{"id":984,"date":"2023-07-13T17:03:49","date_gmt":"2023-07-13T17:03:49","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/?post_type=chapter&p=984"},"modified":"2023-07-13T17:07:22","modified_gmt":"2023-07-13T17:07:22","slug":"reading-healthcare-system-in-the-us","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/chapter\/reading-healthcare-system-in-the-us\/","title":{"raw":"Reading: HealthCare System in the US","rendered":"Reading: HealthCare System in the US"},"content":{"raw":"
\r\n
\r\n\r\nThe United States (US) has a population of over 330 million people and is supported by one of the most complex healthcare systems in the world, formed by intertwining relationships between providers, payers, and patients receiving care. The US healthcare system is in a constant state of evolution.\r\n\r\nDescription of the Healthcare System\r\n<\/strong>Coverage Overview<\/strong>\r\n\r\n<\/div>\r\n<\/div>\r\n
\r\n
\r\n\r\nThe US healthcare system does not provide universal coverage and can be defined as a mixed system, where publicly financed government Medicare and Medicaid (discussed\u00a0here<\/a>) health coverage coexists with privately financed (private health insurance plans) market coverage. Out-of-pocket payments and market provision of coverage predominate as a means of financing and providing healthcare. As of 2019, around 50% of citizens received private insurance coverage through their employer (group insurance), 6% received private insurance through health insurance marketplaces (nongroup insurance) (discussed\u00a0here<\/a>), 20% of citizens relied on Medicaid, 14% on Medicare, and 1% on other public forms of insurance (eg, Veterans Health Administration [VHA] and Military Health Service [MHS]), leaving 9% of Americans uninsured.\r\n<\/sup>Healthcare Financing<\/strong>\r\n\r\nNote that this section is intended to give an overview of how healthcare financing works in the United States. For a more in-depth description of the stakeholders, utilize the hyperlinks to learn more. An overview of the financial flow of the US healthcare system is presented in Figure 1.\r\n\r\nFigure 1. Financial Flow of the US Healthcare System (from Reinhardt UE. The Money Flow From Household to Health Care Providers (2011))\r\n\r\n\"Flow\r\n\r\nHospital and Physician Financing<\/strong>\r\n\r\nPublic and private hospitals receive payment from both public and private financing sources. Hospitals are typically paid through a diagnostic-related group (DRG), which assigns a set payment amount for a particular condition or treatment sequence. Inpatient DRGs are widely used by the Centers for Medicare & Medicaid Services (CMS) and by many private payers as a payment scheme for hospitals. Rather than paying the hospital for a line-item list of procedures and medications, Medicare pays the hospital a fixed amount based on the DRG, regardless of the actual cost of treatment. The DRG-based payments cover accommodation costs in a hospital (ie, room and board, facility costs, etc), procedure costs, support staff (nurses, technicians, etc), and drug\/medical device costs; however, this system does not include physician fees. In the outpatient setting, Ambulatory Payment Classification (APC) codes are used by the hospital system for billing and reimbursement. These APC codes represent a fee-for-service style of billing, rather than the capitated, cost-based style of DRGs.\r\n\r\nPhysician fees are not included within DRG (inpatient) or APC (outpatient) codes. When billing for physicians and other clinician fees, Current Procedural Terminology (CPT) codes are used and are billed under the name of the provider rather than the hospital. CPT codes may be used in both the inpatient and outpatient settings and are indicative of a fee-for-service healthcare reimbursement structure.\r\n\r\nPrivate insurers pay hospitals based on DRGs, case rates, per diems, fee-for-service, and\/or discounted fee-for-service schemes. On average, these payments exceed the hospital\u2019s costs of providing the underlying services. Conversely, hospitals, on average, are reimbursed less than the costs of services for Medicare, Medicaid, and uninsured patients.\r\n\r\nPrivate Insurance Plans\u00a0<\/strong>\r\n\r\nThere are numerous national\u00a0private\u00a0health insurance plans, as well as regional and self-insured plans (organized by large companies). In the United States, it is common for employers to contribute to private insurance premiums, usually as monthly premiums to maintain health coverage, either in whole or part for their employees (group insurance). Some individuals also buy private health insurance for themselves\u00a0(nongroup insurance) through the health insurance marketplace or \u201cexchange.\u201d Patients seeking nongroup insurance can qualify for tax credits based on household income.\u00a0Insurers\u00a0pay providers (hospital and\u00a0clinicians) for health services according to\u00a0contractually agreed-upon amounts. These payments often constitute large proportions of the total cost of service, especially when considering health insurance plans with low deductibles.\r\n\r\nPublic Insurance Programs<\/strong>\r\n\r\nPublic health insurance programs\u00a0(eg, Medicare, Medicaid, and the Children\u2019s Health Insurance Program [(CHIP]) are operated by CMS and\u00a0are financed primarily by government taxes. Medicare is the largest single payer in the United States, providing\u00a0healthcare\u00a0coverage for those ages 65 years and older, regardless of income or medical history, and those under the age of 65 with permanent disabilities or end-stage renal disease. Medicaid provides care to individuals below the poverty level and to those who cannot afford to pay for healthcare given their eligibility and\u00a0is jointly funded by both the federal government and individual states. Each state sets its own guidelines regarding eligibility, services, and reimbursement.\u00a0It is possible to qualify for coverage under both Medicare and Medicaid and such individuals are considered to have dual eligibility.\u00a0CHIP is a national health insurance program for children under 18 years of age who are not eligible for other insurance plans, including private insurance coverage. In addition to CMS, the VHA and MHS are responsible for providing healthcare coverage to veterans and active military.\r\n\r\nIndividual Financing<\/strong>\r\n\r\nAt the individual level, healthcare financing by patients with health insurance often includes copayments (fixed cost for a medical service or product) or coinsurance (a proportion of the total cost of the medical service or product). In addition to copayments or coinsurance, patients often have a deductible\u2014a specified amount of money that the insured must pay before an insurance plan will pay for healthcare\u2014and premiums. These patient costs are considered \u201cout-of-pocket\u201d spending. Patients without health insurance are forced to pay the complete cost for care, including what insurance companies would normally pay, out of pocket. The total out-of-pocket spending in 2019 was $406.5 billion; which correlates to 2019 estimates of roughly $1240 per capita in out-of-pocket spend.\r\n\r\n<\/div>\r\n<\/div>","rendered":"
\n
\n

