The following is an updated version of the HPfHR 3 tiered plan for reforming healthcare. The plan is based on the tenet that the entire population should be covered for life sustaining and health promoting “basic” healthcare, with the added belief that there should be the ability to obtain higher levels of coverage for those desiring it. In addition, the plan is designed to make healthcare delivery more effective and efficient. The group has strived to use mostly existing and tested concepts, agencies and plans that will make the transition to the new system less difficult.
The HPfHR 3-Tier System
The base level (Tier 1) of the new healthcare system would cover the entire population- “from cradle to grave”. Based on evidenced based data, it would include all medical, surgical and psychiatric issues considered life saving, life sustaining and/or preventative. Examples would include outpatient services for conditions such as hypertension, diabetes, coronary disease, cancer, severe and persistent mental disorders, preventive medicine and pregnancy care. It will also cover most non-elective inpatient care and some elective inpatient admissions for therapies shown to be life saving, life sustaining and/or preventative.
Tier 2 would cover all medical, surgical and psychiatric conditions considered to help with quality of life. These would include general medical conditions such as low back pain, knee replacement or other orthopedic interventions, and milder emotional conditions that do not impair functioning (e.g. adjustment reactions).
Tier 3 would apply to all medical and surgical issues considered as luxury or cosmetic. These would include items such as “face lifts”, Lasik eye surgery and Botox injections.
Oversight
The Tier system would be overseen by a panel of physicians and other healthcare professionals, public health experts and economists specialized in health care, known as “The Board”. This Board’s mission will be to promote the health of the United States in a socially responsible and economically sound way.
Similar to a recently proposed “Federal Health Board”[i], the Board would be a quasi-governmental organization resembling the Federal Reserve, which should make it less beholden to political pressures. It will have oversight of CMS (Centers for Medicare & Medicaid Services), the FDA (Food and Drug Administration) and the NIH (National Institutes of Health). Using the already established DRG (Diagnostic Related Group), APC (Ambulatory Payment Classification) and ICD-9-CM (International Classification of Diseases, Ninth Revision, Clinical Modification) codes, the Board would decide which diagnoses and which services are covered by Tier 1, 2 or 3. For each coverage item, the Board would consider the medical importance (using evidence-based data including practice guidelines developed by expert medical panels, Cochrane Database reviews and other sources), the public health and economic impact. The Board would also be able to direct the FDA and NIH to commission Tier specific research to help it make better Tier determinations (see below).
Although it’s decisions about Tier allocation will be final, the Board will have hearings similar to those of the Federal Reserve for general appeals (not for individual cases).
Health Information Technology
To address the excessive overhead involved in claim submission by providers and institutions due to myriad payer-specific forms, a universal reimbursement form (URF) would be created by the Board and would include all necessary data required to route payment requests for services rendered to the appropriate tier provider. Ideally, this would be implemented electronically using a web based tool distributed to hospitals and physician offices either through private vendors or a government/private industry coalition.
The Board will also be responsible for overseeing the development of a uniform standard for Health Information Technology (HIT) including electronic medical records (EMRs) and test reporting. This uniform standard will guarantee that as HIT is developed through private and public initiatives, there will be complete compatibility.
Funding
Tier 1: Funds for Tier 1 would be provided through a government subsidized account similar to Medicare. The method of raising this revenue can be similar to the present funding of Medicare (e.g. FICA), other payroll taxes (indexed to salary), a tax on businesses based on the number of employees (and their wages) or a combination of these. Medicaid will be eliminated, and therefore will not require funding. Since the number of items covered by Tier 1 in this new system would be substantially less than what Medicare and Medicaid cover now, there would be funds to redistribute and achieve universal Tier 1 coverage. We believe that this will be a “revenue neutral” redistribution. Theoretically funding also could be achieved through a commercial entity as long as it is regulated to follow the profit margins/overhead now achieved by Medicare.
Tier 2: Private insurance carriers would administer Tier 2 services. The private insurance carriers would be allowed to offer a limited number of plans that would be developed by the Board (similar to the Medigap Plans A to L now stipulated by CMS)[ii]. Although each insurance carrier does not have to offer all the plans, the plans that are offered must cover all the services stipulated by the Board. This in turn assures that consumers (either employers or individuals) can compare the price of the plans and can be confident of their coverage.
