Use actuarial firms to set premium rates third party

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Use actuarial firms to set premium rates & third-party firms to administerbenefits, pay claims, collect utilization data; third parties may provide casemanagement servicesEmployer advantages: Avoid commercial carrier administrative charges,premium taxes; accrue interest on cash reserves, exemption from ERISAERISA controversies: States’ responsibilities for consumers’ protectionsthrough regulation of employer-sponsored plans; states’ losses of premiumrevenue taxes; prohibition of employees’ suits against employer-sponsoredhealth plans about insurance coverage decisionsCurrently, organizations administering employer-based health insuranceplans have legal immunity for withholding insurance coverage or for failing toprovide necessary careGovernment as a Source of Payment: A System in Name Only
Early focus:Military, government employees, special populations (e.g., NativeAmericans)Now:Medicare, Medicaid, U.S. Public Health Service hospitals, state & local, long-term psychiatric facilities, Veterans Affairs, military & dependents, workers’compensation, public health protection, service grantsMosaic of reimbursement, vendor–purchaser relationships, matching funds, directservicesContracts with providers, not direct service provision (Medicare, Medicaid,grants)Federal with State matching funds (Medicaid)Direct services (Veterans Affairs)ACA: Federal support programs for uninsured, not a comprehensive, universal“system”Medicare: Historical Significance1965: Title XVIII of Social Security ActAll Americans older than 65 years entitled to health insurance benefits; 20 millionentered system in 1965; today, 50 million covered.Financed by payroll taxesConceded accreditation, administration to private sector (JCAHO, now JointCommission)Hospital payments by local Blue Cross intermediariesInitial Medicare ComponentsPart A: Mandatory hospital coverage, outpatient diagnostics, extended care facilities,home care post-hospitalization; funded by Social Security payroll taxes.Part B: Voluntary MD coverage, tests, medical equipment, home health; funded bybeneficiary premiums matched with federal revenuesCost sharing: Deductibles, coinsurance; medi-gap policiesAdditional Medicare ComponentsPart C: Managed Care Options for Private Health Plan Enrollment (1997)Part D: Prescription Drug Coverage (2003)Medicare Cost Containment and Quality InitiativesCosts rose much more rapidly than expectedBy 1976, most cost growth due to added hospital personnel, nonpersonnel costs,and profitsEarly amendments added covered services, which increased costs; quality concernsescalated through 1970s and 1980s.Later amendments addressed cost growth reductions and quality improvementComprehensive Health Planning Act (1966): Organized local health planningProfessional Standards Review Organizations (1972): Review Medicare hospital careHealth Systems Agencies (1974): Plan for health resources based on populationneeds (replaced CHP)OBRA 1980, 1981 amendments to reduce hospital lengths of stay, advocating homecare

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