Term
| What factors forced the reform of medical education in the early 20th century? |
|
Definition
| There was a transformation of the American university system from an emphasis on the classics to an emphasis on learning that could be applied, and endowments increased the capital base of the richest university medical schools so that facilities such as laboratories were greatly improved. The founding of the Johns Hopkins Medical school in 1893 took trends that were occurring elsewhere further by requiring four years of medical school, by being the first to require a college degree before entering medical school, by shifting training from lectures by local practitioners to clinical instruction by leading scientists, by linking the medical school with a hospital and by being the first to establish training in subspecialties through “residencies”. (Note that to get your degree you will complete an administrative residency). In 1904 the AMA established the Council on Medical Education which began to rate medical schools, and increasingly states took the ratings as a basis of acceptable medical schools. Financial pressure on commercial medical schools developed from the combination of expectation for increased resources per student in order to meet standards for schools and standards for students’ licensure and a decline in the number of students due to the increased length of training. Abraham Flexner toured medical schools throughout the country for the Carnegie Foundation and the Flexner report identified weaknesses in a number of specific schools. Many weak schools closed or merged into other schools. |
|
|
Term
| Briefly describe the three phases of the reconstitution of the hospital in the United States. |
|
Definition
| From 1750 to 1850 most hospitals were either public hospitals descended from almshouses, or voluntary hospitals. From 1851 to1889 most new hospitals specialized around disease, religion, ethnic groups, children, women, and medical sects. From 1890 to 1920, most new hospitals were for profit. (The West and South tended to get more of the later two phases.) Over these three periods there was a shift in power. When hospitals were funded by donations trustees were vital, but as more patients paid fees the power shifted to Medical Boards, and in the early 1900's to administrators. As a result hospitals changed from welfare entities where the poor received charity through patrons to scientific businesses where patients paid for professional care. Over these three periods nurses became a trained profession, and hospitals became more acute, less long term care. |
|
|
Term
| Discusses the two forms of corporate medicine during the era 1900-1930 |
|
Definition
| "Escape from the Corporation" discusses two forms of corporate medicine - company doctors and collective marketing. The use of company doctors grew both from Frederick Taylor's theories of scientific management, which led to industrial hygiene, and from "Welfare Capitalism", which tried to preempt unionization. Railroads were the first to offer corporate medicine. Many isolated logging and mining companies induced physicians to remote areas by guaranteeing salaries. The movement toward company doctors, which focused on employees, was one factor that created a bias in medicine toward workforce age males. Physicians, and the courts, generally resisted collective marketing. The lodges, one form of collective marketing, offered access to physicians for $1 or $2 per year. Lodge medicine died out with the end of the surplus of physicians in the 1910's. Private group practice, another form of collective marketing, began at the Mayo clinic in the 1880's. |
|
|
Term
| . In several sentences, explain why attempts to establish social health insurance in the United States failed during the first half of the Twentieth Century. |
|
Definition
| Prior to the First World War, interest groups prevented health insurance because, in contrast to Europe, interest groups wouldn't benefit from insurance. In Europe, Bismarck and Lloyd George had more political leverage than American reformers, and insurance increased income for British general practitioners. In the United States government was decentralized; the challenge to stability was small and was from agrarians and populists, who were less interested in social insurance. Roosevelt apparently believed that including health insurance would have jeopardized the passage of Social Security. |
|
|
Term
| Contrast plans that offer indemnity benefits, service benefits and direct services. Make sure to address, (you could use a table): How does provider reimbursement occur in each system? What is the degree of involvement between the plan and the provider? How does each type of plan try to control costs? How does each plan differ in respect to “insurance “ vs. “prepayment”. How do they differ with respect to “open vs closed panel”. |
|
Definition
Indemnity benefits - Provider reimbursement occurs when the subscriber pays the provider, and the subscriber then seeks reimbursement from the plan. The payer has no link to the provider. To hold down cost, the subscriber is given incentives such as coinsurance, deductibles and caps on fees. This is a traditional insurance approach, where the goal is to reduce the risk of a large loss. The panel is open in pure indemnity.
