Context of Health Care Financial Management

Chapter 1

Learning Objectives

• Identify key elements that are driving changes in health care delivery

• Identify key approaches to controlling health care costs and resulting ethical issues

• Identify key changes in reimbursement mechanisms to providers

Lowering Costs

• Patient Protection and Affordable Care Act (ACA)

The Affordable Care Act puts consumers back in charge of their health care. Under the law, a new “Patient’s Bill of Rights” gives the American people the stability and flexibility they need to make informed choices about their health.

• CMS trying to control rising costs

• Center for Medicare and Medicaid Services (CMS) demonstrate definitively that private insurance is increasingly less efficient than Medicare.

• Value Based Purchasing (VBP)

• Payment methodology that rewards quality of care through payment incentives and transparency in health care.

Goals of the Health Care System

• Access

• Cost

• Quality

1. Access

• Help establish Health Insurance Marketplaces in every state to expand access to coverage for individuals and small businesses, reduce administrative expenses, and increase competition;

• Work with states to expand Medicaid coverage to more low-income Americans;

• Enhance HealthCare gov, which empowers consumers to make informed choices about health care options

2. Cost

• Improve accessibility and integration of health care databases so researchers can identify cost-saving, health-protective, and quality-enhancing practices

• Improve management of health care cost information to identify key drivers of high costs and reduce delivery of ineffective and inappropriate care;

• Adopt and implement Affordable Care Act provisions to standardize administrative claims transactions and to achieve greater interoperability between administrative and clinical data

3. Quality

• Identify innovative solutions to minimize harm in all settings by engaging local front-line providers, patients, and families in multi-stakeholder meetings

• Implement Learning and Action Networks to share best practices for promoting quality, patient safety, prevention, health literacy, and improved care transitions

• Improve the quality of, safety of, and access to care in long-term services and supports settings, behavioral health services, and acute care hospitals, and through state health departments;

Changing Methods Of Health Care Financing and Delivery• Requirement that almost all individuals have insurance coverage

• Requirement that states create insurance exchanges

• Provisions for expansion of Medicaid (is a social health care program for families and individuals with low income and resources)

• Provisions for medical loss ratio and premium rate reviews

• Bundled payments and VBP

• Accountable Care Organizations

Trends• Rise of uninsured from 36 million to 50 million 2001-2010

• ACA authorizes competitive insurance marketplace

• Rise of uncompensated care for the uninsured 2001-2011

• Accountable Care Organizations

• Patient Centered Medical Home

• New technology

• VBP

Factors Affecting the Cost of Care

Impacts to Reimbursement• Cost Accounting Systems

• Group Purchasing Organizations

• Reengineering/Redesigning

• Mergers and Acquisitions

• Retail Health Care

• Medical Tourism

• Compliance

• Recovery Audit Contractors (RACs)

• VBP

• New DRG System

• ICD 10

Summary

• Health care administrator faces numerous complex issues when making strategic and financial decisions.

• High ethical standards must be demonstrated