Module 1: Changing Dynamics of the U.S. Health Care System

Question 1

What’s the law of large numbers?

Answer 1

The law of large numbers suggests that when a sample increases, the sample mean gets closer to the population mean.

Question 2

Losses are spread over a large group of individuals

Answer 2

Pooling

Question 3

A loss that is unforeseen and unexpected and occurs as a result of chance

Answer 3

Random Loss

Question 4

Transfer of a risk from an insured to an insurer, which typically is in better financial position to bear the risk than the insured b/c of law of large numbers

Answer 4

Risk Tranfer

Question 5

What is indemnification?

Answer 5

Reimbursement to the insured if a loss occurs.

Question 6

The problem faced by insurance companies because individuals who are more likely to have claims are also more likely to purchase insurance.

Answer 6

Adverse Selection

Question 7

What is moral hazard?

Answer 7

When individuals are more likely to use unneeded health services when they are not paying the full cost of those services.

Question 8

A generic term for any outside party, typically an insurance company or a government program, that pays for part or all of a patient’s healthcare services.

Answer 8

Third-party payer

Question 9

A federal government health insurance program that primarily provides benefits to individuals aged 65 or older

Answer 9

Medicare

Question 10

Medicare Part A provides what services?

Answer 10

Hospital and some skilled nursing facility coverage.

Question 11

Medicare Part ____ is free to all individuals who are eligible for social security benefits.

Answer 11

A

Question 12

Medicare Part ____ is optional for all individuals who have Part A coverage, and requires a monthly premium.

Answer 12

B

Question 13

Medicare Part ___ offers prescription drug coverage through plans offered by private companies.

Answer 13

D

Question 14

Medicare Part ___, which covers physician services, ambulatory surgical services, outpatient services, and other misc. services

Answer 14

B

Question 15

Medicare Part ____, which is managed care coverage offered by private insurance companies that can be selected in lieu or A&B.

Answer 15

C

Question 16

Medicare Part ___ covers prescription drugs

Answer 16

D

Question 17

A federal and state government health insurance program that provides benefits to low-income individuals.

Answer 17

Medicaid

Question 18

A combined effort by an insurer and a group of providers that aim both to increase quality of care and to decrease costs.

Answer 18

Managed care plan

Question 19

A type of managed care plan that requires a PCP, who authorized all services received.

Answer 19

HMO

Question 20

This type of plan does not mandate use of PCP’s, but there are financial incentives of using providers that are in network

Answer 20

PPO

Question 21

The ACA requires insurers spend at least ____% of premium dollars on health costs and claims instead of admin costs and profits. If violated, they must issue rebates to policyholders (medical loss ratio).

Answer 21

80

Question 22

This mandate required that all eligible individuals who were not covered by an employer-sponsored health plan, Medicaid, or Medicare have an insurance policy or face a tax penalty

Answer 22

Individual Mandate

Question 23

One of the key provisions of the ACA was the _______________ to all citizens and legal residents age 19-64 who have household incomes below 138% of federal poverty level.

Answer 23

Medicaid Expansion

Question 24

Online marketplaces created primarily by the states or the federal government that insurers use to post plan details and consumers use to purchase health insurance.

Answer 24

Health insurance exchanges (HIE)

Question 25

A reimbursement method that provides payments each time a service is provided

Answer 25

Fee-for-service

Question 26

A reimbursement method that is based on the number of covered lives (or enrollees) as opposed to the amount of services provided

Answer 26

Capitation

Question 27

A fee-for-service reimbursement method based on the costs incurred in providing services.

Answer 27

Cost-based reimbursement

Question 28

A list of all items and services provided by a health service organization containing their gross (list) prices.

Answer 28

Chargemaster

Question 29

A fee-for-service reimbursement method in which the payment amount is established beforehand by the third-party payer and, in theory, is not related to costs or charges.

Answer 29

Prospective Payment

Question 30

Under _____________ reimbursement, a separate payment is made for each procedure performed on a patient.

Answer 30

Per procedure

Question 31

Under __________ reimbursement method, the provider is paid a rate that depends on the patient’s diagnoses

Answer 31

Per diagnosis

Question 32

A fee-for-service reimbursement method that pays a set amount for each inpatient day.

Answer 32

Per day / per diem

Question 33

The fee-for-service payment of a single amount for the complete set of services required to treat a single episode

Answer 33

Bundled (global) payment

Question 34

Under _________ reimbursement, providers are given a “blank check” to acquire facilities and equipment and incur operating costs. **If payers reimburse provider for all costs, the incentive is to incur costs.**

Answer 34

Cost-based

Question 35

Under ____________ reimbursement, providers have incentives to set high charge rates, which lead to high revenues.

Answer 35

Charge-based

Question 36

Providers can increase utilization under charge-based utilization and revenues by _________, that is creating more visits, ordering more tests, extending patient stays and so on.

Answer 36

Churning

Question 37

Under per __________ reimbursement, physicians have an incentive to perform procedures that have the highest profit potential.

Answer 37

Procedure

Question 38

Under per __________ reimbursement, providers usually hospitals, will seek patients that have the greatest profit potential and discourage/discontinue those services that have the least potential.

Answer 38

Diagnosis

Question 39

Under prospective payment methods, why do providers have an incentive to reduce costs?

Answer 39

The amount of reimbursement is fixed and independent of the costs actually incurred.

Question 40

Under ______________ methods, the key to provider success is to work harder, increase utilization, and hence increase profits.

Answer 40

Fee-for-service

Question 41

Under __________, the key to profitability is to work smarter and decrease utilization

Answer 41

Prospective payment

Question 42

The process of transforming medical diagnosis and procedures into universally recognized numerical codes

Answer 42

Medical coding

Question 43

Numerical codes for designing diseases plus a variety of signs, symptoms and external causes of injury

Answer 43

International classification of diseases codes (ICD)

Question 44

Codes applied to medical, surgical, and diagnostic procedures

Answer 44

Current procedural terminology codes (CPT)

Question 45

A medical coding system that expands the CPT to include non physician services and durable medical equipment.

Answer 45

Healthcare common procedure coding system (HCPCS)

Question 46

This method is based on diagnosis, that Medicare uses to reimburse providers for inpatient services

Answer 46

Inpatient prospective payment system (IPPS)

Question 47

A measure of the amount of resources to provide a particular service. When applied to physicians, a measure of the amount of work, practice expenses, and liability costs associated with a particular service.

Answer 47

Relative value unit (RVU)

Question 48

An approach to provider reimbursement that rewards quality and efficiency of care rather than quantity of care

Answer 48

Value-based purchasing (VBP)