Service benefits-Provider reimbursement occurs when the payer pays the provider directly, usually in response to the provider submitting a claim. The payer needs to negotiate rates with the provider. The payer controls cost by negotiating fees and may monitor volume with the threat of exclusion. This approach is a mix of “traditional insurance” and the “prepayment approach” with the degree to which it resembles one or the other varying with the details of the particular service benefit plan. The panel is generally limited, although a specific plan might also include an indemnity option.
Direct services-Provider reimbursement occurs when the payer prepays for services, sometimes in the form of salary or capitation. The payer has strong involvement with the provider, perhaps even employing the provider. The payer controls cost through strong budgetary controls and strong utilization controls. This is a prepayment approach, where the goal is to obtain comprehensive care, including primary care and preventative care. The panel is closed in the direct services part of a plan, although other options may be attached to a specific plan. |
|
|
Term
| Describe the birth of Blue Cross and Blue Shield. |
|
Definition
| Early Blue Cross plans were “prepayment plans” that paid service benefits. They guaranteed provision of services to subscribers in exchange for a fixed payment per subscriber per year. This was “hospital underwriting” - small capital reserves, but promises to provide care from the hospitals. Hospital executives were prominent on the governing boards of Blue Cross, and in some states by law a majority of the board members were hospital executives. Blue Shield developed in a similar manner, but indemnity payment was also an important option. For both types of plans, there were occurrences when in a particular year a plan’s costs exceeded revenue, which required a proportional reduction in payment to providers in order to remain solvent. |
|
|
Term
| Briefly describe the development of employer based insurance 1942-1959. Be sure to comment on the role of the Wagner Act, the War Labor Board, the Taft Hartley Act, and the Inland Steel case. |
|
Definition
| The growth in ‘private social security” was initiated by the failure of the Social Security Act to include health insurance and the inclusion within the “Wagner Act” of the implicit right for labor unions to include health insurance in collective bargaining with employers. In 1942 the War Labor Board (which controlled wage increases during WWII) allowed increases in fringe benefits for workers. As a result competition for workers led to offering health insurance, and roughly 20% of the population had some protection (usually weak) against hospital bills by the end of WWII. (The increase during WWII was from 7 million people to 26 million people, about 75% covered by Blue Cross). This would increase to about 60% of the US population by 1954, with union contracts accounting directly for around a third of the increase. The Taft Hartley Act of 1947 established “Taft Hartley funds” which allow a union to require in contracts that employers contribute to a health insurance plan run by the union and management. (This is particularly important in industries where workers often move from employer to employer, such as carpenters.) Taft Hartley also implicitly reaffirmed the right of unions to bargain for health insurance, and this was made explicit by the Inland Steel case, which ruled that health insurance was covered by the phrase “conditions of employment”. By 1954 union negotiated plans (both Taft Hartley funds and contracts negotiated with specific employers) accounted for a fourth of the insured people in the US, and the range of covered services for all plans tended to be growing broader. (Union contracts also had indirect effects – managers tend to get insurance when workers get it through unions, firms try to avoid unionization by offering insurance, and there developed a cultural “taste” for health insurance through the employer, which was encouraged by tax treatment of benefits (untaxed) vs wages (taxed).) |
|
|
Term
| Briefly describe the growth of prepaid practice after 1945. |
|
Definition
| Group Health Cooperative of Puget Sound was organized by members of the Grange, the Aeromechanics union, and local supply and food coops. Kaiser opened up their company plans to the public, and offered “duel choice” – an employer could offer both the Kaiser plan and other insurance plans to their employees. In New York, Mayor La Gaurdia led an effort which organized 22 medical groups into the health Insurance plan, and the city paid half the premium for employees that elected coverage. |
|
|
Term
| What were the major federal health initiatives in 1946? (The "Class of '46".) |
|
Definition
