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Why insure health care? The answer to this question is fundamental to health care reform, insurance coverage, medical practice, and the cost of health care..
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THE PURPOSE OF HEALTH INSURANCE IS TO MANAGE….
PURCHASING HEALTH INSURANCE INVOLVES…
PEOPLE EXPERIENCING A SMALL, CERTAIN LOSS…
(KNOWN AS THE PREMIUM)
IN EXCHANGE FOR RELIEF FROM RISK OF A LARGE UNPREDICTABLE LOSS.
(DUE TO ACCIDENT OR MAJOR ILLNESS)
PERSONBUYS
INSURANCEFROMRISK
INSURER SELLS
PROTECTION FROM RISK
PERSONBUYS
INSURANCEFROMRISK
INSURER SELLS
PROTECTION FROM RISK
PERSON PAYS PREMIUM
INSURER WRITES A POLICY
THE INSURED ARE PROTECTED AT A REASONABLE COST
AND
THE INSURER MAKES SOME MONEY
B Y S P R E A D I N G T H E R I S K
&
BY CONTROLLING THE RISK
WITH WHOM?
• CO-PAYS & CO-INSURANCE• DEDUCTABLESPATIENTS
• RISK SHARING CONTRACTSPROVIDERS
• REINSURANCEOTHER
INSURERS
WITH WHOM?
• CO-PAYS & CO-INSURANCE• DEDUCTABLESPATIENTS
• RISK SHARING CONTRACTSPROVIDERS
• REINSURANCEOTHER
INSURERS
Co-payment – fixed amount of total cost that must be paid by the insured each
time a medical service is usedCo-insurance – a fixed percentage of the
total cost that must be paid for each insured medical service
Deductable – a fixed amount that must be paid by the insured before insurance
takes effect
WITH WHOM?
• CO-PAYS & CO-INSURANCE• DEDUCTABLESPATIENTS
• RISK SHARING CONTRACTSPROVIDERS
• REINSURANCEOTHER
INSURERS
Risk sharing contract – an agreement between an insurer and a provider in which the provider assumes risk for
treatment in some way. Typically, the provider will receive a fixed payment per
patient and assume any costs for treatment above that fixed payment.
WITH WHOM?
• CO-PAYS & CO-INSURANCE• DEDUCTABLESPATIENTS
• RISK SHARING CONTRACTSPROVIDERS
• REINSURANCEOTHER
INSURERS
Re-Insurance –insurance purchased by an insurer from another insurer (i.e.,
reinsurer) for the purpose of transferring risk from the insurer to the reinsurer.
The reinsurer agrees to pay the insurer when insurer’s losses exceed a specified
amount.
BY CONTROLLING
THE PROBABILITY,
SEVERITY,
AND COSTS OF
PROBABILITY & SEVERITY OF EVENTS MAY BE REDUCED WITH…
WELLNESS PROGRAMS
BETTER ADHERENCE TO
THERAPY
QUALITY IMPROVEMENT
MEDICATION UTILIZATION
REVIEW
DISEASE & CASE
MANAGEMENT
APPLICATION OF
TECHNOLOGY
PATIENT ENGAGEMENT
EVIDENCE BASED
MEDICINE
PAY FOR PERFORMANCE
WELLNESS PROGRAMS
BETTER ADHERENCE TO
THERAPY
QUALITY IMPROVEMENT
MEDICATION UTILIZATION
REVIEW
DISEASE & CASE
MANAGEMENT
APPLICATION OF
TECHNOLOGY
PATIENT ENGAGEMENT
EVIDENCE BASED
MEDICINE
PAY FOR PERFORMANCE
THESE MANAGED CARE METHODSSEEK TO IMPROVE ACCESS, INCREASE
QUALITY OF CARE, AND/OR LOWER COST
CONTROLLING COSTS REQUIRES INFLUENCING SPENDING ON…
• DRUGS• SUPPLIES• TECHNOLOGY
PRODUCTS
• PHYSICIAN• HOSPITALS• LONG TERM CARE
SERVICES
• OF EXISTING PRODUCTS & SERVICES• OF NEW PRODUCTS & SERVICES
UTILIZATION
CONTROLLING HEALTH CARE COSTS CAN BE SUMMARIZED WITH THE
FOLLOWING EQUATION…
Total HealthCare Costs =ƒ (Price, Volume, Intensity)
Ƒ = function(i.e. is determined by)
Price = amount charged for services and/or products
Volume = number of units of service and/or products
Intensity = amount of energy or effort used
WHICH MEANS…
Total HealthCare Costs =ƒ (Price, Volume, Intensity)
Ƒ = function(i.e. is determined by)
Price = amount charged for services and/or products
Volume = number of units of service and/or products
Intensity = amount of energy or effort used
TOTALS COSTS ARE CAUSED BY THE PRICE PAID, THE VOLUME USED, AND THE INTENSITY OF
HEALTH CARE PROVIDED. CONTROLLING ONLY ONE (E.G., PRICE) WILL BE POINTLESS
WITHOUT CONTROLLING THE OTHERS.
FOR EXAMPLE…
CONTROLLING PHARMACEUTICAL EXPENDITURES REQUIRES CONTROLLING
THE PRICE OF DRUGS, VOLUME OF DRUGS USED, AND INTENSITY OF CARE
(E.G., USING A CHEAPER GENERIC DRUG INSTEAD OF A NEW BRAND NAME
THERAPEUTIC EQUIVALENT).
THE PURPOSE OF HEALTH INSURANCE IS TO MANAGE…
PERSONPAYS A SMALL, CERTAIN
FOR INSURER PROTECTION
FROM POTENTIAL
INSURERS CONTROL THEIR RISK BY…
S P R E A D I N G
&
CONTROLLING
THE RISK
WITH…
RISK SHARING
• CO-PAYS & CO-INSURANCE• DEDUCTABLESPATIENTS
• RISK SHARING CONTRACTSPROVIDERS
• REINSURANCEOTHER
INSURERS
AND WITH…
WELLNESS PROGRAMS
BETTER ADHERENCE TO
THERAPY
QUALITY IMPROVEMENT
MEDICATION UTILIZATION
REVIEW
DISEASE & CASE
MANAGEMENT
APPLICATION OF
TECHNOLOGY
PATIENT ENGAGEMENT
EVIDENCE BASED
MEDICINE
PAY FOR PERFORMANCE
INSURERS CONTROL
COSTS ALSO BY USING…
WELLNESS PROGRAMS
BETTER ADHERENCE TO
THERAPY
QUALITY IMPROVEMENT
MEDICATION UTILIZATION
REVIEW
DISEASE & CASE
MANAGEMENT
APPLICATION OF
TECHNOLOGY
PATIENT ENGAGEMENT
EVIDENCE BASED
MEDICINE
PAY FOR PERFORMANCE
WHICH HELP CONTROL
(Price, Volume, Intensity)
QUESTIONS?
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