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Page 1: HECO U5 - Health Finance
Page 2: HECO U5 - Health Finance

refers to a system that pays even first peso/dollar health care costs on a collective basis via employer or government funding

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creates its own set of incentives for patients and providers

reduce the cost of such a system is to lower down payments to providers –

adverse on the quality of service provided

ratio the amount of healthcare available to patients

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MODES OF HEALTH FINANCING

Government National Local

Social Insurance

Medicare Employees’

Compensation

Private Sources

Out-of-Pocket Private insurance HMOs Employer-Based

Plans Private Schools

Others

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Alternative Methods of Healthcare Financing in The Philippines

Identify the major providers of health services and role played by the government (the major or sole provider of health services)

Supported mainly from taxes & revenues of the government

Some form of compulsory

State-supported community managed co-operatives

The provider of health services are private individuals and private organizations with government playing a coordinating or regulatory only on certain special services

Through user charges Through insurance

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benefits of the service accrue directly to the user

consumers are willing and able to pay on a fee-for-service basis

particularly suited for those aspects of health care that are considered private goods

Different Modes of Private Health Financing

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is most appropriate for those aspects of healthcare benefits which are widely spread and therefore not quite amenable to any system of user charges

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has been demonstrated to be effective not only to mobilizing resources for healthcare, but also evoking improved health consciousness among community and stimulating collective action to achieve common health goals

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Simply taking out your wallet and paying for the health goods and services that you utilize

Examples: Doctor’s consultation, medicines from the pharmacy, diagnostic procedure

The most dominant mode of private health financing

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Advantages of Out-of-Pocket Minimum cost Merely depend on the primary care physician who

attend for your treatment and healthcare institution where you have been admitted

The shorter you treated the lower the payment

No “gatekeeper” for non-network care If you prefer to go outside the network for

treatment, you are free to see any doctors or choose without first consulting your primary care physician

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Disadvantages of Out-of-Pocket High-out-of-pocket costs Less coverage for treatment

provided by physician No freedom of choice

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bought by individuals for themselves or their families

maybe also be bought by employers as medical benefits for their employees

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Insurance Company

CONSUMEER

GovernmentHospital

PrivateHospital

MedicalSpecialists

General Practice

Physician

Pharmacy

Laboratory

TYPICAL SET STRUCTURE OF AN INSURANCE SETUP

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is term used to described any number of contractual arrangement that integrates the financing and delivery of medical care

Purchasers (employers) contract with a select group of providers to deliver a specific package of medical benefits at predetermined price

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The Theory Of Managed care Cost saving

The medical care costs and spending may be affected by changing

Patient utilization Physician’s practice styles Introduction of new technology

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Managed care Provider side provisions

1. Selection of Providers Managed care limits the patients

choice of provider for a given medical care

Limits include the1. Use of gatekeeper2. Close panels3. Preferred providers

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GATEKEEPER Is a physician responsible for providing

all primary medical care and coordinating access to high cost hospital and specialty care

Patients who wish to see specialist must first get a referral from the gatekeeper

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CLOSE PANEL A designated network of

providers that serve the recipient of health care plan

Patients are not allowed to choose a provider outside the network

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PREFERRED PROVIDER Allows the patient to choose a

provider who is not a part of the panel

Patients who use physician who are not part of the panel usually pay higher coinsurance rates

Further discouraging off-panel utilization

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ANY WILLING PROVIDER A situation in which a managed

care organization allows any medical provider to become part of the network of providers for the covered group

Often, state law will require this practice

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2. Cost Sharing Arrangement MC utilizes various reimbursement

schemes with common goal of shifting some of the financial risk to providers

Shifting risk discourages over Utilization of services Primarily the use of expensive

technology Prescription drugs Referrals to specialist In patient hospital procedures

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2. Cost Sharing Arrangement Primary Physician receive fixed payment Determined in advance to provide all

medically necessary primary care for specific group of patients

It control utilization and cost Subject to strict budgets for hospital

services, specialty referrals, and Rx drugs

Primary Physician who provide care within predetermine budgets receive bonuses

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3. Practice Guidelines and Utilization Review

Directly control clinical decisions Encourage providers to evaluate the

marginal benefit of prescribed care more carefully

Determine the relative efficacy of treatment options and in turn their cost effectiveness

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Techniques for controlling utilization in hospital

1. Pre admission review Establishes the appropriateness

of a procedure Either the admitting physician

or the patient must receive approval prior to the hospital admission

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Techniques for controlling utilization in hospital

2. Concurrent Review Utilizes established guidelines to

determine whether a hospital stay should be continued

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Techniques for controlling utilization in hospital

3. Retrospective review Examines the appropriateness of

care after it has been completed In addition, second surgical opinions

and case management are used to control costs associated with surgery

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Case Management A method of coordinating the

provision of medical care for patients with specific high-cost diagnoses such as cancer and heart disease

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Premium100

HMO13 Admin Overhead

General Practitioner14 minus withhold

Withhold[Percent of Capitation]

Pharmacy Budget10

Hospital Budget38

Specialty Budget25

Bonus PoolSurplus/Deficit

HMO Share of Bonus Pool Surplus

HMO Share of Bonus Pool Deficit

Physician Share of Bonus Pool Surplus

Physician Share of Bonus Pool Deficit after Withhold

Withhold Surplus

Deficit Offset

After Offset

Bonus Pool Surplus Bonus Pool Deficit

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Third Party Transactions What does the 3 parties in an

insurance contracting network gain?

