Health Care Systems and Policy Exam 2 Review

Comprehensive vocabulary flashcards covering key institutional, legal, pharmaceutical, and health policy concepts for Health Care Systems Exam 2.

Charges

The 'sticker' price of a medical service. Few to no payers pay this price, and charges are often arbitrary with little connection to the actual cost of providing the service.

Chargemaster

The comprehensive menu or list of charges for all individual services, procedures, and items provided by a hospital.

Allowed Amount

Also called the negotiated amount or paid amount; the negotiated price that a payer actually reimburses a provider, which is discounted relative to the charge amount based on payer buying power and outside options.

Claim

A formal bill submitted from a health care provider to an insurance company for medical services rendered.

Reimbursement

The payment made to a medical provider for services that have already been rendered in advance of payment.

Almshouse

Historical housing for the poor, elderly, and distressed (also called a poor house), which served as the institutional predecessor to the modern hospital.

Hill-Burton Act

A 1946 federal statute providing grants for the construction and expansion of non-profit hospitals to increase US bed supply, conditioning funding on non-profit status, non-discrimination (though permitting 'separate but equal' facilities), and the provision of uncompensated care.

Integrated Health System

An organization that owns and coordinates hospitals, medical offices, and diverse provider types delivering care across the entire continuum of healthcare services.

Primary Care

The level of care serving as a patient's first point of contact, focused on prevention, routine diagnosis, management of chronic conditions, and uncomplicated treatment.

Secondary Care

Medical care provided by specialized medical practitioners upon referral from primary care providers.

Tertiary Care

Highly specialized and complex medical care, including advanced surgical and inpatient procedures, requiring sophisticated technology and facilities.

Quaternary Care

An extension of tertiary care involving highly uncommon, complex, and experimental medical and surgical interventions.

Trauma Care Levels

A five-tiered classification system categorizing hospital emergency surgical and stabilization capabilities, ranging from Level 1 (comprehensive regional resource) to Level 5 (basic stabilization and referral).

Emergency Medical Treatment and Labor Act (EMTALA)

A federal law mandating that Medicare-participating hospitals with emergency departments examine and stabilize all patients presenting with emergency medical conditions (including active labor), regardless of their ability to pay.

Community Benefit Standard

Federal tax code requirements under 501(c)(3) and 501(r) that non-profit hospitals must fulfill to maintain tax exemption, such as offering charity care, conducting community health needs assessments, and advancing community health.

Objective Function

The underlying goal or purpose motivating an organization or individual, such as profit maximization in for-profit entities, or prestige, community health improvement, or manager salary capture in non-profit hospitals.

Baumol's Cost Disease

An economic theory positing that wages and prices rise in service industries with stagnant productivity growth because they must compete for labor with high-productivity sectors.

Vertical Integration

The combination or merger of organizations operating at different stages of the healthcare supply chain (for example, a hospital system acquiring an outpatient physician practice).

Horizontal Integration

The merger or consolidation of organizations that operate at the same level of care or provide identical services (for example, two general acute hospitals merging).

Cost-Shifting

The theory that healthcare providers increase prices charged to private insurers to offset fee reductions or shortfalls from public programs like Medicaid and Medicare (largely unsupported by empirical evidence).

Uncompensated Care

The total volume of healthcare services provided without full payment, composed of bad debt (uncollectible bills) and charity care (planned financial assistance).

Safety-Net Hospital

A hospital that, either by mission or legal obligation, provides healthcare services to a disproportionate share of uninsured, Medicaid, and vulnerable populations, resulting in significant uncompensated care.

Small Area Geographic Variation

The documented empirical phenomenon in the US where medical utilization, treatment patterns, spending, and prices differ dramatically across local communities, driven by market power in private markets and practice styles/preferences in Medicare.

Roemer's Law

The proposition that 'a bed built is a bed filled,' asserting that an increase in hospital bed supply automatically drives increased bed utilization.

Certificate of Need (CON)

State-level regulatory programs requiring healthcare facilities to obtain government approval proving community need before expanding, purchasing major equipment, or opening new facilities.

Antitrust Law

Statutory and regulatory frameworks designed to protect market competition, prevent anticompetitive mergers, and prohibit monopolies or unfair trade practices.

The Flexner Report

A landmark early-20th-century report evaluating North American medical schools that triggered the nationwide standardization, scientific restructuring, and professionalization of modern medical education.

