Health Systems, Policy, and Administration Exam 2 Review

Comprehensive vocabulary flashcards covering health systems, hospital finance, physician organization, pharmaceuticals, long-term care, and mental health policy.

Charges

The "sticker" price of a medical service that is often arbitrary, bears little connection to the actual cost of providing care, and is paid by few to no payers.

Chargemaster

The comprehensive menu or list of charges for all services provided by a hospital.

Allowed Amount

Also called the negotiated amount or paid amount; the negotiated price that a payer actually pays to a healthcare provider, which is lower than the charge amount and achieved through buying power and outside options.

Claims

A bill sent from a healthcare provider to an insurance company for services rendered.

Reimbursement

The payment made to a medical care provider after care has been delivered in advance of payment.

Almshouse

Historical charitable housing (also known as a poorhouse) for the impoverished, elderly, and distressed, out of which modern hospitals developed.

Hill-Burton Act

A $1946$ federal statute providing grants for the construction and expansion of non-profit hospitals, requiring recipients to maintain non-profit status, provide uncompensated care, and not discriminate (while historically permitting separate but equal care).

Integrated Health System

An organization that owns hospitals, medical offices, and other provider types to deliver coordinated healthcare services across the care continuum.

Levels of Care

A classification scheme for the complexity and purpose of medical services, spanning primary care, secondary care, tertiary care, and quaternary care.

Trauma Care Levels

A hospital categorization framework based on service complexity and capability, ranging from highly complex regional centers (Trauma Level $1$) down to basic stabilization and transfer facilities (Trauma Level $5$).

Emergency Medical Treatment and Labor Act (EMTALA)

A federal law mandating that any hospital offering emergency services must examine and stabilize presenting emergency patients (including women in active labor) regardless of ability to pay.

Community Benefit Standard

Federal tax code requirements under $501(c)(3)$ and $501(r)$ requiring non-profit hospitals to promote community-wide health—via charity care, community investments, research, teaching, or absorbing Medicaid shortfalls—to maintain tax exemption.

Non-Profit Hospital Objective Functions

The motivating operational goals of non-profit hospitals, debated as maximizing service quantity/prestige, altruistic community benefit, or acting as "for-profits in disguise" that channel surplus into executive and physician compensation.

Cost-Disease

An economic theory positing that prices and wages in low-productivity-growth service sectors (such as healthcare) rise over time because they must compete for labor with high-productivity sectors.

Vertical Integration

The consolidation or merger of organizations operating at different stages of the healthcare supply chain, such as a health system acquiring an outpatient medical practice.

Horizontal Integration

The merger or acquisition of organizations operating at the same stage of the supply chain, such as two competing hospitals combining into one entity.

Cost-Shifting

The theory that healthcare providers increase prices charged to private insurers to offset payment reductions from public programs like Medicaid or Medicare.

Uncompensated Care

A metric quantifying the total volume of care delivered without complete payment, consisting of bad debt (uncollectible bills) and charity care (pre-arranged fee forgiveness).

Safety-Net Hospital

A hospital that provides a substantial share of uncompensated care by legal obligation, geographic location, or institutional mission.

Small Area Geographic Variation

The empirical observation that healthcare expenditures, clinical practice patterns, and service prices diverge widely across geographic communities in the United States.

Roemer's Law

The healthcare proposition that "a bed built is a bed filled," suggesting that available hospital capacity in a market induces its own clinical utilization.

Certificate of Need (CON)

State-level regulatory programs requiring healthcare entities to prove that an unmet community need exists prior to constructing facilities or acquiring major medical technologies.

Antitrust

The body of law and regulation aimed at preventing monopolies, curbing anti-competitive behavior, and preserving market competition.

Medicalization

The process through which human conditions, social problems, or behaviors are redefined and treated as medical diseases and placed under clinical jurisdiction.

The Flexner Report

An influential early $20\text{th}$-century evaluation that led to the restructuring, standardization, and rigorous professionalization of American medical school education.

Doctor of Medicine (MD)

A doctoral-level academic degree focused on allopathic medicine that satisfies state physician licensing requirements.

Doctor of Osteopathic Medicine (DO)

A doctoral-level academic degree centered on osteopathic medicine that satisfies state physician licensing requirements.

Graduate Medical Education (GME)

Post-medical school clinical residency and fellowship training during which resident physicians practice under the supervision of fully licensed attending physicians.

Teaching Hospital

A hospital affiliated with a medical school that sponsors accredited residency training programs for resident physicians.

Direct Graduate Medical Education (DGME)

Direct federal Medicare payments allocated to teaching institutions to directly subsidize resident stipends, benefits, and supervisory faculty costs.

Indirect Graduate Medical Education (IGME)

Upward payment adjustments made by Medicare through the Inpatient Prospective Payment System (IPPS) to teaching hospitals to compensate for higher operational costs and patient complexity.

Primary Care Providers

Generalist clinicians (physicians, nurse practitioners, physician assistants) who serve as the entry point into the health system, providing preventive, diagnostic, and chronic disease care.

