Compared with other services, the provision of health care services is unique. First, often only a few providers of a particular service exist in a given area. Next, it is often difficult to judge the quality and cost of competing services, although new tools aim to facilitate service comparison. Then, the decision about which services to purchase is usually not made by the consumer but by a physician or some other clinician. Also, full payment to the provider is not normally made by the user of the services but by a health care insurer. Finally, for most individuals, health insurance from third-party payers is paid for or subsidized by employers or government agencies, so many patients are partially insulated from the costs of health care.
The four distinct characteristics of insurance.
a. Pooling of losses
b. Payment only for random losses
c. Risk transfer
d. Indemnification
The pooling, or sharing, of losses is the basis of insurance. Pooling means that losses are spread over a large group of individuals, so that each individual realizes the average loss of the pool (plus administrative expenses) rather than the actual loss incurred. Pooling involves the grouping of a large number of homogeneous exposure units—people or things having the same risk characteristics—so that the law of large numbers applies.
The law of large numbers states that as the size of the sample increases, the sample mean gets ever closer to the population mean. Accordingly, pooling implies: (1) the sharing of losses by the entire group and (2) the prediction of future losses with some accuracy.
Payment only for random losses
An insurance plan almost always involves risk transfer. The sole exception to the element of risk transfer is self-insurance. Here, the assumption of a risk by a business (or an individual) itself occurs rather than by an insurance company. Risk transfer is the transfer of risk from an insured to an insurer. Typically the insurer is in a better financial position to bear the risk than the insured because of the law of large numbers.
Adverse selection occurs because individuals and businesses that are more likely to have claims are more inclined to purchase insurance than those that are less likely to have claims. If this tendency toward adverse selection goes unchecked, those who are most likely to become sick will seek health insurance, and the insurer will experience a higher-than-expected amount of claims. This increase in claims will trigger a premium increase, which will only worsen the problem, because the healthier members of the plan will seek insurance from other firms at a lower cost or may totally forgo insurance.
The adverse selection problem exists because of asymmetric information, which occurs when individual buyers of health insurance know more about their health status than do insurers.
Explain (a) the concept of moral hazard and (b) how insurers deal with it.
(a) Insurance is based on the premise that payments are made only for random losses. From this premise stems the problem of moral hazard. Moral hazard is the problem faced by insurers because individuals are more likely to use unneeded health services when they are not paying the full cost of those services.
(b) The primary tool that insurers have to combat the moral hazard problem is coinsurance, which requires insureds to pay a certain percentage of eligible medical expenses—say, 20%—in excess of the deductible (the amount that individuals pay before their insurance plan starts to pay). Insurers also use copayments, which are similar to coinsurance but are expressed as a dollar amount.
The major private insurers include Blue Cross Blue Shield, commercial insurers and self-insurers.
Describe the evolution of Blue Cross Blue Shield.
Blue Cross Blue Shield organizations trace their roots to the Great Depression, when both hospitals and physicians were concerned about their patients’ ability to pay health care bills. Blue Cross originated as a number of separate insurance programs offered by individual hospitals. Hospitals agreed to provide a certain amount of services to program members who made periodic payments of fixed amounts to hospitals, whether services were used or not. These programs expanded from single-hospital programs to community-wide, multi-hospital plans called hospital service plans. The Blue Cross name was officially adopted by most of these plans in 1939.
Blue Shield plans developed in a manner similar to Blue Cross plans, except that the providers were physicians instead of hospitals. Today, there are 36 Blue Cross Blue Shield organizations (referred to as “the Blues”). The Blues are organized as independent corporations, including some for-profit entities, but all belong to a single national association that sets standards that must be met to use the Blue Cross Blue Shield name. Collectively, the Blues provide health care coverage for more than 106 million individuals in all 50 states, the District of Columbia and Puerto Rico.
Describe the evolution of commercial insurers.
Commercial health insurance is issued by life insurance companies, casualty insurance companies and companies formed exclusively to offer health care insurance. All commercial insurance companies are taxable (for-profit) entities. Commercial insurers entered the health insurance market following World War II. Following the war, the Internal Revenue Service ruled that employer-provided health insurance was not taxable, giving employers an incentive to offer this tax-free benefit. Like those covered under Blue Cross Blue Shield, the majority of individuals with commercial health insurance are covered under group policies negotiated by employee groups, professional and other associations, and labor unions.
Self-insurers make a conscious decision to bear the risks associated with health care costs and then set aside (or have available) funds to pay future costs as they occur. Individuals, except the very wealthy, are not good candidates for self-insurance because they face too much uncertainty concerning health care expenses. Large groups, especially employers, are good candidates for selfinsurance. Today, most large groups are self-insured.
Summarize the primary public insurers.
Government is a major insurer as well as a direct provider of health care services. The U.S. federal government provides health care services directly to qualifying individuals through the medical facilities of the U.S. Department of Veterans Affairs (the V.A.); the U.S. Department of Defense and its TRICARE program (health insurance for uniformed service members and their families); and the Public Health Service, part of the U.S. Department of Health and Human Services (HHS). Additionally, the government either provides or mandates a variety of insurance programs, such as workers’ compensation, Medicare and Medicaid.
