SG

Question 1

retrospective reimbursement

Answer 1

setting of reimbursement rates based on costs actually incurred.

Question 2

DRG method of reimbursement

Answer 2

a diagnostic category associated with a fixed payment to an acute care hospital under the prospective payment system.

Question 3

GDP

Answer 3

a measure of all the goods and services produced by a nation in a given year.

Question 4

Managed care organization

Answer 4

a system of health care delivery that (1) seeks to achieve efficiencies by integrating the four functions of health care delivery, (2) employs mechanisms to control (manage) utilization of medical services, and (3) determines the price at which the services are purchased and, consequently, how much the providers get paid.

Question 5

fee schedule

Answer 5

a schedule of fees for various health care services.

Question 6

HMO

Answer 6

a type of managed care organization that provides comprehensive medical care for a predetermined annual fee per enrollee.

Question 7

Closed panel HMO

Answer 7

also called “closed network”, “in network”, or “closed access.” A health plan that pays for services only when provided by physicians and hospitals on the plan’s panel.

Question 8

Staff model HMO

Answer 8

an HMO arrangement in which the HMO employs salaried physicians.

Question 9

Group model HMO

Answer 9

an HMO model in which the HMO contracts with multi-specialty group practice and separately with one or more hospitals to provide comprehensive services to its members.

Question 10

Network model HMO

Answer 10

an organizational arrangement in which an HMO contracts with more than one medical group practice.

Question 11

IPA Model

Answer 11

an organizational arrangement in which an HMO contracts with an independent practice association for the delivery of physician services

Question 12

PPO

Answer 12

a type of managed care organization that has a panel of preferred providers who are paid according to a discounted fee schedule. The enrollees do have the option to go to out-of-network providers at a higher level of cost sharing.

Question 13

Point of service plans

Answer 13

a managed care plan that allows its members to decide at the time they need medical care (at the point of service) whether to go to a provider on the panel or to pay more to receive services out of network.

Question 14

Mixed model HMO

Answer 14

an organizational arrangement in which an HMO cannot be categorized neatly into a single model type because it features some combination of large medical group practices, small medical group practices, and independent practitioners, most of whom have contracts with a number of managed care organizations.

Question 15

Gatekeeping

Answer 15

the use of primary care physicians to coordinate health care services needed by an enrollee in a managed care plan.

Question 16

Concurrent UR

Answer 16

a process that determines, on a daily basis, the length of stay necessary in a hospital. It also monitors the use of ancillary services and ensures that the medical treatment provided is appropriate and necessary.

Question 17

Retrospective UR

Answer 17

a review of utilization after services have been delivered.

Question 18

Prospective UR

Answer 18

a process that determines the appropriateness of utilization before the care is actually delivered.

Question 19

Case management

Answer 19

an organized approach to evaluating and coordinating care, particularly for patients who have complex, potentially costly problems that require a variety of services from multiple providers over an extended period.

Question 20

Preauthorization

Answer 20

can be used in place of gatekeepers- obtaining authorization of services before services are rendered.

Question 21

Practice Profiling

Answer 21

use of provider-specific practice patterns and comparing individual practice patterns to some norm.

Question 22

Discharge Planning

Answer 22

part of the overall treatment plan designed to facilitate discharge from an inpatient setting. It includes, for example, an estimate of how long the patient will be in the hospital, what the expected outcome is likely to be, whether any special requirements will be needed at discharge, and what needs to be facilitated for post-acute continuity of care.

Question 23

Anti-trustlegislation

Answer 23

federal and state laws that make certain anticompetitive practices illegal. These practices include price fixing, price discrimination, exclusive contracting arrangements, and mergers among competitors.

Question 24

Voluntary system of health insurance

Answer 24

private health insurance, in contrast to government-sponsored compulsory health insurance.

Question 25

Moral hazard

Answer 25

consumer behavior that leads to higher utilization of health care services when the services are covered by insurance (e.g. those that are insured are more likely to utilize health care services than those that are uninsured, because it costs less for them.)

Question 26

risk

Answer 26

the possibility of a substantial financial loss from an event of which the probability of occurrence is relatively small (at least in a given individual’s case). (e.g. the likelihood that I’ll get into an auto accident this year is relatively small, but I will buy auto insurance anyway because if I did, I’d be screwed financially).