Doctor of Medicine (MD)

A professional academic and clinical doctoral degree conferring licensure qualification based on allopathic medical training.

Doctor of Osteopathic Medicine (DO)

A professional academic and clinical doctoral degree conferring physician licensure qualification with an emphasis on osteopathic manipulative medicine and holistic care.

Physician Group

A practice composed of multiple physicians—either single-specialty or multi-specialty—often structured as a partnership model with joint equity ownership.

Solo Practice

A clinical practice owned, managed, and operated by a single practicing physician.

Private Equity (PE)

Investment management partnerships that acquire privately held companies, implement operational changes to improve financial performance over a 3–7 year period, and sell them for capital gains.

Geographic Maldistribution of Physicians

The systemic imbalance in physician supply characterized by shortages in rural and underserved areas alongside relative surpluses in wealthy metropolitan markets.

Health Professional Shortage Area (HPSA)

A federal designation identifying geographic areas, population groups, or facilities experiencing a critical shortage of primary care, dental, or mental health providers.

Graduate Medical Education (GME)

Formal clinical residency and fellowship training completed after graduation from medical school, required for independent physician licensure and specialty board certification.

Direct Graduate Medical Education (DGME)

Medicare payments made directly to teaching hospitals to cover resident stipends, benefits, and supervisory faculty compensation for capped residency positions.

Indirect Graduate Medical Education (IME)

Medicare inpatient reimbursement adjustments paid to teaching hospitals to compensate for the higher operating costs and patient complexity associated with clinical education programs.

Six Domains of Quality

The Institute of Medicine framework defining healthcare quality through six essential dimensions: Safety, Effectiveness, Patient-Centeredness, Timeliness, Efficiency, and Equity.

Low-Value Care

Medical services and interventions that provide negligible or no clinical benefit in a given scenario and expose patients to potential harm and unnecessary expense.

Care Cascade

A series of progressively invasive tests, procedures, and treatments triggered by an initial incidental finding or medical uncertainty, often conferring little benefit and potential adverse outcomes.

Hospital-Acquired Condition (HAC)

An unintended infection, complication, or injury (such as central line-associated bloodstream infections or falls) sustained by a patient during an inpatient hospitalization.

FDA User Fees

Regulatory review fees assessed on pharmaceutical companies under federal law (PDUFA) to fund FDA staffing and drug evaluation processes, financing approximately half of the agency's drug review budget.

Small Molecule Drugs

Low-molecular-weight pharmaceuticals produced via predictable chemical synthesis that have simple structures, like aspirin, and can be easily replicated as generics.

Large Molecule Biologics

Complex, high-molecular-weight therapeutic agents manufactured in or derived from living organisms, cells, or biological tissues.

Phase 1 Clinical Trial

Initial human testing of an investigational drug conducted in a small cohort of subjects to evaluate basic safety, pharmacokinetics, and safe dosage ranges.

Phase 2 Clinical Trial

Clinical trials enrolling a moderate number of patient subjects with the target condition to determine drug efficacy and evaluate preliminary safety profiles.

Phase 3 Clinical Trial

Large-scale randomized clinical trials conducted on diverse patient populations to establish comparative clinical efficacy, monitor adverse effects, and support market approval filings.

New Drug Application (NDA)

A formal submission to the FDA requesting regulatory authorization to market and sell a new pharmaceutical in the United States, based on comprehensive preclinical and clinical evidence.

Off-Label Prescribing

The legal clinical practice of prescribing an FDA-approved drug for an indication, dosage form, or patient population other than what is explicitly authorized on its approved package label.

Period of Exclusivity

A 3- to 12-year period of statutory marketing exclusivity granted upon FDA drug approval that protects the innovator company from generic competition, incentivizing upfront research and development investments.

Biosimilar

A biological medicine highly similar to an approved reference biologic, demonstrating no clinically meaningful differences in purity, safety, or potency, though not structurally identical due to biological production variations.

Pharmacy Benefit Manager (PBM)

A third-party intermediary contracted by health insurers and employers to administer prescription drug programs, design formularies, negotiate manufacturer discounts, and process pharmacy claims.

Wholesale Acquisition Cost (WAC)

The manufacturer's published list price for a drug to wholesalers before any discounts, rebates, or concessions are factored in.

Drug Formulary

A continuously updated list of prescription medications approved for insurance reimbursement, typically arranged into cost-sharing tiers to incentivize cost-effective medication use.

