Exemplar 39.B: Cost-Effective Care

Public insurance is defined as . . .

Insurance financed by the government.

Private insurance is defined as . . .

Insurance provided by private or publicly owned companies.
e.g. Blue Cross, Blue Shield, Kaiser Permanente, or Aetna

United States has a unique set of values towards healthcare, with an emphasis on . . .

Self-reliance, self-determination, limited government involvement.
This is in contrast to healther of other countries.

Socialized medicine is defined as . . .

The state owns and controls healthcare services.
Physicians derive virtually all of their income from the government and have employment contracts with the state.
e.g. UK, Sweden, Denmark

Socialized insurance is defined as . . .

All medically necessary services are covered by the government (physician care, hospital services, some Rx drugs).
But these services are delivered by a blend of private and public providers.
e.g. Canada, France, Australia

Mandatory health insurance is defined as . . .

Have large nonprofit health insurance organizations called "sickness funds."
Sickness funds are usually from large employers or work-based allocations.
Govt.-sponsored programs cover citizens who are not part of a sickness fund.
Everyone has 1 of these 2

Voluntary insurance is defined as . . .

No guarantee of universality because coverage may be expensive and difficult to purchase.
e.g. U.S.
Millions in the U.S. lack coverage due to financial and other constraints (Poor, one-family member works).

A major goal of the Patient Protection and Affordable Care Act (ACA or "Obamacare") was to . . .

Reduce difficulties associated with securing voluntary insurance in the United States.
Thus, attempting to move the U.S. toward a mandatory insurance system while still allowing people to opt out as long as they are willing to pay the associated penalty.

Under the ACA, the majority of individuals who did not have health insurance through their employer or govt. program were . . .

Required to purchase coverage or pay a financial penalty.
To make this coverage more accessible and affordable, the ACA established subsidies for some Americans and called for the establishment of health insurance exchanges in all 50 states.

Single-payer systems are defined as . . .

Payment for all services ultimately comes from one source (i.e., the national government).
e.g. Socialized medicine and socialized insurance

Multi-payer systems are defined as . . .

Reimbursement is provided by a combination of sources
e.g. Mandatory health insurance and voluntary insurance

Regardless of their exact form, healthcare systems throughout the world are in . . .

Crisis.
Regardless of their level of funding for healthcare, most countries have run out of ways to finance health (via taxing or otherwise).

An imbalance in supply and demand emerged in the 1980s as the cost of medical care began . . .

Increasing faster than the gross national product.
Expectations then became that any and all services, regardless of cost, should be paid for by 3rd party payers.
So, the price of insurance coverage in the private sector skyrocketed, creating further imba

Today, most employers now require their employees to pay . . .

A greater portion of the cost of insurance in the form of increased premiums.
As a result, employees pay more now than they have in the past.
While some do not provide health insurance coverage at all.

Even though there is diminished ability of all consumers to afford care, many Americans continue to expect . . .

Care on demand
From a healthcare economics standpoint, this has created a situation in which healthcare cannot be supplied at the level demanded by the public.

When there is an imbalance in supply and demand, this may result . . .

Rationing
No country can afford provisions for unlimited amounts of medical services to everyone.
Each nation must decide how to ration, or limit access to healthcare services.

The two ways that rationing can be done

Having the governments set limits.
Ration by ability to pay.

Rationing by having the governments set limits

Costs of services is kept low, and people wait for availability.
Scarce services are kept at a reasonable cost, but allocated according to particular criteria (age, waiting list).
Individuals who can pay more for services have access to more services.
e.g

Where in the U.S. is rationing, by having the government set limits, implemented?

Oregon
Enacted a program to limit access to expensive procedures, such as transplantation,
And then increase Medicaid Eligibility to a number of low-income people.

Rationing by ability to pay

This approach limits demand for more expensive procedures by offering them only to those who are willing and able to pay out of pocket,
Or who have sufficient health insurance coverage.

A major difference between the two rationing methods

The freedom of choice for the amount and type of healthcare they use and to select who should deliver it.
Freedom of choice is a traditional value of healthcare consumers in the U.S.
Under a system of strict government rationing, a patient cannot purchase

Under the ability to pay method, a patient can theoretically purchase any healthcare service as long as they can . . .

Afford it.
For those who cannot afford a particular service, however, that service is not an option, no matter how great the individual's need is.

SAFETY ALERT: The Emergency Medical Treatment and Labor Act (EMTALA) of 1986

Under federal law, patients who are experiencing a true medical emergency cannot be denied treatment.
All Medicare-participating hospitals that offer emergency services must examine and stabilize these patients,
Even if they cannot pay for services.
Once

Within the U.S., bills submitted to third-party payers and consumers from healthcare org.s (hospitals) continue to bundle . . .

Nursing services with flat daily charges
e.g. cost of the room and housekeeping.

The cost of nursing has neither been . . .

