Health Services Exam 2

What is the basic principle of managed care?

To improve coordination of health care and control health care spending in insurance plans.

How does the traditional indemnity insurance model operate?

The provider gives health care to the patient, who pays claims and premiums to the insurer, and the insurer reimburses the patient.

What are some problems with the traditional indemnity insurance model?

Lack of coordinated care, high prices, high utilization, and patients may struggle to afford upfront payments.

Describe the managed care model.

Patients pay premiums, insurance pools the money, and pays doctors/hospitals at discounted rates, with patients covering small out-of-pocket fees.

What are control strategies in managed care?

Provider networks, provider reimbursement, and utilization management.

What is a provider network?

A group of providers under contract with the insurer, typically accepting lower reimbursement rates for access to more patients.

What are surprise bills in health care?

Charges incurred when a patient sees an out-of-network provider, which can lead to no coverage or higher cost-sharing.

What does the No Surprises Act protect against?

It protects patients from balance billing in emergency care from out-of-network providers and some non-emergency situations.

What is fee-for-service (FFS) reimbursement?

A model where providers are paid more for more services rendered, potentially leading to higher costs.

What is capitation in health care?

A payment model where providers receive a fixed amount per patient for a specified time, incentivizing less frequent patient visits.

How does capitation affect physician behavior?

It incentivizes physicians to reduce the number of visits and tests to maintain profitability.

What is the role of a primary care physician in managed care?

They often act as a gatekeeper, requiring referrals for specialists to control access and costs.

What are the two types of utilization review?

Prospective (before service) and retrospective (after service) reviews to control costs and improve quality.

What are the characteristics of a traditional HMO?

More restrictive, no coverage for out-of-network providers, primary care physician as gatekeeper, and often uses capitation.

How does a POS plan differ from an HMO?

It allows patients to see out-of-network providers and has a primary care physician as gatekeeper, with possible capitation.

What is an EPO plan?

An Exclusive Provider Organization that has no coverage for out-of-network providers but allows direct access to specialists.

What distinguishes a PPO from other managed care models?

Less restrictive, allows out-of-network providers at higher costs, emphasizes utilization management, and does not require referrals.

What is the goal of Value-Based Health Care Delivery Models?

To incentivize health care providers to control costs while improving quality of care.

What is an Accountable Care Organization (ACO)?

A voluntary contractual arrangement between different groups of providers aimed at reducing spending while improving care quality.

What is the role of Accountable Care Organizations (ACOs) in healthcare?

Patients are assigned to ACOs based on their main provider, and if spending is reduced while meeting quality measures, savings may be returned to the ACO.

What are the five key components of a Patient-Centered Medical Home (PCMH)?

Comprehensive care, coordinated care, patient-centered, accessible services, and quality and safety.

What is the basic principle of Consumer Directed Health Plans?

To control healthcare spending by making patients more price sensitive and controlling their demand for healthcare.

How is charity care funded?

Through public and private sources, including donations, volunteering providers, and grants.

How are inpatient hospital costs determined?

Paid per inpatient stay based on the labor required, without considering the number of days spent in the hospital.

What is the funding source for Medicare Part A?

Funded primarily by payroll taxes on earnings paid by employers and employees.

What services are covered under Medicare Part A?

Inpatient hospital care, skilled nursing facility care, and hospice care.

What is the enrollment period for Medicare Part B?

The initial enrollment period lasts 7 months, including 3 months before and after turning 65.

What is the late enrollment penalty for Medicare Part B?

A penalty is added to the premium based on how long the beneficiary was not enrolled.

What does Medicare Part D cover?

Outpatient prescription medications, excluding over-the-counter medications.

What is required for a beneficiary to enroll in Medicare Part D?

They must be enrolled in either Part A or Part B.

What are some services NOT covered by Medicare?

Hearing aids, eye examinations for glasses, dental services, and long-term care.

What is Medicare Supplement Insurance (Medigap)?

Insurance that fills in gaps in Medicare coverage, specifically for cost sharing related to Parts A and B.

What are the downsides of Medicare Part A and Part B?

Gaps in coverage, cost sharing, deductibles, coinsurance, copayments, and no out-of-pocket maximum.

What is the difference between Medicare Advantage and Medicare Supplement Insurance?

Medicare Advantage is a health plan offered by private companies approved by CMS, while Medigap is used to cover costs not covered by Medicare.

What is the eligibility requirement for Medicaid?

Coverage is provided for low-income individuals, and it is administered by states under federal guidelines.

How is Medicaid funded?

Jointly funded by federal and state governments.

