3.4 Insurance Coverage & Trends

3.4.1 Insurance Coverage (Private and Public)

1. Current Highlights according to Keisler-Starkey & Bunch (2022):

  • In 2020, 8.6% of people, or 28.0 million, did not have health insurance at any point during the year.
  • The percentage of people with health insurance coverage for all or part of 2020 was 91.4%.
  • In 2020, private health insurance coverage remained more prevalent than public coverage at 66.5% and 34.8%, respectively. Of the subtypes of health insurance coverage, employment-based insurance was the most common, covering 54.4% of the population for some or all of the calendar year, followed by Medicare (18.4%), Medicaid (17.8%), direct-purchase coverage (10.5%), TRICARE (2.8%), and Department of Veterans Affairs (VA) or Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) coverage (0.9%).
  • Between 2018 and 2020, the private health insurance coverage rate decreased by 0.8 percentage points to 66.5%, driven by a 0.7 percentage-point decline in employment-based coverage to 54.4%.
  • Between 2018 and 2020, the public health insurance coverage rate increased by 0.4 percentage points to 34.8%.
  • In 2020, 87.0% of full-time, year-round workers had private insurance coverage, up from 85.1 percent in 2018. In contrast, those who worked less than full-time were less likely to be covered by private insurance in 2020 than in 2018 (68.5% in 2018 and 66.7% in 2020).
  • More children under the age of 19 in poverty were uninsured in 2020 than in 2018. Uninsured rates for children under the age of 19 in poverty rose 1.6 percentage points to 9.3%.

II. Reports (for further exploration)

  1. Source: United States Census Bureau (Keisler-Starkey & Bunch, 2022)
  1. Source: National Health Statistic Report (Cha & Cohen, 2022)

3.4.2 Insurance Trends

Two insurance trends developed to reduce total health expenditures and health services utilization are the Accountable Care Organization and the Patient-Centered Medical Home.

I. Accountable Care Organizations

Definition:  Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other healthcare providers, who partner voluntarily to give coordinated high-quality care to the Medicare patients they serve. Coordinated care helps ensure that patients, especially the chronically ill, get the right care at the right time to avoid unnecessary duplication of services and prevent medical errors. When an ACO succeeds in delivering high-quality care and spending healthcare dollars more wisely, it will share in the savings it achieves for the Medicare program (CMS, 2022a).

Accountable Care Organizations (ACOs), also known as Medical Neighborhoods, are a relatively new type of managed care organization. While most ACOs are Medicare plans, there are some private ACOs. As with all managed care, the goal is to coordinate care. Since 2012, ACOs have saved Medicare $13.3 billion in gross savings (National Association of ACOs, n.d.). ACOs allow physicians, hospitals, and other clinicians or healthcare organizations to work more effectively together to improve quality and slow spending growth by allowing for coordination of care among all the different providers needed to fully care for the whole person.

There are three core principles of Accountable Care Organizations:

  1. Provider-led organizations with a strong base of primary care that is accountable for healthcare quality and per capita costs.
  2. Payments linked to improvement in quality and reduced costs.
  3. Reliable and increasingly sophisticated measurement of performance to support improvement and provide confidence care is improved, and cost savings occur (Moy et al., 2022).

The Patient Protection and Affordable Care Act (ACA) created the Medicare Shared Savings Program (MSSP) in part to help address the fragmented nature, lack of coordination, and confusion that multiple payors can create (Berwick, 2011). Under the ACA, the ACO is accountable for the cost and quality of care. As of January 2022 (Table 3), there were 483 ACOs, with over half a million clinicians providing care to 11 million beneficiaries participating in the MSSP (Physicians Advocacy Institute, n.d.). There are multiple tracks in the MSSP program that ACOs can choose, with increasing levels of risk/reward, depending on how confident the ACO is that it can improve the health of the population it is serving. In general, if the ACO can save money by improving the health of the population for both themselves and Medicare, the ACO will get to share in a percentage of the saved costs. However, if the ACO fails to reach these goals, it will receive a penalty by having its reimbursement cut by a certain, agreed-upon percentage. Because this strategy reimburses for clinical outcomes, it is an example of a Pay for Performance strategy.