1. Patients Gain by pooling risks to eliminate

financial uncertainty and make expensive treatments affordable

2. Providers Gain from an increase in demand

and regularity of payment

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Third Party Transactions3. Insurance Companies Benefit from profits Even when the underwriting gains (the

difference between premium paid in and benefits paid out plus administrative costs) are negative, an apparent loss, companies may still make money because they will hold the premium for six to 24 months before paying out benefits

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Insurance,GovernmentManage care

PATIENTS,PUBLIC

HOSPITALS,DOCTORS

Medical care services

MONEY

REGULATIONS

ReimbursementPREMIUM

THIRD PARTY CONTRACTING

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Who Pays? And How Much? There is a popular misconception when

insurance pays for something, IT IS FREE

We may not realize who pays because third party transactions are INDIRECT

Every peso spent on medical care is paid by YOU, or by ME, by SOMEONE just like us

Individuals pay for medical care by paying taxes

There are no free lunches

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Managed care Plans The difference between traditional

indemnity insurance and managed care is that a manager intervenes to monitor and control the transaction between doctor and patient

The management company acts as patient’s agent, trying to get better care and lower prices

The manager examines the process of care and controls the flow of funds, facilitating payment in some circumstances and holding back in others

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INSURANCE

PATIENTS PROVIDERS

MANAGER

FLOW OF FUNDS WITH MANAGED CARE

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HMOs – Health Maintenance Organizations

PPOs – Preferred Provider Organizations

POS – Point-of-service Plans

Health Insurance

Involvement of Private sector

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is an offshoots of health insurancecontrol over the use of healthcare

benefits and are therefore able to make utilization of health goods and services more cost effective

comprehensive healthcare program through a “package benefits”

prevent plan holders from having direct links with the providers in hospitals and clinics

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Is one type of managed care service that provides healthcare to members for a fixed, usually monthly payment

Organizations can be either nonprofit or profit

Are very active on the prevention side of medicine. Because of their emphasis on disease prevention, disease risk reduction and self care by the patient

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CONSUMERS

Health Maintenance Organization

Package of Benefits

MedicalClaims:

“Actuarial Risk”

Medical Specialist

GeneralPractice

Physician

Government Facility

PrivateFacility

consumers will have to “pass through”the system of the HMO to be able to get the providers

HMOs will then choose the most cost effective healthcare provider

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HMOs are able to control the costs of medical claims

by limiting the probability of getting ill by covering only a list of illnesses with specific limitations

by controlling the costs of getting ill by forging contracts with providers and making them part of the HMO setup, providers

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Package of Benefits

Annual Physical Examination

Out-patient benefits, mainly consultation but NOT medication

Preventive care, well baby visits (cost of vaccines not included)

In-patient coverage, hospitalization including professional fees, laboratory, medications, surgery if needed)

Emergency coverage

Dental, tooth extraction, prophylaxis, and cleaning

Maternal Benefits, seen only in group plans

Executive checkup

Insurance benefits

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Types of HMOs1. Group Model

A group of physician, often a large multi specialty group practice, that agrees to provide medical care to a defined patient group in return for a fixed per capita fee or for discount fees

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Types of HMOs2. Staff Model

Physicians are employees of the HMO

Their incomes are usually paid in the form of a fixed salary but may include supplemental payments based on some measure of performance

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Types of HMOs3. Network Model

A managed care organization that contracts with several different providers, including physicians’ practices and hospitals, in order to make a full range of medical services available to its enrollees

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Types of HMOs 4.Independent Practice Association

(IPA)

An organized group of health care providers that offers medical services to a specified group of enrollees of health plan

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Types of HMOs5. Direct Contract Model

A managed care organization that establishes contractual relationship with individual physicians to provide care for a specific group of patients

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Advantages of HMOs1.Low out-of-pocket costs

With most type of insurance, patient are responsible for paying a percentage of the bill every time receives medical care

HMO members pay a fixed monthly fee, regardless how much care is needed in a given month. Instead of deductibles, HMOs often have nominal co-payment

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Advantages of HMOs

2.Focus on wellness and preventive care

By reducing out-of-pocket costs and paperwork, HMOs encourage members to seek medical treatment early, before health problems become severe

