In Topic 1, you were asked to read the first section of the Commonwealth Fund’s profile of the United States health system. In this topic, we will build upon that general overview by reading the remaining sections 2-7 of that profile, which take a closer look at specific aspects of the health delivery system.
You will then be asked to watch the hour-long “The Healthcare Divide” Frontline documentary. Based on the materials we’ve covered up to this point, you can hopefully appreciate that there are major disparities in health outcomes across different segments of American society and that addressing these health disparities is a major challenge for American health care. This video illustrates some of the ways in which the COVID-19 pandemic has further exposed major disparities in healthcare access, quality, and outcomes. Additionally, it also highlights the vital role that safety-net providers play in our health system and the role of health professionals in advocating for patients and suitable working conditions.
United States Health Profile
Sections 2-7
By The Commonwealth Fund[1]
The U.S. health system is a mix of public and private, for-profit and nonprofit insurers and health care providers. The federal government provides funding for the national Medicare program for adults age 65 and older and some people with disabilities as well as for various programs for veterans and low-income people, including Medicaid and the Children’s Health Insurance Program. States manage and pay for aspects of local coverage and the safety net. Private insurance, the dominant form of coverage, is provided primarily by employers. The uninsured rate, 8.5 percent of the population, is down from 16 percent in 2010, the year that the landmark Affordable Care Act became law. Public and private insurers set their own benefit packages and cost-sharing structures, within federal and state regulations.
Sections
- 02 Care Delivery and Payment
- 03 Ensuring Quality of Care
- 04 Reducing Disparities
- 05 Integration and Coordination
- 06 Electronic Health Records
- 07 Cost Containment
- 08 Innovations
02 How is the delivery system organized and how are providers paid?
Physician education and workforce: Most medical schools (59%) are public. Median tuition fees in 2019 were $39,153 in public medical schools and $62,529 in private schools. Most students (73%) graduate with medical debt averaging $200,000 (2019), an amount that includes premedical education.21 Several federal debt-reduction, loan-forgiveness, and scholarship programs are offered; many target trainees for placement in underserved regions. Providers practicing in designated Health Professional Shortage Areas are eligible for a Medicare physician bonus payment.
Primary care: Roughly one-third of all professionally active doctors are primary care physicians, a category that encompasses specialists in family medicine, general practice, internal medicine, pediatrics, and, according to some, geriatrics. Approximately half of primary care doctors were in physician-owned practices in 2018; more commonly, these are general internists rather than family practitioners.22
Primary care physicians are paid through a combination of methods, including negotiated fees (private insurance), capitation (private insurance and some public insurance), and administratively set fees (public insurance). The majority (66%) of primary care practice revenues come from fee-for-service payments.23 Since 2012, Medicare has been experimenting with alternative payment models for primary care and specialist providers.
Outpatient specialist care: Specialists can work both in private practices and in hospitals. Specialist practices are increasingly integrating with hospital systems, as well as consolidating with each other. The majority of specialists are in group practices, most often in single-specialty group practices.24
Outpatient specialists are free to choose which form of insurance they will accept. For example, not all specialists accept publicly insured patients, because of the relatively lower reimbursement rates set by Medicaid and Medicare. Access to specialists for beneficiaries of these programs—not to mention for people without any insurance—can therefore be particularly limited.
Administrative mechanisms for direct patient payments to providers: Copayments for doctor visits are typically paid at the time of service or billed to the patient afterward. Some insurance plans and products (including health savings accounts) require patients to submit claims to receive reimbursement.
Providers bill insurers by coding the services rendered. There are thousands of codes, making this process time-consuming; providers typically hire coding and billing staff.
Because of administrative hurdles, a small number of providers do not accept any insurance. Instead, they accept only cash payments or require annual or monthly retainer payments to the providers for “concierge medicine,” which offers enhanced access to services.
After-hours care: Primary care physicians are not required to provide or plan for after-hours access for their registered patients. However, in 2019, 45 percent of primary care doctors had after-hours arrangements: 38 percent of these provide care in the evenings and 41 percent on the weekends.25
After-hours care is increasingly provided through walk-in appointments at private urgent-care centers or retail clinics that typically serve younger, healthier individuals who require episodic care and may not have a primary care provider.26
Hospitals: In 2018, 57 percent of the 5,198 short-term acute care hospitals in the U.S. were nonprofit; 25 percent were for-profit; and 19 percent were public (state or local government–owned).27 In addition, there were 209 federal government hospitals.
Hospitals are free to choose which insurance they accept; most accept Medicare and Medicaid. Hospitals are paid through a combination of methods.
- Medicare pays hospitals through prospective diagnosis-related group (DRG) rates, which do not include physician payments.