| The "Class of '46" included federal programs for medical research, mental health, community hospital construction, and the Veteran's Administration. The National Mental Health Act of 1946 funded research and training and assisted the states financially in creating mental health clinics. The VA received funds to construct hospitals, and tried to locate many of the new hospitals near academic medical centers. The Hill Burton Act of 1946 provided construction funds for community hospitals. The National Institutes of Health grew out of medical research that had been directed towards medical problems during WWII. |
|
|
Term
| What were the major features of Forand’s proposal in 1958 and the Kerr-Mills act of 1960? What were major features of each of layers in the “three layered cake” of the 1965 law that established Medicaid and Medicare? |
|
Definition
| In 1958 Senator Forand suggested a proposal (which was not enacted) for a scaled down approach to national health insurance, which focused just on the elderly and just on hospital costs. The Kerr Mills Act of 1960 provided federal financial support that matched state spending (at varying rates of match) on welfare medicine for the poor. The three layered cake included Medicaid (an expanded version of Kerr Mills); Medicare Part A (similar to Forand’s proposal); and Medicare Part B, which was similar to a Republican proposal to cover physicians’ fees, with the US government subsidizing the premium for individuals on social security who choose to take the program. |
|
|
Term
| What major concerns led to the health reforms of the 1960’s? What programs grew out of these concerns? |
|
Definition
| There was concern that the future supply of physicians and nurses would not be adequate, and in 1963 Congress adopted the first of a series of measures to expand education of health professionals. There were concerns that there was too much emphasis on hospitals, and the result was a shift to community based health services, especially mental health, but also primary care health centers. Medicare and Medicaid were a response to the concern that the elderly and poor were unable to afford health care. Starr suggests that Medicaid grew more rapidly than health care center programs because Medicaid is "institutionally compatible" in that it covers cases that would be bad debts. In establishing Medicare key decisions were the agreement to determine costs in the manner hospitals preferred, and the use of fiscal intermediaries that had strong ties to providers. |
|
|
Term
| In several sentences describe the constraints “medicine” began to face in the 1970’s |
|
Definition
| In "The End of a Mandate” Starr discusses the constraints that medicine began to face during the 1970's. Rapid increases in costs, in part due to the concessions to providers when Medicare was established, led to increased attention to cost containment. New regulation of health care, including Health Systems Agencies (HSA) and Professional Standards Review Organizations P.S.R.O.s, contrasted with most instances of professional regulation in that it was designed to control cost, and not to protect providers' monopolies or allow liberals to control private enterprise. There was a generalization of patients' rights, including the right to informed consent, the right to see medical records, the right to refuse treatment, and a broadening of the right to care. |
|
|
Term
| What was the HMO act of 1973? What were its major provisions? |
|
Definition
The HMO Act of 1973
1. Created the “federally qualified” category of HMOs
2. Employers were required to offer as an alternative a federally qualified HMO if it existed in their area,
3. Grants and loans for federally qualified HMOs.
4. Overrode state laws that prohibited HMOs |
|
|
Term
| What have been the financial implications of Medicare DRGs for hospitals. |
|
Definition
| In the first year of the Diagnostic Related Groups prospective system (1984) full time equivalent employees (FTEs) in hospitals fell 2-3 %, average length of stay (LOS) also fell. Medicare admission also fell, Medicare inpatient fell 6%, hospital margins were 11.3 %. Since then payments have tended to increase more slowly than cost, but in 1993 cost began to be flat while payments increased up to the BBA in 1997 |
|
|
Term
During the 1990’s what were the major responses of private payers to increased health care
cost? |
|
Definition
Growth in Managed Care- Health maintenance Organizations (HMOs), preferred provider organizations (PPOs),
Growth in Self insured plans
Negotiated rates- DRGs for hospitals, Resource Based Relative Value System,(RBRVS) for physicians and others. |
|
|
Term
| What is the BBA? What were its effects? |
|
Definition
The Balanced Budget Act of 1997
Sharply reduced reimbursement from Medicare to home health agencies, nursing homes and hospitals. Many nursing homes and home health agencies went bankrupt.
