Global Institute, Accounting for the cost of US health care: A new look at why Americans spend more, November 2008 available at: http://www.mckinsey.com/mgi/publications/US_healthcare/pdf/US_healthcare_Chapter1.pdf. Last accessed Aug 1, 2010.http://www.mckinsey.com/mgi/publications/US_healthcare/pdf/US_healthcare_Chapter1.pdf Nelson AR, Costs of Health Care: New Solutions for an Old Problem. The Commonwealth Fund. May 13, 2005 [cited August 3, 2010]. Available from: http://www.commonwealthfund.org/Content/Publications/Commentaries/2005/May/Costs-of-Health-Care--New- Solutions-for-an-Old-Problem.aspx. Last accessed March 22, 2011 http://www.commonwealthfund.org/Content/Publications/Commentaries/2005/May/Costs-of-Health-Care--New- Solutions-for-an-Old-Problem.aspx Health IT Workforce Curriculum Version 3.0/Spring 2012 32 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

33. Financing Healthcare (Part 2) References – Lecture b References (continued) Robert Wood Johnson Foundation. Available at: http://www.rwjf.org/. Source for health issue research and health policy. Last accessed January 2012.http://www.rwjf.org/ The Congress of the United States Congressional Budget Office. Washington DC: 2008 [cited July 31, 2010]. Technological Change And The Growth Of Health Care Spending. Available at: http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf. Last accessed December 12, 2011. http://www.cbo.gov/ftpdocs/89xx/doc8947/01-31-TechHealth.pdf The Hastings Center (nd.). Health Care Costs and Medical Technology From Birth to Death and Bench to Clinic: The Hastings Center Bioethics Briefing Book for Journalists, Policymakers, and Campaigns, available at: http://www.thehastingscenter.org/uploadedFiles/Publications/Briefing_Book/health%20care%20costs%20chapter.p df. Accessed December 12, 2011. http://www.thehastingscenter.org/uploadedFiles/Publications/Briefing_Book/health%20care%20costs%20chapter.p df The Henry J Kaiser Family Foundation. Menlo Park, CA (2009) [cited 2010 August 1]. Healthcare Costs: A Primer; available from: http://www.kff.org/insurance/ 7670.cfm. Key information on health care costs. Last accessed March 22, 2011. http://www.kff.org/insurance/ 7670.cfm The Henry J Kaiser Family Foundation. Menlo Park, CA (2010) [cited 2010 August 1]. Kaiseredu.org > Cost and Spending > US Healthcare Costs; Available from: http://www.kaiseredu.org/index.asp. Provides background information, links to key data and policy information on US healthcare costs. Last accessed March 22, 2011. http://www.kaiseredu.org/index.asp The Henry J Kaiser Family Foundation. Menlo Park, CA (2010). [cited 2010 August 1]. Prescription Drug Trends. Available at: http://www.kff.org/rxdrugs/index.cfm. Last accessed March 22, 2011.http://www.kff.org/rxdrugs/index.cfm The Henry J Kaiser Family Foundation. Menlo Park, CA (2010). [cited 2010 August 1]. The Kaiser Commission on Medicaid and the Uninsured; Uninsured and Untreated: A Look at Uninsured Adults Who Received No Medical Care for Two Years; Available at: http://www.kff.org/uninsured/8083.cfm. Last accessed March 22, 2011.http://www.kff.org/uninsured/8083.cfm Weber EJ, Showstack JA, Hunt KA, et al. “Are the Uninsured Responsible for the Increase in Emergency Department Visits in the United States?” Annals of Emergency Medicine 52(2): 108–115, 2008. Health IT Workforce Curriculum Version 3.0/Spring 2012 33 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

34. Financing Healthcare (Part 2) References – Lecture b Charts, Tables and Figures 5.1 Chart: Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip). (CMS, 2011, PD-US, CC BY-NC-SA 3.0).http://www.cms.hhs.gov/NationalHealthExpendData/ 5.2 Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip). Accessed 11 Dec 2011. Available at http://facts.kff.org/chart.aspx?ch=854. (KFF, CMS, 2011, PD-US, CC BY-NC-SA 3.0). http://www.cms.hhs.gov/NationalHealthExpendData/http://facts.kff.org/chart.aspx?ch=854 5.3 Chart: Chart: The Kaiser Family Foundation, Kaiser Fast Facts. Data Source: Organisation for Economic Co- operation and Development (2010), "OECD Health Data", OECD Health Statistics (database). doi: 10.1787/data- 00350-en (Accessed on 14 February 2011). Available at http://facts.kff.org/chart.aspx?ch=1952. (KFF, CMS, 2011, PD-US, CC BY-NC-SA 3.0).http://facts.kff.org/chart.aspx?ch=1952 5.4 Chart: Concentration of Health Spending in the Total U.S. Population 2007. Adapted from: Healthcare Costs – A Primer 2009. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008. Available at: http://facts.kff.org/chart.aspx?ch=1344. (HHS, MEPS,, KFF, 2008, PD-US, CC BY-NC-SA 3.0).http://facts.kff.org/chart.aspx?ch=1344 5.5 Table: Distribution of Average Spending Per Person, 2008. Source: Kaiser Family Foundation calculations using data from U.S. Department of Health and Human Services, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey (MEPS), 2008. Adapted from: Healthcare Costs – A Primer, 2009. Available at: http://facts.kff.org/chart.aspx?ch=1390. Last accessed December 12, 2011. (HHS, MEPS, KFF, 2008, PD-US, CC BY-NC-SA 3.0) http://facts.kff.org/chart.aspx?ch=1390 Health IT Workforce Curriculum Version 3.0/Spring 2012 34 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b

35. Financing Healthcare (Part 2) References – Lecture b Charts, Tables and Figures (cotinued) 5.6 Chart: Number of Nonelderly Uninsured Americans, 2000 – 2009. Source: Kaiser Commission on Medicaid and the Uninsured/Urban Institute analysis of 2001-2010 ASEC Supplements to the CPS. (KFF, PD-US, CC BY- NC-SA 3.0). 5.7 Chart: The Recession and Uninsured, 2008-2009. Source: Based on John Holahan and Bowen Garrett, Rising Unemployment, Medicaid, and the Uninsured, prepared for the Kaiser Commission on Medicaid and the Uninsured, January 2009. (KFF, 2009, PD-US).Rising Unemployment, Medicaid, and the Uninsured Health IT Workforce Curriculum Version 3.0/Spring 2012 35 Introduction to Healthcare and Public Health in the US Financing Healthcare (Part 2) Lecture b