- Medicaid pays hospitals on a DRG, per diem, or cost-reimbursement basis,28 and states have considerable discretion in setting hospital payment rates.
- Private insurers pay hospitals usually on a per diem basis, typically negotiated between each hospital and its insurers on an annual basis.
Mental health care: Services are provided by both generalists and specialists—including primary care physicians, psychiatrists, psychologists, social workers, and nurses—with the majority delivered in an outpatient setting. Providers are mostly private (nonprofit and for-profit), with some public providers, including public mental health hospitals, Veterans Affairs providers, and federally qualified health centers.
The federal Substance Abuse and Mental Health Services Administration provides states with grants, including Mental Health Block Grants, that fund community mental health services. State and local governments provide additional funding.
The ACA mandated that marketplace insurers provide coverage of mental health and substance use conditions as an essential health benefit. The law also requires all private insurers, including employer-sponsored plans, to provide the same level of benefits for mental and physical health conditions.
Some individuals with serious, long-term mental illnesses qualify for Medicare before age 65. Otherwise, Medicaid is the single largest source of funding for mental health services in the country.29 Many employer-sponsored plans and some state Medicaid programs provide benefits through carve-out contracts with managed behavioral health care organizations.30
Long-term care and social supports: There is no universal coverage for long-term care services. Public spending represents approximately 70 percent of total spending on long-term care services, with Medicaid accounting for the majority.31 Medicare and most employer-sponsored plans cover only post–acute care services following hospitalization, including hospice, short-term nursing services, and short-term nursing home stays (up to 100 days following acute hospitalization).
Private long-term care insurance is available but rarely purchased; private insurance represented only 7.5 percent of total long-term care spending in 2016.
The ACA originally included the Community Living Assistance Services and Supports Act, which would have created a universal, voluntary, public long-term care insurance option for employed persons. However, the program was deemed unworkable and was repealed in 2013.
03 What are the major strategies to ensure quality of care?
The ACA required the U.S. Department of Health and Human Services to establish a National Quality Strategy,32 a set of national aims and priorities to guide local, state, and national quality improvement efforts, supported by partnerships with public and private stakeholders. The strategy includes annual reporting on a selected set of quality measures.33
Since 2003, the Agency for Healthcare Research and Quality has published the annual National Healthcare Quality and Disparities Report, which reports on national progress in health care quality improvement. The 2018 report found that the quality of U.S. health care had improved overall from 2000 to 2016, but that improvement was inconsistent. For example, while most person-centered care and patient-safety measures improved, affordability did not.34
Federal law requires certain providers to report data on the quality of their care, and the Centers for Medicare and Medicaid Services to publicly report performance on quality measures. For example, Hospital Compare is an online public resource summarizing the performance of more than 4,000 hospitals on measures of care processes, care outcomes, and patient experiences. Related quality-reporting programs include Nursing Home Compare and Physician Compare.
The Healthcare Effectiveness Data and Information Set is one of the most widely used tools for rating provider quality. It is used by health plans to rate provider quality. The set includes rates of cancer screenings, medication management for chronic conditions, follow-up visits, and other metrics. The nonprofit National Quality Forum builds consensus on national performance measurement and priorities, including the submission of recommendations for measures to be used in Medicare.
04 What is being done to reduce disparities?
Several federal agencies are tasked with monitoring and reducing disparities. The Agency for Healthcare Research and Quality publishes an annual national report highlighting disparities in health care quality by race/ethnicity, age, and sex. According to the latest report, disparities related to income and race persist but grew smaller between 2000 and 2016.35 African Americans, American Indians, Alaska Natives, Native Hawaiians, and Pacific Islanders received worse care than whites according to about 40 percent of quality measures. Hispanics and Asian Americans received worse care per 35 percent and 28 percent of measures, respectively. Disparities for poor and uninsured populations are also persisting in major priority areas for quality.
Certain federal offices have specific responsibilities related to reducing disparities:
- The Office of Minority Health is tasked with developing policies and programs to eliminate disparities among racial and ethnic minority groups.
- The Health Resources and Services Administration is tasked with providing grants to states, local governments, and community-based organizations for care and treatments for low-income, uninsured, or other vulnerable populations, including specific programs targeting individuals with HIV/AIDS, mothers and children (through the Maternal and Child Health Bureau), and rural or remote populations.36 The agency also houses the Office of Health Equity, which works to reduce health disparities.
- The Indian Health Service serves 2.6 million American Indians and Alaska Natives who belong to more than 500 federally recognized tribes in 37 states. The service is fully funded through the federal government.
