Module 106 Overview and Learning Objectives
An introduction to the payer landscape, including the types of health insurance, how consumers obtain insurance, and the challenges that different types of insurance present to health systems.
Module 106 Key Takeaways
Health insurance is intended to protect people from unexpected, high medical costs. Most Americans purchase private, commercial insurance, coverage provided by private companies. Private insurance can also be purchased on a public exchange like the ACA’s Health Insurance Marketplace. Commercial payers make up the majority of hospital patient care revenue.
Public insurance coverage is offered at the state and federal levels. Patients 65+ and people with certain disabilities are eligible for Medicare, which is federally funded. Medicare coverage offers three kinds of health services: inpatient care, medical, and prescription drugs. Enrollment is rising steadily, and Medicare accounts for a quarter of hospital patient revenue.
Medicare Advantage (MA) plans are an alternative to traditional Medicare. MA provides the same services as traditional Medicare through private payers. In these plans, payers and providers can take on the risk of care costs. MA enrollment is increasing and replacing traditional Medicare. These plans differ from traditional Medicare as they follow a capitated instead of fee-for-service, which values maintaining patient wellness over managing illness.
Patients can also obtain public insurance through state-run Medicaid. Medicaid has wider eligibility: elderly adults, low-income children, disabled adults, and certain low-income Americans. The number of enrollees in Medicaid is equal to that of Medicare, but Medicaid only accounts for 10% of hospital patient care revenue.
Lower reimbursement rates from public payers exert pressure on providers’ margins and requires cross-subsidization from private payer-patient reimbursement. As a result, LHS negotiate higher rates from private payers, which increases payer costs and may raise premiums and deductibles for private patients.
Despite growing anti-Medicare Advantage sentiment, LHS leadership has a growing interest in leveraging MA to get premium dollars and secure higher reimbursement rates. LHS need assistance in leveraging data to enable informed decision-making and manage the total cost of care and outcomes for MA patients.
Some health systems and payers have vertically integrated the care process to become “payviders.” They provide care and offer insurance coverage under one roof.