Created the State Children’s Health Insurance Program (SCHIP) to provide coverage for “near poor” kids.
Provided additional preventative services to Medicare recipients’ |
|
|
Term
| Why has there been an expansion in the number of firms that self insure? |
|
Definition
Self insurance traditionally meant that instead of purchaser insurance an entity choose to retain the risk of loss. For example, a city government with many buildings might decide not to purchase fire insurance for each building. Instead, the money that would have been used to purchase insurance might be pooled with a depreciation reserve, and the funds could be used in the event of a loss from fire. When firms are self insured they frequently contract with other companies that specialize in services such as paying claims and keeping track of eligibility. These companies are called third party administrators (TPA). Some insurers also offer self insured firms these services. When an insurer provides these services the contract is called “administrative services only” (ASO). Many self insured firms purchase “stop loss” insurance. This places a limit on the amount of the loss a ”self insured” plan can occur.
In 1974 the federal government enacted the Employee Retirement and Income Security Act (ERISA). Self insured plans were exempted from state regulations on health insurance. This meant that if a firm self insured it avoided costs such as premium taxes and state mandated benefits. A trend toward self insurance for health insurance began to gain strength in the late 1970s. In 1977 there were 1,500 self insured plans, by 1984 there were 175,000. Large firms are more likely to self insure than small firms. Self insurance plans have the following advantages:
a. The federal Employee Retirement and Income Security Act preempts states from regulating health insurance plans of self insured companies. Consequently, self insured businesses are exempt from State regulations regarding mandated benefits, premium taxes and reserve requirements for unpaid and unreported claims. This is particularly attractive to multistate plans which can avoid numerous and conflicting state requirements.
b. There appears to be a gain in efficiency. McDonnell et al note employers gain more control over benefit design, and they can aim to lower claims administration and overhead costs. McDonnell et al believe that it is easier to reduce the cost of administration and overhead costs than it is to reduce the cost of benefits.
c. In many cases self insurance is less expensive because purchased insurance premiums include costs associated with insurance companies’ profits (or for nonprofits, "surpluses"), the cost of maintaining reserves, brokers commissions, and State premium taxes. In effect, firms can avoid the insurance companies’ "load".
d. There are a number of new products which make it more feasible to self insure. For example, firms can partially self insure and contract with third party administrators for ASO (Administrative Services Only) or CSO (Claims Services only). Third party administrators (TPAs) include commercial insurers and independents. By the mid 1980’s, 75% of self insured firms used TPA's. They provide a range of services including marketing, claims processing, premium collection, claims review, accounting, computing, and consulting. The product “Minimum Premium” leaves the employer liable for (for example) 90% of the expected cost of the firm’s health costs. Premium tax is avoided on this portion. The insurer administers the plan and covers the remaining expenses which the employer covers with a premium.
The following example shows how a firm can use ERISA to avoid health insurance “reform.” (For example, a state law that requires a standard benefit package, or that requires community rating.) In this example, if the firm purchased a health insurance plan, the rate of $220 per month for single employees would include $200 for health insurance and a $20 “load” to cover administrative costs. Instead of purchasing health insurance, the firm may purchase minimum premium insurance for $20 per employee, which works like stop loss for anything over $180 in average expenses. The firm pays the insurance firm $20 per month to cover administrative costs. In addition to the stop loss coverage and administrative costs, the firm sends the insurer $180 per month to cover claims expenses. The total “self insurance” payment of $220 is the same as the insurance premium of $220, and the firm covers its risks in both cases.
