Financing Health Care for Children in Emergencies
Highlights of Points Made by Individual Speakers
- Investments in improved day-to-day operations for children can also provide extraordinary benefits for emergency preparedness (dual use).
- Private practice pediatricians already do many of the activities needed in a disaster on a daily basis, yet they are essentially left out of all phases of disaster preparedness, response, and recovery.
- Children are covered by many forms of private and public insurance and there is no single database of children’s health information, making data collection and analysis challenging.
- State-to-state differences in coverage levels and laws make it challenging to develop broad solutions to payment for children’s health services. In addition, many children cross state lines for care.
- Private insurers can be key partners in disaster preparedness and response in many ways, from waiving copays to rebuilding lost patient health records or tracking patient transport from claims data to providing medically trained volunteers and building space.
- Reimbursement pays for intervention. Any time spent away from seeing patients is lost revenue for a private practitioner.
- As for-profit entities, private practice providers are not eligible for grant money from the Department of Health and Human Services or for Federal Emergency Management Agency assistance.
In this section of the report, panelists representing a health system, an insurer, a hospital, and community practice offer their perspectives on the challenges of funding preparedness activities and response. Session chair John Wible, formerly with the Alabama Department of Public Health, offered his own recommendations for several activities an
advocacy group could undertake in this area. For example, he suggested becoming familiar with the State Medicaid Agency’s policy on out-of-state reimbursement, and working with the agency on cooperation and reimbursement for both in-state and out-of-state care. Educating and encouraging providers close to state borders to sign up for both states’ Medicaid network was another consideration along with drafting a model state Pediatric Emergency Preparedness Act to present to state legislators. Finally, he said, working with the Centers for Medicare & Medicaid Services (CMS) to help load the Disproportionate Share Hospital formula in favor of hospitals that join a regional disaster compact would be a good effort that could benefit from advocacy. The rest of this section gives varying financial perspectives of preparedness financing related to children, including the federal level, private insurer, hospital association, and private practice provider. Their considerations and suggestions can help to understand the biggest challenges in this area and where the opportunities for improvement lie.
Emergency preparedness is built on the strength of everyday health care systems, and the financial stability and sustainability of private-sector health care delivery systems is an essential component of the health security of the nation, said Gregg Margolis, director of the Division of Health System Policy at the Office of the Assistant Secretary for Preparedness and Response. More than 90 percent of the health care delivered in the United States, both routine and during disasters and public health emergencies, is delivered in the private sector.
Health care financing is complex, Margolis said, and there are disparities in the financial stability of various health systems in the United States. Some health care systems report revenue minus expenses of hundreds of millions of dollars per year. Other health care systems, often those that serve vulnerable populations, are much less financially stable. Disasters disproportionately affect vulnerable populations, and pediatric populations in particular, and Margolis emphasized the need to address the financial stability of safety net providers that will be further stressed during public health emergencies and disasters.
Disasters affect the entire health care system. Although there is much discussion about emergency care or trauma care systems, a public health emergency also impacts the primary care system, long-term care, nursing
homes, behavioral health, ambulatory care, and specialty care. There are considerable threats or costs to a health care system during a disaster, for example, unanticipated expenses, business interruption, lost revenue, lost workforce, increased proportion of uncompensated care, and liability. However, disasters are low-frequency events, and low-financial-return types of investments. It can be very difficult to convince health care administrators to invest their limited resources in disaster preparedness when they are inundated by other institutional priorities that have a high probability of being used and will generate high returns on investment (e.g., imaging technologies, laboratory services).
One approach to paying for preparedness is through grant funding. Another way to fund preparedness is as part of the cost of doing business. In a fee-for-service environment, where volume generates revenue through reimbursement, a small fraction of every dollar generated goes toward paying for preparedness. However, as noted above, many programs compete for a portion of this small fraction. Margolis suggested that payment/reimbursement for care during disasters (especially emergency or trauma services) could create a revenue source. But disasters disproportionately affect vulnerable populations, which are disproportionately self-pay or Medicaid patients.