Additionally, many HMOs offer health education discounted health club memberships

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Advantages of HMOs3.Typically no lifetime maximum pay out

HMOs generally do not place a limit on your lifetime benefit

HMOs will continue to cover your treatments as long as you are a member

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Disadvantages of HMOs1. Tight controls can make it more difficult to get

specialized care

HMO member, you must choose a PCP

Your PCP provides medical care and must be consulted before seeking care from another physician

Screening helps to reduce costs both HMO and members, but it can allow complications if the PCP does not provide the referral you need

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Disadvantages of HMOs

2.Care from non-HMO provide generally not covered

Except for emergency occurring outside the HMO treatment area

HMO members are required to all treatment from HMO physicians

HMO will not pay non-emergency care provided by the physician

Additionally, there may be a strict definition of what constitutes an emergency

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Health packages that companies administer for the medical benefits of their employees

Examples: Meralco put up its own hospital for its

employees PAL has both an upscale medical facility

and hospital referral system PLDT follows hospital referral system

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required to put up clinics and set budgets for the healthcare needs of their students

manned by health officers, usually doctors or school nurses

all expenses or budgets for these are reflected in the “private schools” segment.

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serves as intermediary or broker between the purchaser of medical care and the provider

Establishes a network of providers who agree to provide medical services to a specific group of enrollees at discounted rates

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risk sharing – more complex and structure form of health financing based on system

Collective savings as means of protecting members from the catastrophic cost of an unpredictable event such as serious illness or injury

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Hybrid MC plan that combines the features of a prepaid plan and a fee-for-service plan

Enrollees use network physicians with minimal out-of-pocket expenses and may choose to go out of the network by paying a higher coinsurance rate

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Company financed health benefits for employees and dependents

Sponsorship of medical bills of needy patient – philanthropies societies, individuals and groups

Spontaneous or inspired public donations – disaster victims

Special lotteries to raise funds to support the medical operation

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Health Insurance: Some Considerations

If your country already had health insurance

Does it include prevention? Is it built on primary health care principles? Does it promote equity or create privilege? What say has the DOH about its resources

and how it uses them? What would it cost to give the uninsured

the same services as the insured? How could health insurance be adapted to

conform better health for all objectives?

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Health Insurance: Some Considerations

If your country already has no health insurance

Whom could it cover? (what proportion of the population is made up of people in regular employment and their dependents?)

Is there a social security scheme on which it could be built (e.G. occupational injury, provident fund)?

What could the insured be offered for their contributions without undermining health-for-all goals?

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Services and benefits offered by GSIS

Retirement

Loan Privileges Benefit

Life Insurance Benefit

Claims Settlement

Additional Social Security Benefits

Other GSIS Programs

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Laws Governing General Insurance

P.D. 245 - renamed General Insurance Fund

R.A. 656 – Property Insurance Fund

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Section 11, Article XIII of the 1987 Constitution of the Republic of the

Philippines Declares that the state shall adopt an

integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all people at affordable costs…….

Example: NHIP refers to a compulsory health insurance program of the government (RA 7875)

Shall provide universal health insurance coverage and ensure affordable, acceptable, available and accessible health care services for all citizens of the Philippines

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NHIP shall adopt the following guidelines The NHIP shall underscore the

importance for government to give priority to health as a strategy for bringing about faster economic development and improving quality of life

The NHIP shall provide all citizens with the mechanism to gain financial access to health services, in combination with other government health programs

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NHIP shall adopt the following guidelines The NHIP shall give highest priority to

achieving coverage of the entire population with at least a basic minimum package of health insurance benefits

The NHIP shall adequately meet the needs for personal health services at various stages of a member’s life.

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General Lines Offered Fire and Special Risks Motor vehicle Property Floater Marine Hull Marine Cargo Aviation Hull and Liability Aviation Cargo Engineering Personal accident Surety ship Miscellaneous

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Inpatient Hospital Care

Room and board Services of health

care professionals Diagnostic,

laboratory, and other medical examination services

Prescription drugs and biologicals, subject to the limitations

Inpatient education packages

Outpatient Care Services of health

care professionals Diagnostic,

laboratory, and other medical examination services

Personal preventive services

Prescription drugs and biological, subject to the limitations described in Section 37 of RA 7875

Emergency and transfer services

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RA 7875

An act instituting a national Health Insurance program for all Filipinos and establishing the Philippine Health Insurance Corporation for the purpose

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Allocation of National Resources for Health

Universality Equity Responsiveness Social Solidarity Effectiveness Innovation Public services Quality of services Cost containment

Devolution Fiduciary

Responsibility Informed Choice Maximum Community

Participation Compulsory

Coverage Cost sharing Professional

Responsibility of Health Care Providers

Care for the indigent


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