Question 27

Group insurance vs Individual insurance

Answer 27

group insurance is when an employer purchases insurance from an insurance company for their employees, hoping that many employees will buy into it. Since they are buying insurance for such a large number of people, the relative risk is low, and they get a much cheaper rate than if they were purchasing insurance in the individual market.

Question 28

ERISA

Answer 28

The Employee Retirement Income Security Act of 1974. It exempts self-insured plans from certain mandatory benefits that regular health insurance plans are required to provide in many states.

Question 29

Self-insurance

Answer 29

where the employer acts as its own insurer instead of obtaining insurance through an actual insurance company. In 2013, 90% of all companies greater than 5000 people went this route. As mentioned above, self-insurance plans are exempt from lots of stuff due to ERISA… exempt from premium taxes and many government laws and regulations, and even some requirements from the ACA.

Question 30

Tax advantaged treatment of employer health insurance

Answer 30

unlike monetary wages, health insurance benefits are not subject to income tax (they are withdrawn pre-tax). Thus, a dollar of health insurance is worth more than a dollar of taxable wages or an after-tax dollar spent on private out-of-pocket medical expenses. The tax policy provides an incentive to obtain health insurance as a benefit that is largely paid by the employer.

Question 31

Experience rating vs community rating

Answer 31

premiums are determined by the actuarial assessment of risk. One method of determining risk is experience rating, which is based on a groups own medical claims experience. Under this method, the premiums differ from group to group, because the groups have different risks. For example, certain occupations are riskier, therefor they are most likely to incur more insurance claims. Those high risk groups would be charged higher premiums. The main issue with experience rating is that it can make insurance unaffordable for high-risk groups. Community rating, on the other hand, spreads the risk among members of a larger population. Premiums are determined based on the utilization experience of all individuals covered under the same type of insurance. Under community rating, the same insurance rate applies to everyone regardless of age, gender, occupation, or any other indicator of risk. The ACA requires the use of “Adjusted community rating” aka modified community rating, which does take into account age, gender, geography, and family composition, while ignoring all other factors (such as pre-existing conditions, dangerous occupation, etc).

Question 32

First dollar coverage

Answer 32

healthcare coverage with no cost sharing. Meaning, the insurance company pays all expenses with no copay or coinsurance from the individual.

Question 33

Coinsurance

Answer 33

a set proportion of the medical costs that the insured must pay out of pocket. For example, after the deductible is met, the insured person may still have to pay 20% of the costs, while the plan will provide 80% coverage. Another example is requiring copayments at office visits, even after the deductible is met. The rationale for this is to control utilization of health care services, since insurance creates moral hazard by insulating the cost of healthcare. Making the insured person share the cost promotes more responsible behavior in health care utilization.

Question 34

Premium

Answer 34

the amount charge by the insurer to insure against specified risks. (i.e. the amount the consumer pays in order to be insured). An employer may offer multiple plans with different benefits, in which case the premiums may be different.

Question 35

Deductible

Answer 35

the amount the insured person must pay each year before any benefits are payable by the plan. For example, the insured may have to spend $1000 out of pocket first, then all expenses that exceed $1000 will be paid for by the plan.

Question 36

Medically necessary

Answer 36

typical disclaimer included in most contracts states that only “medically necessary” services are covered regardless of whether or not such services are provided by a physician. Examples of things often not included are: cosmetic and reconstructive surgery, work-related illness and injury, genetic counseling, etc.

Question 37

Medicare population

Answer 37

Three groups of people: persons 65 years and older; disabled individuals who are entitled to Social Security benefits; and people who have end-stage rental disease (permanent kidney failure required dialysis or a kidney transplant). People in these three categories can enroll regardless of income status.

Question 38

Medicaid population

Answer 38

low-income individuals. Medicaid is a state-administrated program, meaning that each state is responsible for determining what is considered “low-income” based on their state’s population/average income.

Question 39

MedPAC

Answer 39

The Medicare Payment Advisory Commission. The Balanced Budget Act of 1997 established this independent federal agency, to advise the US Congress on various issues affecting the Medicare program. MedPAC’s statutory mandate includes analysis of payments to private health care providers participating in Medicare, access to care, and quality of care.