Shifting the Mindset
The challenge, Margolis said, is shifting the financial mindset from emergency preparedness as an investment, to emergency preparedness as insurance. How do we make emergency preparedness an integral part of the entire U.S. health care system, beyond the emergency care system, critical care, and emergency medical services? Margolis suggested that a successful business case for emergency preparedness involves decreasing the cost and increasing the value of preparedness. As the health care system evolves from a fee-for-service, volume-based reimbursement system, to a value-based reimbursement system, how do we ensure that preparedness is part of the value equation? One mechanism to increase value is to focus on activities that build from and leverage day-to-day functions to strengthen preparedness and response. As an example, Margolis pointed to how investments in health information technology infrastructure have improved day-to-day operations but have also provided extraordinary benefits for emergency preparedness. To decrease the cost of emergency preparedness on individual facilities, Margolis
called for increased collaboration, coalition building, and new partnerships, so that the burden is shared by all of the institutions when a disaster or public health emergency affects a community. Margolis also described a model of “coopetition” that has been very successful in the airline industry. In this model, organizations that normally compete against each other for market share of their services agree to cooperate in certain defined spaces for the advancement of all. In health care, emergency preparedness could be one such area for coopetition.
The task moving forward, Margolis reiterated, is to think not only about how to build a financially sustainable health care system, but how to ensure that emergency preparedness is an integral part of the entire evolving health care system.
Robert Smith, senior medical director for the central region of United Healthcare Clinical Services, began by clarifying that UnitedHealth Group is both an insurer, through its UnitedHealthcare division, and a health and wellness company, through its Optum division. Together, these two divisions employ more than 133,000 staff, including 27,000 physicians, nurses, and other clinical practitioners, and 12,000 technologists. United manages more than $300 billion in health care annually, and invests more than $2 billion in technology and new development. United delivers health care through the management of medical groups and hospice, and through direct clinical, pharmacy, and health financial services. Overall, United serves 83 million consumers, 777,000 care providers, and 250,000 plan sponsors.
Smith listed some of the many ways that health care for a child is paid for. Employer-based insurance programs can be fully insured plans with coverage provided by a major insurer (e.g., UnitedHealthcare, Anthem, Cigna) or they can be self-funded plans where the employer hires a firm to manage the transactions for them (as is done by the federal government). Smith added that self-insured employers have a lot of control over the process. Other examples include individual policies, self-paid policies, Medicaid, state health insurance programs, military health care, the Indian Health Service, and programs for children with special needs or those under the care of the state (e.g., foster children, those in the juvenile justice system).
The system of payment is complex, which makes it difficult to evaluate data from across the nation regarding coverage. Smith used data from the Kaiser Family Foundation regarding coverage of children ages 0 to 18 to highlight some of the disparities in coverage. In Connecticut, Massachusetts, Minnesota, and Utah, for example, 64 percent of children are covered by employer-based programs, and in New Hampshire is it 68 percent. In Arkansas, Louisiana, and New Mexico, it is 38 percent or less.
Differences in coverage levels and laws from state to state make it challenging to develop broad solutions to payment for children’s health services. In addition, many children cross state lines for care. Large numbers of children are covered by private plans, and it can be difficult to coordinate between carriers, and difficult to identify the responsible parties. Additional challenges to payment for children’s health services listed by Smith include the lack of population-based health system responses, and lack of accountable organizations for care and financing. He added that the effectiveness and adequacy of public–private partnerships is highly variable, and the needs and expectations exceed the ability to respond of any single organization.
Smith called out several key differences between private and public insurance that are important in disasters. In private insurance, the eligibility of a child for payment of care depends on the employment of parents. In the public sector payment is independent of parental employment. Importantly, some items (e.g., dental needs, therapy, private duty nursing) are quite commonly paid for by public coverage, but are subject to restrictions and limits, or not covered at all by private insurance. In a disaster, the majority of children may be covered by employer or individual insurance; however, they may become separated from their parents. These children are not likely to have identification or a health insurance card in their pocket, and may not be able to provide accurate health histories. Their clinical records are likely with private practitioners and may be inaccessible or destroyed, and as such, immediate specialized care may not be available to them.
Roles of Insurance Providers in Disasters
As an insurer, Smith said that a company like UnitedHealth Group has a variety of resilience and response roles, including providing for the safety of its employees. From a business perspective, the company
strives to minimize service disruptions, preserve customer information and organizational assets (including people, process, technology, and information), and continue to comply with laws and regulations regarding continuity of operations. The UnitedHealth Group business continuity plans focus on critical business functions and planning for the worst-case scenario so that the organization can react quickly and efficiently, even in the face of loss of its own critical systems, resources, or facilities.
