Common Payment Types:
A payment system where healthcare services are unbundled and paid for separately. A traditionally prevalent model in the United States.
What is fee for service (FFS)?
These models reward healthcare providers based on patient outcomes, not the quantity of services provided.
What are value-based payment models?
The U.S. healthcare system often experiences this issue, where rural or low-income communities struggle to access providers due to geographic or financial barriers.
What is limited access to care? Or access to care issues?
The value equation in Healthcare is:
What is Quality + patient experience over cost?
This is the amount the beneficiary must pay each year before their health insurance coverage plan begins paying.
What is a deductible?
This type of hidden information problem occurs when one party has private knowledge about quality or risk before a transaction, like in the ‘market for lemons.
What is adverse selection?
This model pays a healthcare provider a fee for providing services to a number of people, such that the amount paid is determined by the number of total patients.
What is capitation?
This 2010 law aimed to increase healthcare coverage while introducing payment reforms that emphasize prevention and coordinated care.
What is the affordable care act (ACA)?
This makes up 40% of overall health, that is often overlooked by health systems.
What is Behavior?
A concept in value-based healthcare referring to unnecessary variation in tests or treatment across providers that don’t improve patient outcomes.
What is unwanted variation?
A flat fee that a beneficiary must pay each time they receive medical care. Example: A patient may pay $10 for every doctor's visit while the insurance plan covers the rest of the cost.
What is a copayment?
The situation where one party takes on more risk because another party bears the cost of that risk, often due to information asymmetry or the presence of a safety net like insurance or a government bailout
What is Moral Hazard?
This plan provides comprehensive coverage for high-cost medical events but features a high deductible coupled with a limit on annual out of pocket expenses.
What is a High-deductible health plan (HDHP)?
A payment approach that bundles payments for all services during a patient’s episode of care instead of paying separately for each service.
What is bundled payment?
This phenomenon occurs when public insurers pay less than the actual cost—forcing providers to charge private payers more to compensate.
What is cost shifting?
These organizations contract with private insurers to manage care for state-run health programs like Medicaid, aiming to control costs.
What are managed care organizations?
These are services that are not covered by a plan. These must be clearly defined in the plan literature.
What are exclusions/limitations?
When you get health insurance, what are you insuring?
Hint: Tad says this all the time
What is your wealth?
This system, introduced in the 1980s, reimbursed hospitals a fixed amount based on diagnosis, not length of stay.
What is the diagnosis related group system (DGR)?
This is a hospital insurance plan largely financed through social security taxes from employers and employees that covers inpatient hospital stays, skilled nursing facility stays, home health visits, and hospice care.
What is Medicare Part A?
As healthcare utilization increases, what happens to the marginal benefit of additional healthcare services?
What is down?
This is a network of providers who give better terms to patients when they seek care within the network
What are Preferred Provider Organizations (PPOs)?
The maximum amount a patient is required to pay for covered services in a plan year, after which the insurance company pays 100%.
What is the out-of-pocket maximum?
Getting sick makes an individual more willing to purchase medical care. This is an example of what happening to the demand curve?
What is a demand curve shift outward?
A form of managed care in which all care is received from participating providers within the network. A referral from a primary care provider needs to be obtained prior to seeing specialists.
What is a Health Maintenance Organization (HMO)?
This strategy encourages multiple providers to coordinate care for a patient or population, often sharing in savings if they reduce unnecessary spending and improve outcomes.
What is an Accountable Care Organization (ACO)?
This inefficiency occurs when providers order more tests or treatments than necessary out of fear of being sued for malpractice.
What is defense medicine?
Prior authorization, behavioral interventions, gatekeepers, second-opinion programs, and cost-sharing mechanisms are examples of these cost-containment tools used in healthcare.
What are typical tools used by MCOs?
A patient has a $1,500 deductible and no coinsurance. They need a $4,000 procedure. How much does the patient pay, assuming they have not met any of their deductible yet?
What is $1,500?
When patients face lower out-of-pocket costs, they may demand care that provides little or no clinical benefit. This phenomenon is sometimes described as “too much care.”
What is demand side moral hazard?