Physician Group

A formal organization of multiple physicians operating under a shared corporate or partnership structure, practicing either a single specialty or multiple specialties.

Solo Practice

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

Private Equity

Investment firms that deploy capital to acquire private healthcare practices, streamline operations over an abbreviated horizon ($3\text{--}7\text{ years}$), and divest for investor profit.

Geographic Maldistribution of Physicians

The structural disparity wherein rural and low-income communities experience severe physician shortages while wealthy metropolitan areas experience physician surpluses.

Health Professional Shortage Area (HPSA) / Medically Underserved Area (MUA)

Federal designations given to geographic regions, populations, or facilities with severe healthcare shortages, conferring eligibility for enhanced reimbursements, loan repayment programs, and placement grants.

The Health Center Program

A federal initiative providing grant funding and enhanced Medicaid/Medicare reimbursement to community clinics that provide sliding-scale primary care, supportive services, and operate under a majority-patient governing board.

Federally Qualified Health Center (FQHC)

A community-based clinic receiving federal grants under the Health Center Program that qualifies for cost-related Medicare and Medicaid payment to treat underserved populations.

Six Domains of Quality

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

Low-Value Care

Medical services that offer no proven clinical benefit within a given clinical scenario and expose patients to potential physical, emotional, or financial harm.

Care Cascade

A chain reaction of increasingly intensive, invasive, and costly diagnostic tests or treatments triggered by an initial incidental finding or medical error.

Food and Drug Administration (FDA)

The agency within the Department of Health and Human Services (HHS) responsible for protecting public health by regulating the safety, efficacy, and labeling of pharmaceuticals, biological products, medical devices, cosmetics, and food.

Hospital-Acquired Condition (HAC)

An adverse medical condition, complication, or injury (such as a catheter-related infection, bed fall, or adverse drug event) contracted by a patient while admitted to an acute inpatient facility.

FDA User Fees

Mandatory fees paid by pharmaceutical and biotechnology manufacturers to the FDA to expedite the drug review and approval process, funding roughly half of the agency's operational budget.

Small Molecule Drugs

Low-molecular-weight pharmaceutical compounds (such as aspirin) synthesized via standard chemical processes that are stable, orally active, and easy to manufacture.

Large Molecule Biologics

Complex, high-molecular-weight therapeutics (such as monoclonal antibodies or vaccines) manufactured in or extracted from living biological systems, cells, or tissues.

Phase 1 Clinical Trials

The initial stage of human clinical testing following preclinical laboratory studies, conducted with a small cohort of subjects to evaluate drug safety, tolerability, and dosage ranges.

Phase 2 Clinical Trials

Mid-stage clinical trials enrolling an expanded group of patients to evaluate therapeutic efficacy and monitor short-term adverse effects.

Phase 3 Clinical Trials

Large-scale, multi-center clinical trials designed to confirm comparative therapeutic efficacy, evaluate overall risk-benefit profiles, and identify side effects across broad populations.

New Drug Application (NDA)

The comprehensive regulatory dossier submitted by a pharmaceutical manufacturer to the FDA requesting formal approval to commercialize, distribute, and label a new therapeutic drug.

Off-Label Prescribing

The legal clinical practice of prescribing an FDA-approved drug for an unapproved disease indication, alternative dosage regimen, or unapproved patient demographic.

Period of Exclusivity

A statutory period ($3\text{--}12\text{ years}$) during which a drug manufacturer possesses government-granted marketing exclusivity, barring generic competitors to protect R&D investments.

Brand Name Drug

An original pharmaceutical product protected by trademark and patent exclusivity, marketed under a proprietary commercial name.

Generic Drug

A bioequivalent drug manufactured with the identical active chemical ingredient, dosage, strength, and route of administration as an off-patent brand-name drug.

Biosimilar

A generic biological product shown to be highly similar in structure, efficacy, and safety to an FDA-approved reference biologic, despite natural molecular variability.

Pharmacy Benefit Manager (PBM)

A third-party administrator that manages outpatient prescription drug benefits for commercial insurers, designing formularies, building retail networks, and negotiating manufacturer rebates.

Drug Wholesaler

A commercial intermediary that buys bulk pharmaceutical products directly from manufacturers and distributes them to retail pharmacies, clinics, and hospital pharmacies.

Wholesale Acquisition Cost (WAC)

The baseline manufacturer list price for a drug sold to wholesalers, serving as the benchmark from which PBM discounts and patient coinsurance are determined.

Drug Formulary

A structured, tiered list of prescription medications approved for coverage by a health insurance plan, establishing patient cost-sharing tiers and utilization controls.

Rebate (PBM)

A confidential price discount paid retrospectively by a drug manufacturer to a PBM to secure favorable tiered formulary placement for a specific pharmaceutical.

Advisory Committee on Immunization Practices (ACIP)

An expert advisory panel selected by the HHS Secretary that provides recommendations to the CDC Director regarding population vaccine guidance and insurance coverage mandates.

