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Health and Human Services wants to trim the administrative fat from the country's $666 billion healthcare bill. The Hartford Foundation is letting bids for a system that allows individual communities to share healthcare data for a variety of purposes. Both efforts draw significantly on electronic media claims.
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St. Joseph Mercy Hospital in Ann Arbor, Mich., is one of the four hospitals participating in a unique federal project testing package pricing for coronary by-pass procedures. In the following interview with Donald E.L. Johnson, editor and publisher of Health Care Strategic Management, Garry C. Faja, CEO of St. Joseph Mercy, explains how the project has impacted relations between the medical staff and hospital administrators. It has led to more sharing of data and ideas as well as unifying the many people involved in the hospital's cardiology program. Surprisingly, it was the cardiac surgeons who spearheaded the project. "They saw it as a direction for the future," Faja said.
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Total net Medicaid expenditures exceeded $94 billion in FY 1991, with 5 states accounting for more than 40 percent--New York, California, Massachusetts, Pennsylvania, and Texas. Nationally, inpatient and institutional long-term care payments each comprise about one-third of Medicaid spending. Medicaid expenditures have grown rapidly. From 1987 to 1991 they nearly doubled, greatly exceeding the expenditure growth for Medicare and private health insurance. This growth has been unevenly distributed. Expenditures increased by 125 percent or more in 12 States during this period, but an equal number of States had increases below 75 percent. Although expenditures grew the most slowly in institutional long-term care, this still comprises the largest payment category. Spending for inpatient services, community long-term care, insurance payments, and services not otherwise classified had the fastest rate of growth. By 1995, projected Federal expenditures for Medicaid will exceed $100 billion, approximately equal to those for Medicare in 1991. Health care inflation, State program decisions, and Federal mandates all affect the growth in Medicaid expenditures. Legislative changes have expanded coverage of pregnant women, infants, and children, and also have increased Medicaid payments of Medicare premiums and cost sharing for the elderly and disabled. Other Federal mandates raised nursing home standards and expanded EPSDT services. Legislative requirements and court challenges caused some States to increase provider payment rates. Some States developed alternative financing arrangements to accommodate the fiscal demands of higher expenditure growth. Requirements for DSH payments allowed States to use Medicaid to offset State support of public hospitals. Provider taxes and donations permitted States to increase Medicaid payments without having to raise other revenues or place an economic burden on providers. These arrangements were significantly curtailed by legislation passed in 1991.
Will you and your employees be better or worse off under the Clinton Health Security Act? A national survey of nearly 2,000 large and small businesses finds that a few workers will pay a lot less and receive a lot more insurance coverage than they receive today, while those who lose ground will just be a little worse off.
The second round of changes resulting from FAS 106 will be less dramatic than the first. But employers can anticipate that overall retiree health care costs will be reduced, averting the need to increase pensions or other retiree benefits. A fixed dollar benefit design will justify a lower accounting cost.
This Issue Brief discusses the evolution of the health care delivery and financing systems and its effects on health care cost management and describes the changes in the health care delivery system as they pertain to managed care. It presents empirical evidence on the effectiveness of managed care and concludes with an analysis of the potential of future health care reform to influence the evolution of the health care delivery system and affect health care costs. Between 1987 and 1993, total enrollment in health maintenance organizations (HMOs) increased from 28.6 million to 39.8 million, representing an additional 11.2 million individuals, or 4 percent of the U.S. population. At the same time, new forms of managed care organizations emerged. Enrollment in preferred provider organizations increased from 12.2 million individuals in 1987 to 58 million in 1992, and enrollment in point-of-service plans increased from virtually none in 1987 to 2.3 million individuals in 1992. In addition, the percentage of traditional fee-for-service plans with some form of utilization review increased to 95 percent in 1990 from 41 percent in 1987. Measuring the effects of the changing delivery system on the costs and quality of health care services has been a difficult task, resulting in considerable disagreement as to whether or not costs have been affected. In a recent report, the Congressional Budget Office recognizes two new major findings. First, managed care can provide cost-effective health care at a level of quality comparable with the care typically provided by a fee-for-service plan. Second, independent practice associations can be as effective as group- or staff-model HMOs under certain conditions. In the future, we are likely to see a continued movement of Americans into managed care arrangements, an increase in the number of physicians forming networks, a reduction in the number of insurers, an increase in the number of employers joining coalitions to purchase health care services for their employees, and a health care system that is generally more concentrated and vertically integrated.
As State Medicaid programs become increasingly important sources of payment for acquired immunodeficiency syndrome (AIDS)-related care, and drug regimens the major weapons available to fight human immunodeficiency virus (HIV)-related illnesses, Medicaid drug policies will have a substantial impact. State Medicaid programs were surveyed to identify policies on a range of prescription drug policies affecting these recipients. All Medicaid programs provide prescription drug benefits to all categorically needy recipients, and about three-fourths of the States provide these benefits to medically needy recipients. However, utilization limits, copayments, and off-label-use and prior-authorization policies in many States weaken the drug benefit available.
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