Health Care Costs and Payment Models

Health Care Costs and Payment Models

2018• Presentation 2 of 6

Learning Objectives

• Explain the basics of health insurance and coverage
• Demonstrate the complexity of health care costs and the large variation in out-of-pocket costs based on insurance status
• Weigh the impact of insurance coverage and out-of-pocket costs with the ability to adhere to treatment recommendations
• Explore how provider reimbursement models can affect delivery of high value care
• Encourage physicians not to practice “one size fits all” medicine

Mr. M is a 28-year-old man with severe abdominal pain, ED diagnosis of a ruptured appendix; treated with IV antibiotics for 4 days, followed by surgery

• Mr. M is a 28-year-old man with severe abdominal pain, ED diagnosis of a ruptured appendix; treated with IV antibiotics for 4 days, followed by surgery
• Patient: “I grew up in a family without health insurance my whole life, and our policy was basically ‘Give it a couple of weeks’… so I didn't want to call 911 or go to an emergency room.”

An Uninsured Patient’s Perspective

Julian McCullough, comedian

• Julian McCullough, comedian
• Recorded at “Told,” a storytelling show in New York City
• As heard on This American Life (NPR) (#439)
• “How much? No health insurance, 7 days in the hospital, … appendectomy:”

$45,000

An Uninsured Patient’s Perspective1

• Cost: Dollar amount for a provider to deliver a health care service
• Charges: The financial amount a health care provider asks for a service
• Often much higher than cost and reimbursement
• Only uninsured patients are billed charges
• Reimbursement: Amount a third party payer (i.e., insurance) negotiates as payment to the provider
• May drive charge inflation
• Price: the amount a patient pays out of pocket for a service
• Hardest number to estimate, but this matters most to patients