10.06.11.managed care - Private Health Insurance Plans: Can...

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Private Health Insurance Plans: Can they reduce moral hazard and control costs? HCMG 101 Daniel Polsky October 6, 2011
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Summary: Difference between Adverse Selection and Moral Hazard Moral hazard – When behavior changes as a result of being insulated from risk or true economic costs. Moral hazard arises because the economic actor does not bear the full consequences of its actions. Adverse selection - a market process in which bad results occur due to information asymmetries between buyers and sellers.
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Outline How can health insurance be designed to better control costs? 1. Decrease quantity of services Provider payment Utilization Management 2. Decrease price of services What are the different types of health insurance designs? http://www.polleverywhere.com/multiple_choice_polls/OTMzNjI5ODY3 http://www.polleverywhere.com/multiple_choice_polls/LTIwNjU1MjMwNDE
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Schematic on What a Health Insurer Does Health Insurer Providers: - MDs - hospitals Enrollee/ Patient Employer Pay a premium regardless of whether a person receives any medical care Cost sharing if/when patient receives medical care Pay providers when enrollees receive care -determine how & how much to pay providers - manage the medical care provided - determine which providers to include in the network
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How can health insurance be designed to better control costs? 1. Decrease quantity of services: – Demand side: • Deductibles • Co-payments • Co-insurance Supply side: • Payment incentives (eg. Physicians paid using salary or capitation rather than fee for service) • Utilization Management
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Payment incentives Payment schemes that might reduce utilization Physicians paid via salary or capitation 91% of physicians have insurance contracts These contracts represent 46% of revenue, on average Physicians have an average of 13 contracts Hospitals paid prospectively by type of hospitalization rather than based on all services delivered in hospital ( DRG/case rates)
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Supply side: Insurer Methods of Paying Physicians Insurance Company MD Fee-for-service Insurance Company Capitation Payment depends Payment based Payment fixed for on what MD on hours worked each month, regardless actually charges of what MD does MD Salary to MDs Insurance Company MD MORE CARE LESS CARE
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Supply side: Methods of Paying Hospitals Insurance Company Per Diem Rates Medicare Medicaid DRGs (Case Rates) HOSP HOSP Payment inclusive of all service for a single day (per diem) (different rate for medical, surgical, intensive … Payment based on a bundle of tests and procedures under a diagnosis Insurance Company Fee-for-Service HOSP Payment based on each test, procedure LOWER LOS HIGHER LOS
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designed to better control costs? 1. Decrease quantity of services
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This note was uploaded on 10/26/2011 for the course ASDF 2342 taught by Professor 2adga during the Spring '11 term at Mansfield University of Pennsylvania.

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10.06.11.managed care - Private Health Insurance Plans: Can...

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