What is the maximum deductible for Medicare in 2025?

$590.

What is the coverage gap phase in Medicare?

Beneficiaries were previously responsible for a percentage of costs, but as of 2025, there will be no coverage gap phase.

What are the coverage options for outpatient prescription medications under Medicare?

Beneficiaries can select a Part D drug plan or a Medicare Advantage plan that includes medication coverage.

What is the coverage for vaccines under Medicare Part B?

Covers vaccines for treatment, such as pneumococcal and influenza vaccines, but not for preventive measures unless related to treatment.

What is the role of private insurers in the Medicare system?

Private insurers offer Medicare Advantage plans and Part D drug plans, approved by CMS.

What is the significance of the Medicare ACO Shared Savings Program?

Providers can earn or lose money based on meeting quality measures and achieving savings.

What is the impact of high deductible health plans (HDHP) on patient behavior?

They aim to make patients more price sensitive and control healthcare spending.

What is the coverage for outpatient hospital costs?

Paid per diem, which includes services like mental health and addiction treatments.

Are states required to offer a Medicaid program?

No, but all states do offer a Medicaid program.

What are the traditional eligibility categories for Medicaid?

Individuals must be 65 or older, under 65 children, parents, pregnant women, disabled, or blind.

What is the role of household income in Medicaid eligibility?

Household income cannot exceed the cutoff for that state.

What is the Federal Poverty Limit (FPL) in relation to Medicaid?

FPL determines financial eligibility criteria; higher FPL means a higher dollar amount for eligibility.

What optional services may Medicaid cover?

Medicaid may cover prescription drugs, physical therapy, dental, glasses, hospice, speech, hearing, and language disorder services.

What significant change did the Affordable Care Act (ACA) make regarding Medicaid?

The ACA created a new pathway for Medicaid eligibility, allowing states to choose whether to permit this pathway.

What is the cutoff for Medicaid eligibility under the ACA for childless adults?

The cutoff is 138% of the Federal Poverty Limit (FPL).

What is dual eligibility in Medicaid?

Dual eligibility allows Medicaid to cover costs for individuals enrolled in Medicare, including deductibles and copayments.

What is the purpose of Extra Help in relation to Medicare Part D?

Extra Help assists with costs for Medicare Part D, automatically qualifying those with full Medicaid or help with Part B premiums.

How can patients obtain outpatient prescription drug coverage through Medicare?

Beneficiaries can obtain coverage through Medicare Part D, with some drugs covered under Part B.

What is the process when a patient fills a prescription at an outpatient pharmacy?

The patient presents their insurance card, and the pharmacy submits a claim to the insurer for approval before dispensing medication.

What is a formulary in the context of insurance coverage for drugs?

A formulary is a list of drug products covered under an insurance plan, often categorized into tiers.

What are patient cost-sharing mechanisms for prescription drugs?

Cost-sharing includes deductibles, coinsurance, and copayments.

What is prior authorization in drug utilization management?

Prior authorization requires criteria to be met before an insurer will pay for a drug.

What is step therapy in drug utilization management?

Step therapy requires patients to try one or more drugs before the insurer will cover a specific drug.

What are quantity limits in drug utilization management?

Quantity limits restrict the amount of medication covered for a specific duration to prevent unnecessary spending.

What is the role of Pharmacy Benefit Managers (PBMs)?

PBMs manage prescription drug claims processing, drug utilization, pharmacy networks, and rebate negotiations.

What are some revenue sources for PBMs?

PBMs generate revenue through administrative fees, spread differences, and rebates from pharmaceutical manufacturers.

What happens if an insurer does not manage prescription drug utilization effectively?

The insurer may incur higher costs and less effective management of drug spending.

What is the impact of insurance coverage for prescription drugs on pharmacies?

Pharmacies need systems to submit claims electronically and may receive partial payments instead of full payment at the point of sale.

What is the significance of the ACA in Medicaid funding?

Initially, the ACA provided 100% federal funding for the expansion, which has since decreased to about 90%.

What is the eligibility requirement for a woman living in Tennessee with an income of $35,000 and two dependents?

She is not eligible for Medicaid as her income exceeds the 105% FPL cutoff in Tennessee.

What is PBM Pricing 'Spread'?

The difference between what the PBM pays the pharmacy and what the PBM charges the client for a dispensed drug.

What role do rebates play in PBM pricing?

PBMs negotiate rebates and retain a portion of the rebates received.

What are three major issues that drug donation programs can help solve?