These plans can be broad (covering most Tier 2 services) or can be customized for specific groups: a geriatric plan that covers extended care facilities but not fertility care, or a heavy laborer plan that includes chiropractic therapy. The price of this private coverage can either be regulated (variant 1), funded with tax incentives or health savings accounts (variant 2) or left to the “free market” (variant 3).
Tier 3: Tier 3 would not be covered under this system (as is true in the current system) and all bills would go to the patient.
Billing
All billing for services (whether in the hospital or office) would be submitted to one “Clearing House” using the URF previously described. Based on the patient’s diagnoses and the services rendered, the Clearing House, through it’s computer based program, would pay the provider directly for Tier 1 items. Those judged to be Tier 2 items would trigger a search for private insurance coverage and if found would be charged to the private carrier. Those without insurance would be billed directly to the patient.
If the service is determined to be Tier 3, the patient is billed.
Therapeutics and Pharmaceuticals
The Board will be better able to accomplish its overall mission (to improve the health of the country and reduce costs) if it has oversight of the NIH and FDA. This will allow the Board to direct research focused on pharmaceutical and therapeutic issues that it needs to achieve its mission. This may be done with a combination of public/private funding depending on Tier. For Drug development, one possibility is to have public funds go to develop Tier 1 therapies (and then Tier 1 owns the drug) while private funds will finance Tier 2 drugs (with the pharmaceutical company owning part or all the rights to the drug when approved).
Drugs will have similar Tier assignments as medical coverage: Tier 1 will be formulations and therapies that have been shown to treat or prevent life threatening illnesses. Tier 2 will apply to those drugs and therapies that increase the quality of life and Tier 3 will be for “luxury” items. Tier 1 medications will be owned by the Board and distributed either for free or at an affordable rate (can be linked to income). Tier 2 drugs will be owned by the pharmaceutical companies, but these firms will not be allowed to advertise prescription drugs to the public. Like Tier 2 medical coverage, these medications will either be covered by one of the Tier 2 insurance plans or will be paid “out-of-pocket”. Tier 3 will all be out-of-pocket and can be advertised.
[i] Tom Daschle, Scott S. Greenberger, Jeanne M. Lambrew, Critical. What we can do about the health-care crisis (New York: St. Martin’s Press 2008), pp.169-171
[ii] CENTERS FOR MEDICARE & MEDICAID SERVICES , 2008 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare http://www.medicare.gov/publications/pubs/pdf/02110.pdf (Accessed April 28, 2008).
The HPfHR 3-Tier System
The base level (Tier 1) of the new healthcare system would cover the entire population- “from cradle to grave”. Based on evidenced based data, it would include all medical, surgical and psychiatric issues considered life saving, life sustaining and/or preventative. Examples would include outpatient services for conditions such as hypertension, diabetes, coronary disease, cancer, severe and persistent mental disorders, preventive medicine and pregnancy care. It will also cover most non-elective inpatient care and some elective inpatient admissions for therapies shown to be life saving, life sustaining and/or preventative.
Tier 2 would cover all medical, surgical and psychiatric conditions considered to help with quality of life. These would include general medical conditions such as low back pain, knee replacement or other orthopedic interventions, and milder emotional conditions that do not impair functioning (e.g. adjustment reactions).
Tier 3 would apply to all medical and surgical issues considered as luxury or cosmetic. These would include items such as “face lifts”, Lasik eye surgery and Botox injections.
Oversight
The Tier system would be overseen by a panel of physicians and other healthcare professionals, public health experts and economists specialized in health care, known as “The Board”. This Board’s mission will be to promote the health of the United States in a socially responsible and economically sound way.
Similar to a recently proposed “Federal Health Board”[i], the Board would be a quasi-governmental organization resembling the Federal Reserve, which should make it less beholden to political pressures. It will have oversight of CMS (Centers for Medicare & Medicaid Services), the FDA (Food and Drug Administration) and the NIH (National Institutes of Health). Using the already established DRG (Diagnostic Related Group), APC (Ambulatory Payment Classification) and ICD-9-CM (International Classification of Diseases, Ninth Revision, Clinical Modification) codes, the Board would decide which diagnoses and which services are covered by Tier 1, 2 or 3. For each coverage item, the Board would consider the medical importance (using evidence-based data including practice guidelines developed by expert medical panels, Cochrane Database reviews and other sources), the public health and economic impact. The Board would also be able to direct the FDA and NIH to commission Tier specific research to help it make better Tier determinations (see below).
