Medicare cost shifting and universal coverage l.jpg
This presentation is the property of its rightful owner.
Sponsored Links
1 / 33

Medicare, Cost Shifting and Universal Coverage PowerPoint PPT Presentation


  • 148 Views
  • Uploaded on
  • Presentation posted in: General

Medicare, Cost Shifting and Universal Coverage. MCV’s “M-3 Workshop Week” April 27, 2005 Rick Mayes, Ph.D. Assistant Professor of Public Policy. Overview. This presentation examines : Larger trends in the U.S. health care system and in Medicare

Download Presentation

Medicare, Cost Shifting and Universal Coverage

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Medicare cost shifting and universal coverage l.jpg

Medicare, Cost Shifting and Universal Coverage

MCV’s “M-3 Workshop Week”

April 27, 2005

Rick Mayes, Ph.D.

Assistant Professor of Public Policy


Overview l.jpg

Overview

This presentation examines:

  • Larger trends in the U.S. health care system and in Medicare

  • Issues of specific concern to physicians and hospitals

  • Cost shifting and the controversy over increasing market segmentation


Underlying medical inflation the rise and fall and rise again of managed care l.jpg

Underlying Medical Inflation: The Rise and Fall (and Rise Again?) of Managed Care

Sources: Census Bureau, Kaiser Foundation, CMS, 2004.


Underlying medical inflation health insurance premiums l.jpg

Underlying Medical Inflation: Health Insurance Premiums

Since 2001, on average . . .

  • 5 million fewer jobs now provide health insurance in the U.S.

  • the avg. cost of health insurance premiums has increased 59%

    (versus 10-12% in wages & general inflation)

  • employee contributions for health insurance have grown:

    by 57% for single coverage (total of $3,695 annually, 2004)

    by 49% for family coverage (total of $9,950 annually, 2004)

    avg. premium for family coverage ($14,565 projected, 2006)

    - A growing proportion of the overall increase in premiums for employers has been “shared” with employees, particularly those in small businesses.

Source: Henry J. Kaiser Family Foundation/Health Research and Education Trust Survey of Employer Health Benefits, Health Affairs Sept./Oct. 2004.


Health insurance premiums declining coverage l.jpg

Health Insurance Premiums & Declining Coverage


Health insurance premiums declining coverage6 l.jpg

Health Insurance Premiums & Declining Coverage


Slide7 l.jpg

Underlying Medical Inflation Affects Medicare Population

Source: CMS Office of the Actuary, 2004.


Total uninsured 45 million total persons census 2003 l.jpg

Total Uninsured: 45 million total persons (Census, 2003)


The uninsured 15 6 of the u s population census 2003 l.jpg

The Uninsured, 15.6% of the U.S. Population (Census, 2003)


Consequences care postponed not received l.jpg

Consequences: Care Postponed & Not Received


Extreme consequences bankruptcy earlier death l.jpg

Extreme Consequences: Bankruptcy & Earlier Death

  • Upwards of 750,000 families are bankrupted by medical debt each year, even though 80% of them have some form of health insurance (CAMS, 2003).

  • 46% of uninsured patients have debts from previous medical care (CAMS, 2003).

  • Uninsured women with breast cancer are twice as likely to die as women with breast cancer who have health insurance (Kaiser Commission, 2002).

  • Men without health insurance are nearly 50% more likely to be diagnosed with colon cancer at a later, more dangerous stage than men with insurance (Kaiser Commission, 2002).


Demographic trends l.jpg

Demographic Trends

Source: Medicare Board of Trustees, 2003.


Actuarial trends l.jpg

Actuarial Trends

Source: Medicare Board of Trustees, 2003, 2004.


Medicare s new 534 billion rx drug benefit l.jpg

Medicare’s new $534 billion Rx Drug Benefit


Tom scully former cms administrator l.jpg

Tom Scully, former CMS Administrator

“I hate this whole G--damn system. I’d blow it up if I could, but I’m stuck with it. If it were up to me, I’d buy everybody private insurance and forget about it. Obviously that’s what the Republican view is.

We ought to do the same thing we do for federal employees: go out and buy every senior citizen a community-rated, structured, regulated private insurance plan. Let them buy an Aetna product, or Blue Cross products. That’s the Republican philosophy.

Why should Tom Scully and his staff fix prices for every doctor and hospital in America? Which is what we do.

- Personal interview with Tom Scully, Administrator, Ctrs. for Medicare & Medicaid Services, 2001-2003


Liability insurance crisis in u s l.jpg

Liability Insurance Crisis in U.S.

Sources: New England Journal of Medicine and AMA, 2003.


Issues of concern for physicians growing practice expenses l.jpg

Issues of Concern for Physicians: Growing Practice Expenses


Slide19 l.jpg

Issues of Concern for Physicians: Growing Practice Expenses

Source: CMS, Office of the Actuary, 2004.


Cost shifting hydraulic for medical providers l.jpg

Cost-Shifting “Hydraulic” for Medical Providers

B =C + MarginContribution

130%

B

120%

Cost Shift

C

A

110%

Cost

100%

Shortfall

Margin

90%

80%

70%

Payment-to-Cost Ratio

60%

Above Cost Payers

Below Cost Payers

50%

40%

30%

20%

10%

0

10

20

30

40

50

60

70

80

90

100

Percentage of Market Share


Cost shifting hydraulic for medical providers21 l.jpg

Cost-Shifting “Hydraulic” for Medical Providers

  • Perhaps best thought of as a lubricant within a massive series of financial feedback loops between:

    - government (Medicare, Medicaid)

    - providers (hospitals, physicians) and

    - private payers (insurance companies,

    employers, patients).