Purchased Insurance Self Insurance
Monthly set aside $180
Stop loss coverage $ 20
Administrative services $ 20
MONTHLY PREMIUM $220 MONTHLY PREMIUM $220 |
|
|
Term
|
Definition
| A preferred provider organization (PPO) consists of contracts between an employer or insurance company and providers who offer discounted fees and agree to establish utilization review procedures to reduce the volume of services. The employer or insurance company pays a larger share of the cost of care when employees use a “preferred provider,” so it is less costly for employees to use services “in the network.” Employees retain a broader choice of providers, since they can go outside the network if they pay a larger share of the costs of care. Sutton and Sorbo suggest that a PPO needs at least a $200 deductible and 20% coinsurance on out of network care, otherwise there will not be a sufficiently strong incentive for patients seek care from “preferred providers.” Preferred Provider Organizations (PPOs) broker networks of health care providers to employers and groups of employees. Many PPOs evolved from informal marketing arrangements, especially marketing arrangements with insurance companies. PPOs try to control cost with careful credentialing, utilization review, and evaluation of hospital costs. They use benefit design to direct patients to the lowest cost provider. In the simplest form, a PPO is a direct contracting arrangement between providers and unions and/or employers. |
|
|
Term
| What are the major changes to the structure of the health insurance markets since 1970? |
|
Definition
Christianson (1990, “A Supply-Side View of American Medicine.” Advances in the Study of Entrepreneurship, Innovation, and Economic Growth 4:15-84.) has provided an analysis of health insurance markets using the industrial organization analysis of structure, conduct, and performance. Christianson identifies four major changes since 1970 in the structure of the health insurance markets:
1. There is an increase in the number of companies that self insure health benefits. (See above question)
2. There has been an increase in the number of HMOs and in the number of HMO members. There was also a growth of national HMOs in the early 1980s. Advocates of the HMO movement had argued that while the presence of HMOs had not significantly reduced the rate of growth of health care expenditures, costs would be contained once there was competition between HMOs. The argument was that costs had not been contained because when an HMO faced only fee for service competition, the HMO had no incentive to set premiums substantially below the fee for service plans. A premium that was slightly lower than the rates offered by fee for service programs would attract price sensitive individuals, so why set premiums far below the fee for service plans? However, by 1986 all of the 25 largest MSAs had 5 or more HMOs, and health care costs continued to increase above the rate of inflation.
3. There was a growth in managed care organizations, such as PPOs. Christianson notes that in December of 1984 there was 1.3 million people enrolled in PPOs, but by the summer of 1986 there were 16.5 million people enrolled in PPOs. In a year-and-a-half, the number of people covered by PPOs had grown more than tenfold. Sutton and Sorbo note that by 1992 both HMOs (which bear risk) and PPOs (usually not risk bearing) each controlled 15-17% of the market.
By 1992 both HMOs (which bear risk) and PPOs (usually not risk bearing) each controlled 15-17% of the market. Christianson note that in the past 25 years traditional insurers began adopting utilization management techniques that had been used by HMOs. By the early 2000’s. over half of all enrollees were covered by PPOs. In 1984, less that 5% of enrollees in conventional plans had coverage requiring pre-admission certification for hospital care, but by the end of 1987 44% of enrollees were covered by pre-admission certification. The result of these changes has been that firms also began to offer a wider variety of plans. Insurers began offering employers multiple options, hoping to retain all of a firm's employees in a single risk pool.
4. This was a period of decline in the market share of Blue Cross/Blue Shield. (It was also a period of decline in the market share of commercials.) |
|
|
Term
| By decade since the 1940’s, summarize the major trends that influenced the amount of resources going into health care in the United States |
|
Definition
1940’s Class of 46 , more resources from the federal government for target areas- Hill Burton, VA NIH, mental health.
1950’s Growth in employer based insurance (sometimes called “private social security” ) allowed more people to pay with insurance.
1960s Entitlement for particular categories of people – elderly, poor, disabled, through Medicaid and Medicare.