Although it’s decisions about Tier allocation will be final, the Board will have hearings similar to those of the Federal Reserve for general appeals (not for individual cases).
Health Information Technology
To address the excessive overhead involved in claim submission by providers and institutions due to myriad payer-specific forms, a universal reimbursement form (URF) would be created by the Board and would include all necessary data required to route payment requests for services rendered to the appropriate tier provider. Ideally, this would be implemented electronically using a web based tool distributed to hospitals and physician offices either through private vendors or a government/private industry coalition.
The Board will also be responsible for overseeing the development of a uniform standard for Health Information Technology (HIT) including electronic medical records (EMRs) and test reporting. This uniform standard will guarantee that as HIT is developed through private and public initiatives, there will be complete compatibility.
Funding
Tier 1: Funds for Tier 1 would be provided through a government subsidized account similar to Medicare. The method of raising this revenue can be similar to the present funding of Medicare (e.g. FICA), other payroll taxes (indexed to salary), a tax on businesses based on the number of employees (and their wages) or a combination of these. Medicaid will be eliminated, and therefore will not require funding. Since the number of items covered by Tier 1 in this new system would be substantially less than what Medicare and Medicaid cover now, there would be funds to redistribute and achieve universal Tier 1 coverage. We believe that this will be a “revenue neutral” redistribution. Theoretically funding also could be achieved through a commercial entity as long as it is regulated to follow the profit margins/overhead now achieved by Medicare.
Tier 2: Private insurance carriers would administer Tier 2 services. The private insurance carriers would be allowed to offer a limited number of plans that would be developed by the Board (similar to the Medigap Plans A to L now stipulated by CMS)[ii]. Although each insurance carrier does not have to offer all the plans, the plans that are offered must cover all the services stipulated by the Board. This in turn assures that consumers (either employers or individuals) can compare the price of the plans and can be confident of their coverage.
These plans can be broad (covering most Tier 2 services) or can be customized for specific groups: a geriatric plan that covers extended care facilities but not fertility care, or a heavy laborer plan that includes chiropractic therapy. The price of this private coverage can either be regulated (variant 1), funded with tax incentives or health savings accounts (variant 2) or left to the “free market” (variant 3).
Tier 3: Tier 3 would not be covered under this system (as is true in the current system) and all bills would go to the patient.
Billing
All billing for services (whether in the hospital or office) would be submitted to one “Clearing House” using the URF previously described. Based on the patient’s diagnoses and the services rendered, the Clearing House, through it’s computer based program, would pay the provider directly for Tier 1 items. Those judged to be Tier 2 items would trigger a search for private insurance coverage and if found would be charged to the private carrier. Those without insurance would be billed directly to the patient.
If the service is determined to be Tier 3, the patient is billed.
Therapeutics and Pharmaceuticals
The Board will be better able to accomplish its overall mission (to improve the health of the country and reduce costs) if it has oversight of the NIH and FDA. This will allow the Board to direct research focused on pharmaceutical and therapeutic issues that it needs to achieve its mission. This may be done with a combination of public/private funding depending on Tier. For Drug development, one possibility is to have public funds go to develop Tier 1 therapies (and then Tier 1 owns the drug) while private funds will finance Tier 2 drugs (with the pharmaceutical company owning part or all the rights to the drug when approved).
Drugs will have similar Tier assignments as medical coverage: Tier 1 will be formulations and therapies that have been shown to treat or prevent life threatening illnesses. Tier 2 will apply to those drugs and therapies that increase the quality of life and Tier 3 will be for “luxury” items. Tier 1 medications will be owned by the Board and distributed either for free or at an affordable rate (can be linked to income). Tier 2 drugs will be owned by the pharmaceutical companies, but these firms will not be allowed to advertise prescription drugs to the public. Like Tier 2 medical coverage, these medications will either be covered by one of the Tier 2 insurance plans or will be paid “out-of-pocket”. Tier 3 will all be out-of-pocket and can be advertised.
[i] Tom Daschle, Scott S. Greenberger, Jeanne M. Lambrew, Critical. What we can do about the health-care crisis (New York: St. Martin’s Press 2008), pp.169-171
[ii] CENTERS FOR MEDICARE & MEDICAID SERVICES , 2008 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare http://www.medicare.gov/publications/pubs/pdf/02110.pdf (Accessed April 28, 2008).
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