The United States (US) has a population of over 330 million people and is supported by one of the most complex healthcare systems in the world, formed by intertwining relationships between providers, payers, and patients receiving care. The US healthcare system is in a constant state of evolution.<\/p>\n

Description of the Healthcare System
\n<\/strong>Coverage Overview<\/strong><\/p>\n<\/div>\n<\/div>\n

\n
\n

The US healthcare system does not provide universal coverage and can be defined as a mixed system, where publicly financed government Medicare and Medicaid (discussed\u00a0here<\/a>) health coverage coexists with privately financed (private health insurance plans) market coverage. Out-of-pocket payments and market provision of coverage predominate as a means of financing and providing healthcare. As of 2019, around 50% of citizens received private insurance coverage through their employer (group insurance), 6% received private insurance through health insurance marketplaces (nongroup insurance) (discussed\u00a0here<\/a>), 20% of citizens relied on Medicaid, 14% on Medicare, and 1% on other public forms of insurance (eg, Veterans Health Administration [VHA] and Military Health Service [MHS]), leaving 9% of Americans uninsured.
\n<\/sup>Healthcare Financing<\/strong><\/p>\n

Note that this section is intended to give an overview of how healthcare financing works in the United States. For a more in-depth description of the stakeholders, utilize the hyperlinks to learn more. An overview of the financial flow of the US healthcare system is presented in Figure 1.<\/p>\n

Figure 1. Financial Flow of the US Healthcare System (from Reinhardt UE. The Money Flow From Household to Health Care Providers (2011))<\/p>\n

\"Flow<\/p>\n

Hospital and Physician Financing<\/strong><\/p>\n

Public and private hospitals receive payment from both public and private financing sources. Hospitals are typically paid through a diagnostic-related group (DRG), which assigns a set payment amount for a particular condition or treatment sequence. Inpatient DRGs are widely used by the Centers for Medicare & Medicaid Services (CMS) and by many private payers as a payment scheme for hospitals. Rather than paying the hospital for a line-item list of procedures and medications, Medicare pays the hospital a fixed amount based on the DRG, regardless of the actual cost of treatment. The DRG-based payments cover accommodation costs in a hospital (ie, room and board, facility costs, etc), procedure costs, support staff (nurses, technicians, etc), and drug\/medical device costs; however, this system does not include physician fees. In the outpatient setting, Ambulatory Payment Classification (APC) codes are used by the hospital system for billing and reimbursement. These APC codes represent a fee-for-service style of billing, rather than the capitated, cost-based style of DRGs.<\/p>\n