1. Medication Affordability: Patients cannot afford prescriptions, leading to non-adherence and worsening health. 2. Medication Waste: Billions of dollars of safe, unexpired drugs are destroyed each year. 3. Environmental Harm: Improper disposal of unused or expired drugs can contaminate soil.

What are the criteria for a medication to be appropriate for donation to a drug donation program?

Medications must be 3+ months from expiration and sealed in tamper-evident packaging, such as blister packs or unused inhalers.

How do charitable pharmacies and drug donation programs collaborate?

They provide low or no-cost medications to prevent emergency room visits, reduce complications, and decrease inpatient hospital stays.

What are High Deductible Health Plans (HDHPs)?

Health plans with lower premiums that are becoming more common, especially through ACA health exchanges, ideal for high-income, healthy populations.

What is a Health Savings Account (HSA)?

An account allowing tax-free payment of eligible medical expenses, with tax-deductible contributions and no taxes on earned interest, tied to an HDHP.

What are the issues associated with High Deductible Health Plans?

People may forego care due to high costs, and healthcare costs are concentrated among a small percentage of the population.

What is the Patient Protection and Affordable Care Act (ACA)?

The most significant U.S. healthcare reform since 1965, with most major provisions beginning in 2014.

What is Experience Rating in health insurance pricing?

A model where premiums are based on expected healthcare costs, with higher premiums for individuals with more health risk factors.

What are the problems with Experience Rating?

Individuals with health risk factors may be unable to afford premiums, leading to higher uninsured rates and increased administrative costs.

What is Pure Community Rating?

A pricing model where premiums are based on the average health risk in a geographic area, not individual risk factors.

What are the issues with Pure Community Rating?

Adverse selection occurs as healthier individuals may drop out, and insurers might discourage sicker individuals from purchasing insurance.

What is Modified Community Rating?

A model allowing some health risk factors to influence premiums, but prohibiting the use of health status (pre-existing conditions) in setting premiums.

What are the problems with Modified Community Rating?

Individuals with health risk factors factored into premiums may struggle to afford coverage, leading to some adverse selection.

What are the six major new regulations introduced by the ACA?

1. Dependents can stay on parent's insurance until age 26. 2. Guaranteed issue for pre-existing conditions. 3. No exclusions for pre-existing condition treatments. 4. Out of pocket limits. 5. Free preventative care for all new plans. 6. No lifetime or annual coverage maximums.

What is the significance of employer-sponsored health insurance?

Almost all large employers and many small employers offer health insurance as a benefit, with larger firms more likely to self-insure.

How is the cost of employer-sponsored health insurance typically shared?

The employer pays about 75% of the cost, with the remainder covered by the employee and government subsidies.

What tax benefits do employer health insurance premiums receive?

Employer health insurance premiums are exempt from federal, state, and local income taxes, as well as Social Security and Medicare taxes.

Which types of employers struggle to offer health insurance?

Small employers and those with many low wage workers.

What is the ACA Insurance Mandate for large employers?

Employers with 50 or more employees must pay a penalty if they fail to offer full-time employees affordable, comprehensive coverage.

How is a full-time employee defined under the ACA?

A full-time employee is defined as one who averages 30 or more hours per week.

What is the largest effect of the ACA mandate?

The largest effect is on firms with 50-100 employees and those with many low wage workers.

What change does the ACA bring for small employers with fewer than 50 workers?

It changes from experience rating to modified community rating.

What assistance may some small employers receive under the ACA?

Some small employers receive subsidies to help them purchase insurance.

Are small employers subject to the employer insurance shared responsibility penalty?

No, they are not subject to the penalty but must follow the 'Big 6' new insurance regulations.

What is individual health insurance?

Insurance purchased directly from a private insurer, not obtained through an employer or public program.

What major changes did the ACA bring to the individual health insurance market in 2014?

It created American Health Benefit Exchanges (insurance marketplaces).

What is the purpose of insurance exchanges under the ACA?

To present information to consumers, organize the sale of insurance, and encourage competition.

Who sets the rules for the insurance exchanges under the ACA?

States set the rules under federal guidelines; the federal government runs exchanges if states opt not to create their own.

Where can insurance be purchased in relation to the exchanges?

Insurance may be purchased through the exchange or off the exchange, but subsidies are only available through exchanges.

What is the main factor in post-2021 enrollment growth in ACA plans?

Enhanced premium subsidies.

What are ACA compliant plans?

Plans that follow the 'Big 6' rules plus all ACA rules for the individual health insurance market.

What are ACA non-compliant plans?

Plans that must follow some ACA rules (grandfathered plans) or do not follow any ACA rules (short-term plans).