Slide22 l.jpg

The History of Medicare’s Relationship with Hospitals: Maximize Reimbursement First, Decrease Costs Later

Source: Stuart Guterman (CMS)


Physicians the role of cost shifting l.jpg

Physicians & the Role of Cost-Shifting

Source: The Lewin Group, “The American College of Emergency Physicians (ACEP) Practice Expense Study,” for the

American College of Emergency Physicians, September 15, 1998.


Slide24 l.jpg

Source: American Hospital Association’s Annual Survey of Hospitals (n=6,800 hospitals), 2005. Pearson’s correlation coefficients:1984-1997: Medicare and Private ratios: r = -.861980-2003: Medicare and Private ratios: r = -.73 1984-1997: Medicaid and Private ratios: r = -.391980-2003: Medicaid and Private ratios: r = -.56


Community hospitals the role of cost shifting l.jpg

200%

180%

160%

140%

120%

The correlation coefficient between

Private Payer Payment-to-Cost Ratio and

Medicare, Medicaid & Uncompensated

Care cost shift burden is 0.753

100%

Private Payer Payment-to-Cost Ratio

80%

60%

40%

20%

0%

0%

5%

10%

15%

20%

25%

Medicare, Medicaid & Uncompensated Care Cost Shift Burden (in %) by State

Community Hospitals & the Role of Cost-Shifting

Source:The Lewin Group analysis of data contained in AHA TrendWatch Chartbook: Trends Affecting Hospitals and Health Systems, 2001.


Slide26 l.jpg

Source: Glenn Melnick, “Uninsured Americans,” Hearing Before the Subcommittee on Health of the Ways and Means, U.S. House of Representatives, 108th Cong., 2nd Sess. (9 March 2004); Professor Melnick’s testimony from the Center for Health Financing, Policy and Management, School of Policy, Planning and Development, University of Southern California.Technical Note: Data are derived from the Medicare Prospective Payment System’s Impact File, Centers for Medicare and Medicaid Services (CMS, 2004), available at http://www.cms.hhs.gov/providers/hipps/ippspufs.asp, last visited October 1, 2004).


Source medpac june 2004 l.jpg

Source: MedPAC (June 2004)

Segmentation of U.S. Health Care System Increasing


Source cms office of the actuary 2004 l.jpg

Source: CMS, Office of the Actuary, 2004.

Segmentation of U.S. Health Care System Increasing


Slide30 l.jpg

POLICY implications of the significant rise in physician-owned: ambulatory surgery centers, specialty hospitals, and diagnostic imaging centers:

1.) prospects for improved quality, lower costs, and more professional autonomy

- not a new phenomenon (e.g., heart hospitals in London 1857, psychiatry clinics, ear

and eye hospitals, obstetrics & gynecology hospitals)

- Adam Smith and the advantages of specialization (e.g., pins and “focused factories”)

2.) financial impact on community hospitals: fair or unfair competition?

- “cherry picking” the best-insured private patients by, largely, for-profit entities

- “skimming” lower-cost, healthier Medicare cases within individual DRGs

- cardiac, orthopedic, radiological services: huge proportion of hospitals’ net revenues

3.) impact on communities’ overall access to care

- declining volume & smaller patient populations make charity care harder to provide

- vulnerability of emergency services, burn units, psychiatric facilities

- complicates doctor-hospital relationships (e.g. staff privileges, economic credentialing)

- can easily exacerbate the development of a multi-tiered health care system


Present future concerns l.jpg

Present & Future Concerns

  • (1) The ultimate cost shift is both prevalent and increasing in scope and degree: employers passing on a larger and larger share of their increased health care costs to their employees . . .

    - higher monthly wage deductions and/or increased co-payments,

    deductibles, out-of-pocket costs (especially for employees’ dependents)

  • (2) Beyond this strategy, more and more employers have simply stopped offering health insurance . . .

    - (15% of the U.S. population is uninsured; 45 million individuals or the

    aggregate population of 24 states, Census 2003)


Conclusion how much should the government pay medical providers l.jpg

Conclusion: How much should the government pay medical providers?

TOM SCULLY: “My frustration is that you’re trying to be a government contractor. Hospitals usually get about 50% of their revenues from Medicare & Medicaid; doctors, on average, generally come into practice getting roughly 30% or so from Medicare & Medicaid.

So if you’re a doctor or if you’re a hospital, fundamentally a big chunk of your business is as a government contractor. And your expectation, I think, when dealing with the government—whether you’re in the Pentagon or in health care—is boring consistency, decent operating margins that don’t flop around. If you’re Boeing, you don’t want to have a 25% margin one year and a negative 2% the next year, right?”

- Interview with Tom Scully, Administrator, Ctrs. for Medicare & Medicaid Services, 2001-2003


Exit questions l.jpg

Exit Questions

(1.) What do providers do (or have to do)

when each payer only wants to pay the marginal cost?

(2.) Who is ultimately responsible for the common good in a competitive market?


  • Login