1970s Attempts to shift resources from institutional care, attempts to hold down cost through regulation and HMOs
1980s Attempts to hold down cost through reimbursement incentives, such as DRGs
1990s Attempts to hold down costs through managed cage and the BBA. Expansion of SCHIP
2000s MMA brought Medicare Drug benefit. Consumer directed plans emphasized. |
|
|
Term
| Describe the major features of the covered services of the Medicare program.(Details in parenthesis not required for test) |
|
Definition
Part A of Medicare, which accounts for 41% of the spending for Medicare, provides inpatient hospital services (34% of Medicare spending), hospice services (2%), some home health services (3% ) and some skilled nursing home coverage (5%). Part A is funded by a payroll tax, for every $100 workers receive in pay $1.45 goes to Medicare Part A, and the employer matches that payment with another $1.45 These funds go into a trust fund, which is intended to be sufficient to keep Medicare Part A solvent. (Between 1966-1983 Part A reimbursed hospitals through a reasonable cost system. In 1983, Congress enacted a prospective payment system, which relies on a patient’s Diagnosis-Related Group (DRG) to establish reimbursement amounts. DRG rates are pre-set.)
Part B of Medicare which accounts for 35% of Medicare spending, covers physician and other providers service (24%), outpatient hospital services (5%) and other services including preventive services and some home health (5%). Part B is funded by general revenues and premiums charged to beneficiaries. As of January 2007 the premium was $98.40. Beginning in 2007, higher income individuals must pay ahigher premium for part B. (Up until 1992, for physician's services Part B was reimbursed on a reasonable cost system. In 1992, the Resource Based Relative Value Scale (RBRVS) was enacted for physician services)
Part C of Medicare, which accounts for 14% of Medicare expenditures, is the Medicare Advantage plans. These plans involve organizations (for example HMOs) that contract to provide all Part A, B and D services to Medicare eligible individuals for a set premium.
Part D of Medicare, which accounts for 8% of Medicare spending, is the Medicare prescription bill which began in January 2006. Part D is funded by general revenues, beneficiary premiums and state funds. |
|
|
Term
| Describe the major features of the eligibility requirements for individuals for the Medicare program. |
|
Definition
| Medicare is a medical benefits plan established by the federal government for 35.4 million persons age 65 and older. It also provides services to 6.3 million disabled people under age 65. Medicare is administered by the Centers of Medicare and Medicaid services. Part A is free to all those who are eligible for social security benefits and for a premium for those who are not. Part B is optional to all those who have Part A coverage and requires a monthly payment. Generally, state Medicaid programs pay the part B premium for “dually eligible” individuals who qualify for both Medicaid and Medicare. |
|
|
Term
| Describe the major features of the eligibility requirements for individuals Medicaid program. What is meant by “dually eligible” what is meant by “spend down”. |
|
Definition
(Medicaid is jointly run by the states and the federal government to provide a medical safety net for low income mothers and children, and for elderly, blind, and disabled persons receiving supplemental social security benefits.)To be eligible for Medicaid an individual must meet all three of the following:
Income tests There is a maximum amount of income that may be earned by the household.
Asset tests There is a maximum amount of assets that may be owned by the household.
Categorical An individual must fall into one of several “categories” they may be a low income child or their parent, or a pregnant woman, or disabled, or over age 65.
Federal law sets some limits, but the states have some latitude in setting eligibility rules.
Dually eligible means that an individual is eligible both for Medicaid and Medicare.
Spend down occurs when an individual starts out ineligible for Medicaid for asset or income reasons, but “spends down” either their income or assets on medical expenses to the point that they are eligible.
(Medicaid covers 55 million Americans, including 27 million children, 14 million working age adults, 6 million seniors, and 8 million disabled individuals.) |
|
|
Term
| Describe the major features of the covered services of the Medicaid program. What are DSH payments? |
|
Definition
Congress originally mandated that Medicaid cover hospital and physician care, X-ray and Lab tests. Mandatory nursing home coverage was added in 1972. Congress added incentives so that states would expand the eligibility base and/or increase the range of optional benefits. (This favors states with a high tax base and/or a low percentage of their population in poverty. Some of the other services that were optional have since been “mandated”, for example a screening program for kids called EPSDT and rural health clinics.)
