Legal Issues

1. Legal Issues Health Care Distribution, Ch. 7

2. Health Care Cost United States Gross Domestic Product (GDP) in 2002 was 10 trillion dollars • 1.6 trillion of it was spent on health care • 5,440 dollars per citizen (including children) Causes of high cost: • Demographic changes (as population ages more demand for health care) • Administrative costs (insurance systems cost money to run) • Malpractice insurance (costs of large settlements and penalties are passed on to consumers) • Labor costs • Technology (updating equipment with advances)

3. Traditional v. Managed Care Traditional Care: • Patients are free to choose whomever they want to provide their health care • Patients pay for that care • out of pocket, or • though their purchased insurance Managed Care: Any system that controls the • Type • Quality • Use, and • Costs of health care

4. Traditional v. Managed Care Main problem with traditional care is its costs, which are • often crippling to individuals who can pay, and • prohibitive for those who cannot • Insurance was the solution to prohibitive costs, but is no longer

5. Traditional v. Managed Care Main problems with managed care are (p155): For Physicians: • Restrictions that affect “practice patterns”: • obtain preapprovals • denied diagnostic tests • monitored drug prescriptions • limited referrals to specialists • limited scope of specialists available • Financial relationship with managed care entities (unspecified)

6. Traditional v. Managed Care Main problems with managed care are (p155): For Patients: • choice of hospital • choice of physician • concern over limitations placed on physicians • 73% of respondents to a poll said they support expanding the right to sue for malpractice to managed care facilities

7. History of Managed Care 1900-1970 – Traditional Care 3 problems with traditional, fee-for-service, care (mainly employer-sponsored, insurance-based care): • Rising prices • no incentives to reduce costs • Health risks due to variation of care • small towns had very different care than large cities • Health risks due to lack of coordination • doctor shopping led to multiple prescriptions and conflicting care

8. History of Managed Care 1970s- Managed Care Arrives Managed Care is the joining of two things that were separate: • The delivery of medical care • The financing of medical care Financing works against delivery, which is • good for keeping cost down, but • potentially bad for quality

9. History of Managed Care 1970s- Managed Care Arrives, cont. Since physicians and patients dislike the restrictions of managed care, the Nixon administration passed the • Health Maintenance Organization (HMO) Act in 1973 • used federal money to spur the growth of HMOs to encourage their acceptance by the public See list of Minnesota’s HMOs • Few Americans signed up with HMOs • Businesses began to complain that health care insurance costs were causing them to become uncompetitive internationally

10. Evolution of Managed Care 1980s and 1990s - Managed Care Evolves Insurers recognize Americans dislike the restrictions of HMOs, begin loosening them, • Create IPAs (Independent-Practice Associations) • Rather than employ physicians, contract with them • Physicians agree to limited restrictions • Insurers provide a list of approved physicians (which increases physician exposure)

11. Evolution of Managed Care 1980s and 1990s - Managed Care Evolves, cont. Insurers respond to calls for more freedom with the Point of Service (POS) plan: • Take an IPA plan • Add, for a fee, freedom to choose doctors not on the list

12. Evolution of Managed Care Despite IPA and POS plans … • Patients still disliked the restrictions • Physicians dislike the meddling, reduction in autonomy • Prices are still rising

13. Legislation and Managed Care ERISA v. State Law Main points: HMOs bear some responsibility for errors in health care • They encourage less than comprehensive testing • They limit consultation with specialists • Etc. HMOs, however, have not been legally liable for malpractice That is changing; p160-161 tells the story

14. Regulation and Managed Care Since expanding the ability to sue to HMOs, we can expect the cost to rise again One way to reduce those costs arrived through the work of the Institutes of Medicine (IOM) The IOM is • a non-profit • branch of the National Academy of Sciences IOM has conducted research and created protocols to guide HMOs in their decision making, resulting in Risk Managed Care over Managed Care

15. Medicare and Medicaid Leaving Managed Care behind, you should also know about Medicare and Medicaid Medicare • Provided by the federal government • Administered by the Centers for Medicare & Medicaid Services • The nations largest health insurance program • Covers 40 million Americans • For those 65 and older, only • Some exceptions for disabled

16. Medicare and Medicaid Medicaid • A joint and voluntary program between the federal government and the states • Provides health insurance to the • Poor • Disabled • Impoverished elderly • If a state participates (receives federal money), it must abide by federal guidelines regard the delivery of heath care

17. Patient-Focused Care In an effort to reduce costs, some health care providers are employing the concept of Patient-Focused, or Patient-Centered Care The goal is to reduce costs and improve the standard of care The model • “…attempts to centralize patient services using the unit-based model seen with nursing care.” • http://gateway.nlm.nih.gov/MeetingAbstracts/ma?f=102272800.html • Patients have a team of health care workers assigned to them • Not all the team members are trained for every job they may be assigned, and so liability questions are so far unexplored

18. Impact… Read Impact on the Imagine Professional, p163