Rebate (Pharmaceutical)

A confidential retrospective discount paid by a drug manufacturer to a PBM or payer in exchange for preferred formulary tier placement and market share.

Advisory Committee on Immunization Practices (ACIP)

A federal expert advisory committee established by HHS that provides evidence-based recommendations on vaccine schedules and use to the Director of the CDC.

Vaccines for Children Program (VFC)

A federally funded program that procures and distributes vaccines at no cost to eligible children who are uninsured, underinsured, or Medicaid-enrolled.

340B Drug Pricing Program

A federal statutory program requiring pharmaceutical manufacturers to sell outpatient drugs at discounted ceiling rates to qualifying safety-net providers, enabling them to generate revenue from higher insurer reimbursements.

Inflation Reduction Act (IRA) Drug Provisions

Federal legislation authorizing Medicare to negotiate maximum fair prices directly with pharmaceutical companies on selected high-spending Part B and Part D drugs, starting with 10 drugs in 2026.

International Reference Pricing

A benchmark pharmaceutical pricing policy where domestic drug reimbursement rates are pegged to the lower prices paid by comparable high-income foreign countries.

Skilled Nursing Facility (SNF)

An inpatient facility providing short-term (typically under 28 days) 24-hour nursing care and specialized rehabilitation services following acute hospitalization.

Long-Term Services and Supports (LTSS)

A spectrum of health, personal care, and social services assisting individuals with functional limitations in performing daily living activities, with Medicaid serving as the primary payer.

Activities of Daily Living (ADLs)

Fundamental self-care activities used to measure functional independence, including eating, bathing, and dressing.

Instrumental Activities of Daily Living (IADLs)

Complex daily functioning skills necessary for independent community living, including managing medications, meal preparation, shopping, and housekeeping.

Home and Community-Based Services (HCBS)

Medicaid-funded long-term supports provided within an individual's private residence or community setting rather than in an institutional nursing facility.

Medically Needy Pathway

A state Medicaid eligibility mechanism enabling individuals with income above the standard limit to qualify by 'spending down' their excess income on incurred medical expenses.

Medicaid Estate Recovery

The federally mandated process whereby state Medicaid programs seek repayment for LTSS expenses from the remaining estate (such as the primary home) of a deceased beneficiary aged 55 or older.

Computerized Provider Order Entry (CPOE)

An electronic system that allows clinicians to directly enter and transmit medical orders—including prescriptions, laboratory tests, and imaging—digitally to pharmacy and clinical teams.

Clinical Decision Support (CDS)

An automated health IT tool within EHR systems that analyzes clinical data to provide real-time alerts, dosage calculations, and evidence-based clinical guidance to providers.

Health Information Exchange (HIE)

The secure digital transmission and sharing of patient healthcare information and clinical documents across unaffiliated healthcare organizations.

Deinstitutionalization

The systemic policy shift moving psychiatric patients and mental health support services away from long-stay state psychiatric institutions and into community-based settings.

Transinstitutionalization

The process whereby individuals discharged from closed psychiatric institutions end up transferred to alternative institutional settings (such as prisons, nursing homes, and boarding homes) rather than living independently in the community.

Mental Health Parity

The statutory requirement (Mental Health Parity and Addiction Equity Act of 2008) that insurance benefits and coverage limitations for mental health and substance use disorders be no more restrictive than those for general medical/surgical conditions.

Quantitative Treatment Limitations (QTLs)

Explicit numerical caps placed on insurance coverage for care, such as restrictions on annual visit numbers, days of coverage, or copayment amounts.

Nonquantitative Treatment Limitations (NQTLs)

Non-numerical insurer policies and utilization controls that restrict access to treatment, such as prior authorization, step therapy, and medical necessity criteria.

Serious Mental Illness (SMI)

A diagnosable mental, behavioral, or emotional disorder resulting in severe functional impairment that substantially limits one or more major life activities (e.g., schizophrenia, bipolar disorder, severe major depression).

Any Mental Illness (AMI)

Any diagnosable mental, behavioral, or emotional disorder regardless of severity level, ranging from mild distress to severe functional disability.

Psychotherapy

A professional psychological intervention provided by a trained clinician utilizing verbal communication and relational techniques to assess, diagnose, and treat maladaptive behaviors, thoughts, and emotions.