Optional services include prescription drugs, intermediate care facilities for the mentally retarded, dental care, hearing aids, prosthetic devices, and many other services. DSH (Disproportionate share) payments are additional reimbursement to those providers that have a high proportion of uninsured patients. DSH payments are allowable under federal law, but there is considerable discussion as to what the guidelines should be for these payments.
(Medicaid is administered by the states, so that each state establishes its own reimbursement system for providers. Originally, reimbursement was on a cost basis, but gradually states moved to a prospective per-diem or fixed-free rate system. ) The federal government “matches” the amount the states spend, with the match varying from 50% to 76% depending on economic conditions in the state. |
|
|
Term
| What are the major measures of inflation? Give an example of how each is used. |
|
Definition
Inflation is often measured with price indices. An index is constructed by periodic surveys that measure which items are purchased, the location where the items are purchased, and the prices at these locations. For example, it is necessary to measure the number of candy bars consumers purchase(i.e.. what weight should be assigned to candy bars as a percentage of consumers "market basket"), the distribution between locations with different prices (e.g. vending machines, discount stores, etc.) and the prices at each location.
The most commonly used index, the Consumer Price Index for Urban Consumers (CPI-U), is based on surveys which measure changes in prices in the typical bundle of goods purchased by urban consumers. Since the CPI-U measures the changes in prices paid by workers it is often used in wage contracts to adjust wages for inflation. A broader measure, the Implicit Price Deflator, is constructed by dividing the Gross National Product (GNP) measured in current prices by the GNP measured in last year's prices. The Implicit Price Deflator reflects the overall changes in prices in the economy. The Wholesale Price Index measures changes in the prices producers pay for inputs for their products. To the extent producers can be expected to pass price increases on to consumers the Wholesale Price Index provides advanced warning of likely changes in the CPI. |
|
|
Term
| What are the major measures of inflation in health care? |
|
Definition
Some measures of inflation are specific to health care. The Medical Price Index is a component of the CPI developed by the US Bureau of Labor Statistics. The measure's primary weakness is that it tracks "charges", which in fact are not what health care consumers are charged, but rather "sticker prices" which are almost always discounted. So changes in "charges" can be different than changes in the actual prices if discounts become larger or smaller.
The Centers for Medicare and Medicaid Services (CMS) previously the Health Care Financing Administration (HCFA), is an agency within the Department of Health and Human Services, which has 8 regional offices that oversee the Medicare program and ensure that its regulations are followed. CMS provides some alternative measures of health care price changes, which are sometimes used in administering the Medicare program. CMS computes separate "market basket" indices for hospitals, nursing homes and home health agencies. There are three separate indices for hospitals that adjust for their location (major metropolitan, urban, and rural). An alternative CMS index, the Medicare Economic Index, is a blend of other indices. These indices are averages, so a hospital that does not have a typical mix of services or a typical level of intensity (more very sick patients) could have costs that change that change at a rate that is different than the average rate. |
|
|
Term
| An investor purchases a one year bond with a nominal rate of return of 8%. During the year inflation is 12%. How much will the investor's purchasing power change? |
|
Definition
| Purchasing Power = 1.08/1.12 =.9643 The investor earns a negative real rate of return. |
|
|
Term
| Explain the difference between increases in expenditure and inflation by defining three components of changes in expenditures. |
|
Definition
When the total expenditures on a particular type of services increase, it can be due to three causes:
1. Inflation, the change in the price of particular goods.
2. "Intensity" changes, so that the cost increases but so does the quality. More resources may be going into each unit of service (e.g. more hours of nursing care per hospital admission).
3. More units of service. For example, the increase home health care visits results in an increase in health care expenditures. |
|
|
