Deck 5: Insurance Contracts and Managed Care

Question 1

Medicare is the most important health insurer in the U.S because it insures the most people, followed by employer sponsored private insurance, privately purchased health insurance, Medicaid and other federal insurance programs.

Answer 1

False

Question 2

Medicaid is funded by a 1.45% tax on employers and a matching 1.45% tax on employees.

Answer 2

False

Question 3

Small group coverage mitigates the problem of adverse selection for the nine percent of the population who purchase health insurance individually.

Answer 3

False

Question 4

High deductible plans increase consumer awareness of costs of medical care by forcing them to pay for expenses up to a deductible amount. The negative aspect of this is that employees may not like having to spend extra time gathering information about price differences between providers.

Question 5

Health Savings Accounts may contribute to risk sharing problem as younger, healthier, better educated individuals tend to use the HSAs as savings accounts.

Question 6

An important feature of health insurance companies' pricing policies is that in the long run, cyclical trends of overcharging and undercharging can be observed, with each cycle period lasting 1-3 years.

Question 7

The public perception of either one of these two initiatives, and the willingness to vote for either initiative, would be exactly the same.

Question 8

The effect of either one of these two initiatives on consumers' welfare would be exactly the same.

Question 9

The preferred provider organizations (PPOs) are the most comprehensive type of managed care organizations, providing all care, including building their own hospitals, hiring their own doctors and implementing sophisticated electronic record keeping systems. Kaiser Permanente is an example.

Question 10

A common criticism of HMOs, PPOs and other managed care organizations is that the sickest patients resist use of managed care because they are uncomfortable with the gatekeepers and managers involved in obtaining their health care.

Question 11

Medicare provides government insurance to the poor, while Medicaid provides government insurance for the elderly.

Question 12

Which of the following statements about Medicare is false?

A) Enrollment into Part A is automatic.
B) Enrollment into Part B is optional, as it requires payment of an additional premium.
C) Almost all Medicare enrollees (98 percent) participate in both Parts A and B.
D) 88 percent of those with Medicare have supplemental insurance.
E) Part A premiums are income-based.

Question 13

The proportion of an insurance company's premium income spent on provision of treatments is called the

A) formulary.
B) capitation per member per month.
C) point of service.
D) medical loss ratio.
E) total premium.

Question 14

Managed care organizations

A) compete with each other on quality and low cost provision of services.
B) exclude health maintenance organizations.
C) exclude preferred provider organizations.
D) exclude closed-panel HMOs.
E) are often run by the federal government.

Question 15

All of the following are examples of substituting cheaper forms of care for more expensive ones, except

A) prescribing a generic (vs. brand name) medication.
B) recommending chiropractic care instead of back surgery.
C) authorizing outpatient vs. inpatient surgery.
D) recommending nursing home care vs. hip replacement surgery.
E) using a physician assistant (vs. doctor) to see patients with uncomplicated health issues.

Question 16

A physician graduates from medical school and must decide whether to take a job as a junior member of a large group practice or work for an HMO directly. For the physician, a positive aspect of working for the HMO is

A) lack of utilization controls.
B) very little peer review.
C) higher salary than with the group practice.
D) a steady stream of patients and income.
E) lower salary than with the group practice.

Question 17

When it comes to attempts of managed care to control costs, cutting prices is one of the most popular methods. Which of the following is not among the valid explanations of the rationale behind this practice?

A) Price cuts would put money directly into the pocket of patients.
B) Compared to other methods, prices are easier to cut.
C) Large insurers have bargaining power to negotiate lower prices with providers.
D) When certain markets go through periods of excess supply, large insurers use it to negotiate lower prices.
E) Large insurers can threaten providers with taking the patients away unless discounts are provided.

Question 18

You give birth to healthy twins. After two days in hospital, case control nurse reviews your records to determine if it is medically necessary for you to remain another day in hospital. This is an example of

A) pre-admission testing.
B) concurrent review.
C) retrospective review.
D) discharge planning.
E) database profiling.

Question 19

An actuarial assistant at your HMO presents graphs and charts of the number of colonoscopies performed per 1,000 patients by each doctor in the plan. This is an example of

A) pre-admission testing.
B) concurrent review.
C) retrospective review.
D) discharge planning.
E) database profiling.

Question 20

Requiring patients to have psychological exams, echocardiograms, mammograms, and blood tests before undergoing bariatric surgery (an elective surgery which induces weight loss) is an example of

A) pre-admission testing.
B) capitation.
C) retrospective review.
D) discharge planning.
E) second opinion.

Question 21

Your grandmother is admitted to the hospital with a heart attack at 8:00 a.m. By time you arrive for a visit at 4:30 p.m., the social worker is looking for you to schedule a meeting to discuss where your grandmother will go when she leaves the hospital. This is an example of

A) capitation.
B) pre-certification.
C) retrospective review.
D) discharge planning.
E) estate planning.

Question 22

More than half of the U.S. population is covered by employer group health insurance. One of the underlying reasons is that

A) covering a large group under a single contract increases transaction costs.
B) group coverage increases adverse selection.
C) employer payments towards health insurance premiums reduce tax benefits.
D) many of the most expensive patients are heavily subsidized or excluded.
E) it is both the most preferred and the most common method for part-time employees to obtain affordable coverage.

Question 23

The size of private health insurance premiums depends on all of the following except

A) prices.
B) expected utilization volume.
C) administrative costs.
D) profit margin.
E) number of carve-outs in a plan.

Question 24

Which of the following assertions about the uninsured is incorrect?

A) Many of the uninsured cannot afford coverage.
B) Many of the uninsured are young and healthy individuals, for whom not having insurance is a rational economic decision.
C) Some of the uninsured are unable to obtain coverage because of a preexisting condition.
D) The number of the uninsured in the U.S. exceeds 30% of the population.
E) The percentage of the population without coverage depends significantly on the efforts of local and state governments.

Question 25

In 2012, U.S. spending on health care totaled almost 18% of GDP. Near term projections by the Congressional Budget Office (CBO) and the Centers for Medicare and Medicaid (CMS) of the growth rate of national health care expenditures estimate that health care expenses will escalate to almost 20% of GDP within 10 years. Why is this issue important to the federal government? (Be sure to include the idea of opportunity cost.)

Question 26

If Medicare significantly lowers its reimbursement rates to physicians, discuss the likely consequences of this event for all parties.

Question 27

Discuss why employer sponsored health insurance contracts rarely include coverage of substance abuse, mental health, HIV/AIDS and similar treatments.

Question 28

Explain why pharmacy benefits managers might be in favor of re-importation of prescription drugs from Canada to the U.S.

Question 29

Jayda receives a phone call from her doctor's office reminding her that it is time to bring her twelve year old son in for a wellness checkup. She is part of an HMO. How does one reconcile this unsolicited office visit with capitation, which has the goal of minimizing costs to HMOs.