Separated out (from flat daily charges) nor given a dollar cost.
This hinders the nurses' ability to receive payment from third-party payers.
Many nursing leaders think that in order for nursing to be a profession, nursing services must be accounted separ

Examples of quantifying nursing care via nursing diagnoses that categorize nursing interventions

NANDA International (NANDA-I) diagnoses
Nursing Interventions Classification (NIC)
Nursing Outcomes Classification (NOC)
Similarly, payment codes for care coordination

Proponents of quantifying nursing care systems argue that they . . .

Help control costs by ensuring pt.s pay only for the exact level of nursing care they require.
Provide useful data that for tracking cost effectiveness of various nursing actions, as well as allocate resources in the most efficient way possible.

The most prominent cost-containing strategies are . . .

Competition, Price controls, Alternative insurance delivery systems
Also managed care, health promotion, illness prevention, alternative care providers, and vertically integrated health service organizations.
And ACA cost-containment strategies.

Competition has given healthcare costs . . .

A slight reduction.
But, it has also led to the establishment and expanded use of walk-in clinics, urgent care clinics, and alternative healthcare providers (e.g. advanced practice registered nurses).

Examples of price controls

Freezes on physicans' fees at various times for short periods.
States limiting reimbursement to physicians and hospitals for services provided to Medicaid patients.

Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982

The federal government change the payment method for Medicare form a retrospective system to a prospective one.

Retrospective payment system is explained as . . .

Billing is determined after services are rendered.

Prospective payment system (PPS) is defined as . . .

Billing is determined before the patient is ever admitted to the hospital.
By doing so, TEFRA limits the amount of Medicare reimbursements paid to hospitals.

Diagnosis-related groups (DRGs) are defined as . . .

Patients with a specific diagnosis are grouped together so that hospitals are paid a predetermined amount for their care.

Example of a Prospective Payment System

Pt admits for Dx of MI
They are then reimbursed for a specific dollar amount regardless of the cost of services, length of stay, or the acuity or complexity of the patient's illness.

DRG amounts are set in advance of . . .

The year during which they apply,
And are considered to be fixed unless major, uncontrollable events occur.

Unfortunately, using PPS with DRGs may result in healthcare agencies choosing to . . .

Withhold borderline necessary tests and procedures and shorten hospital stays to avoid the expenditures of a prolonged stay.
i.e. earlier discharge, decreased admissions, increased outpatient services (type and number), increased focus on the costs of car

Another way of reducing healthcare costs is the development of group self-insurance plans. These are created for . . .

Employees in a large company, a group of companies, or a union.
The designated group then assumes all or part of the costs of healthcare for its members.
Can provide coverage cheaper than insurance companies because they are exempt of certain taxes and fe

As a result of PPS and Group-self insurance plans, several trends have emerged in healthcare delivery, such as . . .

Preventative care.
Provision of treatment in noninstitutional settings (clinics and homes).
Use of best practices as documented in protocols and guidelines.
These strategies focus on avoiding hospital and institutional placement unless absolutely necessar

Vertically integrated health services organizations are defined as . . .

Networks of hospitals, clinics, and individual providers that offer a broad range of care and support services to patients across the entire wellness spectrum.
By integrating hospital care, ambulatory care, outpatient surgery, and home health services, th

Two trends that have contributed to the rise of vertically integrated health service organizations.

Changes in payment structures (TERFRA and DRGs)
Development of medical technology (Hospital could now discharge earlier, and to specialized agencies they owned or contracted with)

Before vertical integration, Hospital integrated horizontally to form . . .

Multiple-hospital systems.
By coordinating services with each system, hospitals were able to avoid duplication of services as well as underuse expensive equipment at multiple test sites.

The goal of vertical integration is to create a . . .

seamless" system of patient care in which movement from service to service is coordinated and well organized.
This improves outcomes, quality of care, pt satisfaction, costs via efficient resource use, allow greater accountability.

Examples of cost containment in the ACA

The law established payment penalties as an incentive to prevent hospital readmissions and healthcare-associated conditions such as pressure injuries and inf.
Provision of coordinated care by healthcare teams, rather than individual providers.
Mandated re

The nursing vacancy rate is defined as . . .

The rate or percentage of unfilled nursing positions for which an organization is recruiting.

The issue of shortage-linked salary fluctuations in determining the actual costs of nursing

Shortage occurs and the employer is then forced to compete for the same available pool of nurses (increasing wages to retain and hire staff).
Positions fill and more nurses enter the workforce.
Employers then slow the rate they increase wages.

Trends that further the complexity of actual nursing costs.

Pt's sent home "Sicker and quicker"
Services moved from hosp. to SNF, outpatient, home.
Nurse patient ratios
With UAPs being used as replacements
New nurse roles (case mgmt.)
Staff reductions, which disillusion nurses to leave

As RNs increasingly perform more highly valued functions, administrators will need to . . .

Respect and compensate them accordingly.

Nursing staff is the largest professional group in a hospital, so it is . . .

The most expensive.
But the nursing staff does not produce revenue, because nursing services are included as part of patients' room and board charges.

No matter the workplace, nurses are increasingly required to . . .

Participate in strategies to make care more cost effective.
This is done via evidence-based nursing practices (e.g. hand washing, safety)