Vaccines for Children Program (VFC)

A federally financed program that purchases and distributes free pediatric vaccines to enrolled clinics for administration to eligible uninsured, underinsured, and Medicaid-enrolled children.

The Vaccine Schedule

Official clinical guidance published by the CDC specifying the recommended vaccines, doses, and age intervals for the immunization of children and adults.

340B Drug Pricing Program

A federal regulation mandating that drug manufacturers sell outpatient medications at discounted Medicaid prices to safety-net healthcare institutions.

Inflation Reduction Act

Federal legislation enacted under President Biden authorizing Medicare to directly negotiate maximum fair prices with manufacturers for select high-spend Part B and Part D drugs starting with $10$ drugs in $2026$.

International Reference Pricing

A pharmaceutical pricing mechanism in which domestic drug reimbursement ceilings are set or benchmarked against prices paid by a basket of foreign industrialized nations.

Long-Term Care Services and Supports (LTSS)

A spectrum of health, functional, and social services assisting individuals with chronic physical or cognitive impairments in performing activities of daily living, primarily paid for by Medicaid.

Activities of Daily Living (ADLs)

Essential self-care tasks required for fundamental daily functioning, including bathing, dressing, eating, transferring, and toileting.

Instrumental Activities of Daily Living (IADLs)

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

Skilled Nursing Facility (SNF)

A residential institution delivering post-acute inpatient nursing and rehabilitative therapies for a short duration (typically fewer than $28\text{ days}$) following hospital discharge.

Nursing Home

A residential facility providing extended, long-term custodial care and personal ADL/IADL assistance over weeks, months, or years for individuals with chronic functional dependency.

Deinstitutionalization

The public policy process of transferring mental health care and psychiatric patient populations out of long-stay state psychiatric asylums into community-based outpatient settings.

Transinstitutionalization

The systemic dynamic whereby individuals discharged from closed psychiatric hospitals end up housed in alternative institutions (such as jails, state prisons, or nursing homes) rather than their own homes.

Mental Health Parity

The legal mandate requiring commercial and public health plans to offer equivalent coverage, deductibles, copayments, and benefit limits for behavioral health disorders as for physical illnesses.

Home and Community-Based Services (HCBS)

Medicaid-funded LTSS provided in private residences or community environments (e.g., adult day care) to enable functionally impaired beneficiaries to avoid nursing home admission.

Self-Directed Services

A model of LTSS delivery where the beneficiary retains direct fiscal and management authority over their Medicaid personal care budget, allowing them to hire and manage caregivers, including family members.

Medically Needy Pathway

A Medicaid eligibility track for individuals with excessive income who qualify after spending down excess income on out-of-pocket medical expenses, subject to countable asset assessments.

Medicaid Spend Down

The regulatory process through which an applicant incurs qualifying medical bills to lower their countable income to Medicaid eligibility thresholds.

Medicaid Estate Recovery

The federally mandated statutory process allowing states to recoup long-term care costs from the estate (e.g., sale of a primary residence) of a deceased Medicaid beneficiary.

Nursing Home Deficiencies

Official regulatory citations issued against a nursing facility for failing to comply with federal health and safety standards required for Medicare and Medicaid reimbursement.

Mental Health Parity and Addiction Equity Act (MHPAEA)

A $2008$ federal law requiring group health insurance plans to ensure financial requirements and treatment limitations for mental health and substance abuse benefits are no more restrictive than those for medical/surgical benefits.

Quantitative Treatment Limitations (QTLs)

Expressed numerical benefit restrictions within an insurance policy, such as annual visit caps, copayment amounts, or maximum covered inpatient days.

Nonquantitative Treatment Limitations (NQTLs)

Non-numerical benefit management strategies used by health plans to limit the scope or duration of treatment, including prior authorization, step therapy, and medical necessity criteria.

Serious Mental Illness (SMI)

A diagnosed mental, behavioral, or emotional disorder that results in serious functional impairment substantially limiting one or more major life activities.

Any Mental Illness (AMI)

A broad diagnostic category defining any mental, behavioral, or emotional disorder, ranging in severity from no impairment to mild, moderate, or severe functional limitations.

Psychotherapy

A psychological service provided by a trained professional utilizing structured communication and interaction to assess, diagnose, and treat dysfunctional emotional reactions, thought patterns, and behaviors.

How much did the U.S spend on hospital care in 2023?

30% or $1.5 trillion

What percent of Hospitals are non-profit?

58%

What percent of metropolitan areas have concentrated hospital markets?

97%

What percent of physicians work at a practice that is physician owned?

46%

What percent of the country lacks an OBGYN

50%

What is the average physician salary at age 50?

$344,000

What percent of Medicare patients receive low value service?

25%

What percent of inpatient spending is used on defensive medicine?

5%

What percent of adults use a prescription medication?

66%

What percent of adults are hospitalized?

7.9%

How many people per year receive LTSS?

8 million

What percent of LTSS are paid for by Medicaid?

60%

What percent of nursing homes are for-profit?

72%