Because private insurers control a significant portion of health care dollars as the fiduciary representatives of employers of parents, they can have significant involvement in disaster preparedness and response. For example, insurers can waive the copay for prescriptions refill for medications lost in the disaster. They can cover visits to out-of-network providers at the higher in-network payment levels. If provider records are destroyed or the provider cannot be found, Smith said that United-Healthcare can compile a profile of a given child’s medical situation by using information from health claims such as diagnoses and prescriptions. Claims data can also be used to track patient transport and reunite families. As a large employer and business, insurers have medical staff who can volunteer, and facilities that can serve as shelters or auxiliary medical sites. Smith stressed the importance of public–private partnership and urged planners to include insurers in preparedness discussions.
The mission of the Children’s Hospital Association is to advance children’s health through the quality, cost, and delivery of care in association with the 225 member hospitals, said Amy Knight, senior vice president of the Children’s Hospital Association. Members include freestanding children’s hospitals as well as pediatric units within larger hospitals or health systems. Many of the children cared for by the network of children’s hospitals have complex medical conditions, and many are children who are covered by Medicaid. These populations are particularly vulnerable in a disaster.
Knight listed the primary activities of the Children’s Hospital Association as public policy and advocacy; data, research, and analysis; peer networking and knowledge exchange among members; clinical quality and operational improvements; and purchasing and cost contain-
ment initiatives. Knight noted that one of the challenges with regard to data and analysis is that the pediatric population is covered by various forms of private and public insurance and there is no single database of children’s health information. Day-to-day issues drive hospital priorities and often trump planning and preparedness activities, Knight explained. Those issues and priorities include, for example, patient safety; Medicaid (and paying for children’s care in the face of Medicaid budget cuts); workforce, including subspecialty recruitment and training; value (i.e., competitiveness on quality and cost of care); market strategy; and organizational survival.
Advancing preparedness can be overwhelming for children’s hospitals, in large part because they are only part of the system. They are largely focused on acute care (i.e., response) rather than preparedness. Similarly, reimbursement pays for intervention, not for prevention or preparedness. The availability of resources, both internally and externally, is a perpetual challenge, and she concurred with Margolis that capital investment decisions are generally for something that has an immediate return on investment. Population health and accountable care are in nascent stages of development, Knight said, as there are very few children’s hospitals, and most children are not treated at children’s hospitals.
Knight suggested that one potential driver of change in the way children’s hospitals invest in preparedness is their expanding accountability, influence, and control across the care continuum. External incentives and expectations also drive change (e.g., reimbursement, grants, regulations, certifications, standards). Ultimately, current events are major drivers of change and force people to think differently about preparedness.
INDEPENDENT PRIVATE PRACTICE PROVIDERS
The majority of pediatric care is primary care provided by pediatricians, as well as family practitioners, nurse practitioners, and physician assistants, said Scott Needle, a pediatrician in the Healthcare Network of Southwest Florida (Phillips et al., 2005). There are also cognitive subspecialists and surgical subspecialists who focus on pediatric care. The majority of pediatric care takes place in independent private practices, which Needle said can range from solo practices to “super groups” such as Pediatric Associates in South Florida, which has
180 pediatricians at 25 sites. Pediatric care also takes place in health care systems, hospital-owned practices, and federally qualified health centers.
Medicaid is the single largest payer of children’s health care, covering 39 percent of the children in the United States. Children in families who do not qualify for Medicaid, but still have limited income, may be covered by the State Children’s Health Insurance Program (SCHIP). Many children are covered in some fashion by private insurers, and some are self-paying. Children are not covered by Medicare, Needle reminded participants. This is an important point because Medicare is a federal government program with uniform coverage across the country, while Medicaid, although funded in part by the federal government, is run by the states and coverage can vary. After Hurricane Katrina, for example, Medicare incentive payments were made available for some of the affected providers and institutions. Any kind of comparable proactive change to Medicaid is much more difficult to effect because four agencies are involved in the decisions (CMS, Congress, the state legislature, and the state Medicaid authority).
Medicaid is generally one of the lowest-paying payers for most pediatric providers, Needle said. The current payment system is fee-for-service, which means the pediatrician is paid for face-to-face encounters with the patients. Any time spent away from seeing patients (such as giving a talk at an Institute of Medicine workshop, or spending time on preparedness) is lost revenue. In addition, payments are generally preset and inflexible and there is no ability to recoup losses suffered by a practice during a disaster. There are also many administrative and regulatory burdens which can be particularly challenging for small practices with limited administrative staff.