Another form of reimbursement ACOs can receive is bundled payments (Navathe et al., 2020). The Center for Medicare and Medicaid Innovation (Innovation Center) created the Bundled Payment Care Initiative (BPCI) as a new way of linking payments for an episode of care (Agarwal et al., 2020). Instead of taking the payments from each individual provider separately, it links the various providers together for one single payment. One of the differences with bundled payments is that it shifts the clinical and financial responsibility on providers to a single care episode for an individual instead of the current setup of making reimbursement tied to ongoing outcomes. For example, the ACO would simply bill for a single bundled payment for all providers involved in a knee replacement instead of billing each provider separately. Suppose the providers are able to coordinate care effectively and keep the total care costs for the knee replacement below the bundled payment reimbursement amount. In that case, they are able to generate and share in a profit. However, if the total care costs exceed the bundled payment amount, they all incur a financial loss. Studies show that bundled payment reimbursements maintain or improve quality and lower the cost of caring for lower extremities. However, this payment method does not seem to be as effective with other conditions or procedures (Agarwal et al., 2020). 

Table 3 Shared Savings Program Information: Program Statistics (as of January 1st of each year)

Performance Year # ACOs # Assigned Beneficiaries
2022 483 11.0 million
2021 477 10.7 million
2020 517 11.2 million
2019 487 10.4 million
2018 561 10.5 million
2017 480 9.0 million
2016 433 7.7 million
2015 404 7.3 million
2014 338 4.9 million
2012/2013 220 3.2 million

(Centers for Medicare and Medicaid Services, 2022b)

II. Patient-Centered Medical Home

The Patient-Centered Medical Home (PCMH) concept was originally introduced in 1967 by the American Academy of Pediatrics. In 2007, the concept was further refined into a set of principles by four primary care physician organizations, including the: American Academy of Family Physicians, American Academy of Pediatrics, American College of Physicians, and American Osteopathic Association. PCMHs are sometimes confused with ACOs, but they are quite different. PCMHs are a multidisciplinary approach to primary care delivery (Hong et al., 2018). The ACA allowed special funding avenues for state medical homes with Medicaid beneficiaries (Davis et al., 2011). The PCMH focuses on providing meaningful, holistic care of the patient, both physical and mental, via an interdisciplinary team of providers under one roof (Bresnick, 2019). Today there are several medical home models of care with corresponding certifications, accreditations, or recognition programs. Although consensus exists around the basic components of the medical home, not all models look alike or use the same approaches to improve healthcare quality and control costs. According to the Agency for Healthcare Research and Quality (2022), the attributes of a PCMH are:

  1. Comprehensive Care
  2. Patient-Centered
  3. Coordinated Care
  4. Accessible Services
  5. Quality and Safety

PCMHs were believed to hold great promise to address longstanding inequities in the quality of primary care experienced among socially and economically marginalized populations. However, a study by Bell et al. (2021) of the geographic distribution of the country’s medical homes indicated that medical homes are more likely to emerge within communities that have more favorable health and socioeconomic conditions. Despite the wide adoption of PCMHs, the evidence about effectiveness remains mixed in terms of spending and outcomes. One potential explanation for these mixed findings is the wide variation in how practices implement the model. For example, significant reductions in emergency department utilization, outpatient care, laboratory services, and imaging services distinguish those practices that emphasized the adoption of (or expanded use of) health information technology (Saynisch et al., 2021). The major ways in which PCMHs are financed are: increased fee-for-service (FFS) payments, traditional FFS payments with additional per-member-per-month (PMPM) payments, and traditional FFS payments with PMPM and pay-for-performance payments (Basu et al., 2016).

Review infographic (Primary Care Collaborative, 2022): What is a Patient-Centered Medical Home?

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