Component 1: Introduction to Health Care and Public Health in the U.S. 1.1: Unit 4: Financing Health Care (Part 1) 4.1 a: Overview

Objectives Of This Unit Describe models of health care financing in the US and in selected other countries Describe the organization and function of Medicare and Medicaid Describe the organization and structure of network-based managed care health insurance programs Component 1/Unit 4a2 Health IT Workforce Curriculum Version 1.0/Fall 2010

Overview This unit begins the discussion of how health care is financed. It looks at insurance, third party payers, Medicare, Medicaid, and managed care as different ways to finance the provision of health services. The next unit will look at coding, billing, and reimbursement processes for hospitals and providers. Component 1/Unit 4a3 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business Health Care Industry- Largest US Industry- In 2004, 16% of the country’s gross domestic product or $1.9 trillion (gross domestic product=the dollar value of all the final goods and services produced in a country). Component 1/Unit 4a4 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business Health Care Industry- (cont’d) Fastest growing US Industry Where the jobs are 40% hospitals 22% nursing homes or residential facilities 16% in medical offices Component 1/Unit 4a5 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) Column % Change Number of Hospitals6,4116,7315 Hospital Revenue (millions)$500,112$713, Hospital Annual Payroll (millions)$197,153$263, Hospital- Paid employees (millions)5,1745,5357 Number of Oupatient Clinics489,021544, Outpatient Clinic Revenue (millions)$488,613$692, Outpatient Clinic Annual Payroll (millions)$203,341$280, Outpatient Cinics- Paid Employees (millions)4,9245, Number of Long-term care facilities69,34275, Long-term Care Revenue (millions)$127,113$167, Long-term Care Annual Payroll (millions)$58,974$74, Long-term Care- Paid Employees (millions)2,8303,0558 Economic Impact of Healthcare: Component 1/Unit 4a6 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The table above shows the US 2007 Economic Census compared to the 2002 Economic Census. The figures indicate that health care as a business exhibited double digit growth in revenue and payroll from 2002 – The health care industry will continue to expand. The US Department of Labor predicts that 19% of new jobs will be created in healthcare. Component 1/Unit 4a7 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) Three reasons for health care growth – Aging of the population – Advances in medical technology – Continued interest to manage costs Component 1/Unit 4a8 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Three policy drivers Quality Access Cost Component 1/Unit 4a9 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Government must make trade-offs with these three issues when making policies – The role of government is significant, even though there is no national healthcare system. Component 1/Unit 4a10 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Actually there are three roles played by the federal government Provider of health care services – VA Health system, Military health system, Indian Health Service, grants for other models of health care providers Component 1/Unit 4a11 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role A payer for services provided by others – Medicare, Medicaid, TRICARE A regulator of health care providers – Regulates health care by passing laws. Component 1/Unit 4a12 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Passing laws has two objectives Ensure fair competition – 1890 Sherman Anti-trust Act- prohibits restraint of trade and monopolization – Clayton Act- restricts practices such as price discrimination, exclusive dealing Component 1/Unit 4a13 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Passing laws has two objectives Protect the public – 1938 Federal Food, Drug, and Cosmetic Act – Drug Price Competition – Americans with Disabilities Act Component 1/Unit 4a14 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Health Care Laws 1965 Medicare/Medicaid: part of the Social Security Act; Medicare provides health care insurance (including hospitalization) for elderly and disabled patients; Medicaid provides health care for the poor Component 1/Unit 4a15 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role – Health Care Laws 1946 Hill-Burton Act: Also called the Hospital Survey and Construction Act; federal government funded construction of private facilities pursuant to a Certificate of Need; facility required to provide care to underserved populations; enforcement act passed in Component 1/Unit 4a16 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role- – Health Care Laws (cont’d) 1989 “Stark I”- amendment to the Social Security Act that prohibits referrals to clinical lab service where provider has a financial interest “Stark II”- Expands Stark I to include referrals to “designated health services” Component 1/Unit 4a17 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) The Government’s Role- – Health Care Laws (cont’d) 1996 HIPAA- (Health Information Portability and Accountability Act)- provides for health insurance portability and protects the privacy of health records Component 1/Unit 4a18 Health IT Workforce Curriculum Version 1.0/Fall 2010

Health Care as a Business (cont’d) Integrating Business into Healthcare – Although managers can’t regulate the economy, they can adapt services to meet the demand. – Managers are also responsible for marketing services to potential patients – Healthcare facilities now have strategic plans that include business and non-business goals Component 1/Unit 4a19 Health IT Workforce Curriculum Version 1.0/Fall 2010