The ACA created a legal requirement for nonprofit hospitals, which are exempt from paying certain taxes because of their charitable status, to conduct community health needs assessments together with community stakeholders to identify and address unmet health needs in their communities. This requirement is enforced through the Internal Revenue Service, and reporting must be made available to the public.37
05 What is being done to promote delivery system integration and care coordination?
The ACA introduced several levers to improve the coordination of care among medical/clinical providers in the largely specialist-driven health care system. For example, the law supported adoption of the “patient-centered medical home” model, which emphasizes care continuity and coordination via primary care, as well as evidence-based care, expanded access, and prevention and chronic care management.
The ACA also expanded the Centers for Medicare and Medicaid Services’ ability to test alternative payment models that reward quality, reduce costs, and aim to improve care coordination. This trend has since been continued by public and private payers.
One of these alternative payment models is “bundled payments,” whereby a single payment is made for all the services delivered by multiple providers for a single episode of care. Another trend is the proliferation of accountable care organizations (ACOs). These networks of providers assume contractual responsibility for providing a defined population with care that meets quality targets. Providers in ACOs share in the savings that constitute the difference between forecasted and actual health care spending.
As of 2019, there were more than 1,000 ACOs in the public and private markets, covering 32.7 million people. Of these ACOs, 558 are Medicare ACOs, serving 12.3 million beneficiaries who are free to seek services from any Medicare provider, including those outside their designated ACO.38,39,40 There are many variants of the Medicare ACO: The most popular is a permanent program written into the ACA, the Medicare Shared Savings Program, which serves nearly one-third of all Medicare beneficiaries. To improve coordination, ACOs are implementing programs that include medication management, prevention of emergency department visits and hospital readmissions, and management of high-need, high-cost patients.
06 What is the status of electronic health records?
The Office of the National Coordinator for Health Information Technology, created in 2004, is the principal federal entity charged with the coordination of nationwide efforts to implement and advance the use of health information technology and the electronic exchange of health information. In 2017, an estimated 96 percent of nonfederal acute care hospitals and 86 percent of office-based physicians had adopted a “certified” electronic health record (EHR) system. Eighty percent of hospitals and 54 percent of physician offices had adopted an EHR with advanced capabilities, such as the ability to track patient demographics, list medications, store clinician notes, and track medication orders, laboratory tests, and imaging results.41,42
The 21st Century Cures Act, passed in 2016 to promote the use of EHRs overall, requires that all health care providers make electronic copies of patient records available to patients, at their request, in machine-readable form.
07 How are costs contained?
Annual per capita health expenditures in the United States are the highest in the world (USD $11,172, on average, in 2018), with health care costs growing between 4.2 percent and 5.8 percent annually over the past five years.43
Private insurers have introduced several demand-side levers to control costs, including tiered provider pricing and increased patient cost-sharing (for example, through the recent proliferation of high-deductible health plans). Other levers include price negotiations, selective provider contracting, risk-sharing payments, and utilization controls.
The federal government controls costs by:
- setting provider rates for Medicare and the Veterans Health Administration
- capitating payments to Medicaid and Medicare managed care organizations
- capping annual out-of-pocket fees for beneficiaries enrolled in Medicare Advantage plans and individuals enrolled in marketplace/exchange plans
- negotiating drug prices for the Veterans Health Administration.
However, since most Americans have private health insurance, there are limited options available to the federal government. The ACA introduced cost-control levers for private insurers offering marketplace coverage, requiring that insurers planning to significantly increase plan premiums submit their prospective rates to either the state or the federal government for review.
State governments try to control costs by regulating private insurance, setting Medicaid provider fees, developing preferred-drug lists, and negotiating lower drug prices for Medicaid. Maryland and Massachusetts estimate total statewide health expenditures and set annual growth benchmarks for health care costs across payers. In those states, health care entities are required to implement performance improvement plans if they do not meet the benchmark.
Attempts to contain pharmaceutical spending are limited to a few mechanisms:
- The prices private health plans pay for prescription drugs are based on formularies.
- Pharmacy benefit managers are tasked with negotiating drug prices and rebates with manufacturers on behalf of private insurers.
- Volume-based rebates are commonly used by payers and manufacturers to offset the prices of drugs with therapeutic substitutes.
- Prior authorizations and step therapy encourage the use of lower-cost alternatives.
Among public payers, the Veterans Health Administration receives the deepest discounts for medicines. The agency is legally entitled to a minimum 24 percent discount from the non-federal average manufacturer price and can choose to negotiate deeper discounts with manufacturers. Medicaid also is legally entitled to a discounted price and can negotiate further discounts.44 Medicare, the largest buyer of prescription drugs, does not negotiate drug costs with manufacturers.