Question 40

Medicare Part A

Answer 40

Hospital insurance (HI). It’s an entitlement program, meaning that people are entitled to it when they contribute to Medicare through payroll taxes throughout their working lives for at least 10 years. Part A covers inpatient services for acute care hospitals, psychiatry by the required premium contributions. ie hospitals, inpatient rehab facilities, skilled nursing facilities, home health visits, and hospice care.

Question 41

Medicare Part B

Answer 41

Supplementary medical insurance (SMI). Is a voluntary program financed partially by the general tax revenues and partly by the deductible. Most people who obtain part A also choose to obtain part B because they cannot get similar coverage at the same price from private insurers. Also covers some limited home health services.

Question 42

Medicare Part C

Answer 42

Medicare advantage. Provides some additional choices of health plans, with the objective of channeling a greater number of beneficiaries into managed care plans. It allows people to actually take advantage of managed care plans, and have lower out-of-pocket costs.

Question 43

Medicare Part D

Answer 43

Prescription drug coverage. Available to anyone who has coverage under Part A or Part B. This program requires payment of a monthly premium to Medicare, which is in addition toe the premium for Part B.

Question 44

Supplemental Medical Insurance (SMI)

Answer 44

this is Medicare Part B. A voluntary program, in which Medicare beneficiaries are allowed to purchase supplemental insurance and take part in managed care plans.

Question 45

Workers compensation

Answer 45

the first ever broad-coverage health insurance in the united states, initiated in 1914. The theory underlying worker’s compensation is that all accidents which occur on the worksite must be regarded as risks to the industry. Therefore, the industry (employer) should be responsible. It started out as payment for wages lost, then expanded to include payments to medical expenses and compensation to families in cases of death. It has been suggested that since this was the first ever forced-health insurance, it served as a trial balloon for government sponsored, universal health insurance in the united states. However, the emergence of third party private insurance companies prevented universal healthcare from developing.

Question 46

Fee for service

Answer 46

the oldest method of reimbursement and is still in existence, although used less frequency. Services are itemized. Initially, hospitals/physicians would set their own price/fee-for-service, and the insurance company would pay for it. Then insurance companies started making maximum amounts they would reimburse for each service. Some providers still bill this way – such as dentist, therapists, and some physicians. The main problem is that it incentivizes physicians to provide non-essential services, because they can itemize them and get paid more.

Question 47

Bundled fee

Answer 47

bundles a number of related services into one package, as opposed to itemizing everything like fee-for-service. Packaged pricing reduces the incentive for providing non-essential services. Has been shown to effectively reduce health-care spending without significantly affecting quality of care.

Question 48

Cost-plus payment

Answer 48

also called retrospective reimbursement. This was the traditional method used by Medicare and Medicaid to establish per diem (daily) rates for inpatient stays. Hospitals were required to submit cost reports to the insurance company, which would look back on the overall cost of a patient’s stay before reimbursing. Under this system, total reimbursement is directly related to length of stay, services rendered, and cost of providing the services. Providers have an incentive to provide services indiscriminately, thus increasing costs, and they have no reason for efficiency and cost containment. Thus, hospitals had a great incentive to provide extra services and keep patients inpatient for longer. Because of this perverse financial incentive, this system has now largely been replaced by prospective reimbursement.

Question 49

Prospective reimbursement

Answer 49

uses certain criteria to determine the amount of reimbursement in advance, before services are delivered. It provides strong incentives to organizations to reduce cost. The organization makes a profit only if it can keep its costs below the prospective reimbursement amount. Inability to control costs jeopardizes the organizations financial health.

Question 50

Capitation

Answer 50

a method of reimbursement by Managed Care Organizations (MCOs… insurance companies), which helps control healthcare costs. The provider is paid a set monthly free per enrollee (sometimes referred to the per member per month rate). This fixed monthly fee is paid to the provider regardless of how of often the enrollees receive medical services form the provider. Capitation removes the incentive for providers to increase the volume of services to generate additional revenue. It also makes providers prudent in providing only necessary services.