Challenges in Engaging Providers
Needle continued by noting that outside agencies attempting to engage pediatricians in preparedness face several challenges. First, pediatric providers are fragmented, diverse, and independent. There is no central agency or authority through which on can reach out to all providers. For example, although The Joint Commission does have outpatient certification, the average pediatrician has no incentive or reason to participate. Office-based providers are also for-profit entities, and Needle explained that they are not eligible for grant money from the Department of Health and Human Services or other agencies unless there
is a specific provision. In addition, the Stafford Act does not allow for Federal Emergency Management Agency assistance directly to for-profit businesses in a disaster. The net result is that office-based providers are essentially left out of all phases of disaster preparedness, response, and recovery.
This is a significant concern because providers have a significant role in the community. For the majority of people, an office-based provider is their first point of contact with the health care system. Pediatricians hope to see 100 percent of their patients in the office at least once every year for annual well care, or routine acute or chronic care. Care provided in the office can often prevent someone from having to go to the emergency room, Needle said. In addition to providing care that can lead to overall health system cost savings, providers also have a positive economic impact on their communities. Needle cited an American Medical Association (AMA) study that found that, on average, each individual office-based physician generates about $100,000 in state and local tax revenue each year (AMA, 2011). In aggregate, office-based physicians are a tremendous part of local and state economies in the United States. In 46 out of 50 states, for example, physician practices across all specialties paid out more in employee wages and benefits than the hospital systems in the same states. In some states, physicians pay out more in employee wages and benefits than hospitals, universities, home health care agencies, nursing homes, and legal facilities combined in the same states.
As discussed earlier by Chernak (see Chapter 3), physicians also have a significant role to play in a disaster. Many of the activities necessary in response to a disaster are already done every day by the office-based pediatrician (e.g., communication, public health surveillance, vaccines, longitudinal care, mental and behavior health). This is dual use capacity waiting to be tapped, he said. Needle added that office-based providers are key partners in a disaster for the management of children with special health care needs.
Opportunities for Preparedness
Involving private practice pediatricians in preparedness, response, and recovery will require financial and material assistance. Needle suggested that there are some current opportunities that can be leveraged for preparedness. For example, the meaningful use standards for
electronic health records (EHRs) allows providers to earn incentive payments, and increases the functionality of their EHR systems. The Affordable Care Act does not address preparedness per se, but the Medicaid parity to Medicare provision does allow for higher Medicaid payment rates, which could create more possibilities for preparedness. The patient-centered medical home model of care fulfills many of the criteria for disaster-based capabilities. Finally, accountable care organizations are moving health care toward a value-based continuum of care, which also means a shift toward population-based or community pediatric care, creating the potential to help many more children, Needle said. It also provides the opportunities for collaboration, networking, and data collection.
Other opportunities include community coalitions, and networks to share resources and create economies of scale. Needle also suggested recovery memoranda of understanding or contracts that could pass on Stafford Act disaster recovery funds to office-based practices, perhaps similar to how for-profit debris removal services are contracted by the state for disaster services.
Bruce Clements of the Texas Department of State Health Services raised an additional financial issue for private providers. He relayed the concerns of a private provider following Hurricane Katrina who felt that the disaster clinics were putting the provider out of business. States are good at quickly deploying resources when needed, but deciding when is the right time to demobilize medical assets post-disaster is a very difficult decision, Clements said. It is a delicate balance between supporting the community and threatening the current infrastructure. Needle concurred noting that the free clinics were often the only source of care in the first few days to weeks after Hurricane Katrina. But as time went on, patients wondered why they should pay a $20 copay at their providers office when they can go to the free clinic instead. Experience from Haiti and other disasters shows that staying too long can set up this care conflict and actually undermine the self-sufficiency of the local health care system. Needle suggested the need for a regional health care coordinator: someone who could coordinate and assess the health care situation from the integrated system as a whole, and better define current needs. Moving forward, coordinating the needs of children through private practice providers, private insurers, hospitals, and federal-level policy makers could help to alleviate the disjointed framework that currently plagues reimbursement and finance for children’s care after disasters.