Physician fees are not included within DRG (inpatient) or APC (outpatient) codes. When billing for physicians and other clinician fees, Current Procedural Terminology (CPT) codes are used and are billed under the name of the provider rather than the hospital. CPT codes may be used in both the inpatient and outpatient settings and are indicative of a fee-for-service healthcare reimbursement structure.<\/p>\n

Private insurers pay hospitals based on DRGs, case rates, per diems, fee-for-service, and\/or discounted fee-for-service schemes. On average, these payments exceed the hospital\u2019s costs of providing the underlying services. Conversely, hospitals, on average, are reimbursed less than the costs of services for Medicare, Medicaid, and uninsured patients.<\/p>\n

Private Insurance Plans\u00a0<\/strong><\/p>\n

There are numerous national\u00a0private\u00a0health insurance plans, as well as regional and self-insured plans (organized by large companies). In the United States, it is common for employers to contribute to private insurance premiums, usually as monthly premiums to maintain health coverage, either in whole or part for their employees (group insurance). Some individuals also buy private health insurance for themselves\u00a0(nongroup insurance) through the health insurance marketplace or \u201cexchange.\u201d Patients seeking nongroup insurance can qualify for tax credits based on household income.\u00a0Insurers\u00a0pay providers (hospital and\u00a0clinicians) for health services according to\u00a0contractually agreed-upon amounts. These payments often constitute large proportions of the total cost of service, especially when considering health insurance plans with low deductibles.<\/p>\n

Public Insurance Programs<\/strong><\/p>\n

Public health insurance programs\u00a0(eg, Medicare, Medicaid, and the Children\u2019s Health Insurance Program [(CHIP]) are operated by CMS and\u00a0are financed primarily by government taxes. Medicare is the largest single payer in the United States, providing\u00a0healthcare\u00a0coverage for those ages 65 years and older, regardless of income or medical history, and those under the age of 65 with permanent disabilities or end-stage renal disease. Medicaid provides care to individuals below the poverty level and to those who cannot afford to pay for healthcare given their eligibility and\u00a0is jointly funded by both the federal government and individual states. Each state sets its own guidelines regarding eligibility, services, and reimbursement.\u00a0It is possible to qualify for coverage under both Medicare and Medicaid and such individuals are considered to have dual eligibility.\u00a0CHIP is a national health insurance program for children under 18 years of age who are not eligible for other insurance plans, including private insurance coverage. In addition to CMS, the VHA and MHS are responsible for providing healthcare coverage to veterans and active military.<\/p>\n

Individual Financing<\/strong><\/p>\n

At the individual level, healthcare financing by patients with health insurance often includes copayments (fixed cost for a medical service or product) or coinsurance (a proportion of the total cost of the medical service or product). In addition to copayments or coinsurance, patients often have a deductible\u2014a specified amount of money that the insured must pay before an insurance plan will pay for healthcare\u2014and premiums. These patient costs are considered \u201cout-of-pocket\u201d spending. Patients without health insurance are forced to pay the complete cost for care, including what insurance companies would normally pay, out of pocket. The total out-of-pocket spending in 2019 was $406.5 billion; which correlates to 2019 estimates of roughly $1240 per capita in out-of-pocket spend.<\/p>\n<\/div>\n<\/div>\n","protected":false},"author":107,"menu_order":15,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-984","chapter","type-chapter","status-publish","hentry"],"part":840,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/chapters\/984","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/wp\/v2\/users\/107"}],"version-history":[{"count":1,"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/chapters\/984\/revisions"}],"predecessor-version":[{"id":986,"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/chapters\/984\/revisions\/986"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/parts\/840"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/chapters\/984\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/wp\/v2\/media?parent=984"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/pressbooks\/v2\/chapter-type?post=984"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/wp\/v2\/contributor?post=984"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accanderssenmicro\/wp-json\/wp\/v2\/license?post=984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}