Describe Medicare and its origination.
Medicare was established by Congress in 1965 primarily to provide medical benefits to individuals aged 65 or older. Medicare has evolved to include four major coverages:
Part A, which provides hospital and some skilled nursing facility coverage. Part A coverage is free to all individuals who are eligible for Social Security benefits. Individuals who are not eligible for Social Security benefits can obtain Part A medical benefits by paying monthly premiums.
Part B, which covers physician services, ambulatory surgical services, outpatient services, and other miscellaneous services. Part B is optional for all individuals who have Part A coverage, and it requires a monthly premium from enrollees that varies with income level.
Part C, which is managed care coverage offered by private insurance companies and can be selected in lieu of Parts A and B. About one-third of Medicare enrollees elect to participate in Part C, also called Medicare Advantage Plans, rather than Parts A and B.
Part D, which covers prescription drugs. Part D offers prescription drug coverage through plans offered by private companies. Each Part D plan offers somewhat different coverage, so the cost of Part D coverage varies widely.
In addition, Medicare covers health care costs associated with selected disabilities and illnesses, such as kidney failure, regardless of age
Describe the evolution of Medicaid.
Medicaid began in 1966 to be jointly funded and operated by the states and the federal government. The goal was to provide a medical safety net for low-income mothers and children and for the elderly, blind, and disabled individuals who receive benefits from the Supplemental Security Income (SSI) program. Congress mandated that Medicaid cover hospital and physician care, but states were encouraged to expand the basic package of benefits, either by increasing the range of benefits or by extending the program to cover more people. A mandatory nursing home benefit was added in 1972. Medicaid has provided access to health care services for many low-income individuals. Medicaid has become an important source of revenue for health care providers, especially for nursing homes and other providers that treat large numbers of indigent patients.
Describe the essential characteristics of managed care plans.
Managed care plans combine the provision of health care services and the insurance function into a single entity. The aim of this entity is to both increase the quality of care and to decrease the cost of health care services. Traditional plans are created by insurers that either directly own a provider network or create one through contractual arrangements with independent providers.
A health maintenance organization (HMO) is one type of managed care plan. HMOs are based on the premise that the traditional insurer-provider relationship creates incentives that reward providers for treating patients’ illnesses while offering little incentive for providing prevention and rehabilitation services. This is often referred to as volume over value. By combining the financing and delivery of comprehensive health care services into a single system, HMOs theoretically have as strong an incentive to prevent illnesses as to treat them.
The preferred provider organization (PPO) evolved during the 1980s. PPOs are a hybrid of HMOs and traditional health insurance plans that use many of the costsaving strategies developed by HMOs. PPOs do not mandate that beneficiaries use specific providers, although financial incentives (i.e., patients pay less for going to more efficient providers) encourage members to use providers that are part of the provider panel—those providers that have contracts (usually at discounted prices) with the PPO. PPOs do not require beneficiaries to use preselected gatekeeper physicians.
Hoping to achieve the potential cost savings of managed care plans, most insurance companies now apply managed care strategies to their more conventional plans. Such plans, which are called managed fee-for-service plans, use preadmission certification, utilization review and second surgical opinions to control inappropriate utilization.
Although the distinctions between managed care and conventional plans were once quite apparent, considerable overlap now exists in the strategies and incentives employed. Thus, the term managed care now describes a continuum of plans, which can vary significantly in their approaches to providing combined insurance and health care services. The common feature in managed care plans is that the insurer has a mechanism by which it controls, or at least influences, patients’ utilization of health care services.
The Affordable Care Act (ACA) introduced a number of provisions to expand insurance coverage and improve insurance affordability and access.
(a) Among the ACA’s provisions that increased insurance access were the following:
• Children and dependents were permitted to remain on their parents’ insurance plans until their twenty-sixth birthday.
• Insurance companies were prohibited from dropping policyholders if they became sick and from denying coverage to individuals due to preexisting conditions.
• Individuals were given the right to appeal and request that the insurer review denials of payment.
(b) Among the ACA’s provisions that improved insurance affordability were the following:
• Insurers are required to charge the same premium rate to all applicants of the same age and geographic location, regardless of preexisting conditions or sex (this is called community rating).
• Insurers must spend at least 80% (85% for large groups) of premium dollars on health costs and claims instead of on administrative costs and profits. This is called the medical loss ratio (MLR). If the insurer violates the MLR, it must issue rebates to policyholders.
• Lifetime limits on most benefits are prohibited for all new health insurance plans.
(c) Among the ACA’s provisions that relate to standards of care are:
• All plans must now include essential benefits, such as ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, laboratory services, preventive and wellness services, chronic disease management, and pediatric services, including oral and vision care.
• Preventive services, such as childhood immunizations, adult vaccinations and basic medical screenings, must be available to patients free of charge.
• Individuals are permitted to choose a primary doctor outside the plan’s network.
• Individuals can seek emergency care at a hospital outside the health plan’s network.
Note: Individuals who seek primary or hospital care out-of-network will likely pay more.
The individual mandate of the ACA went into effect in January 2014. This mandate required that all eligible individuals not covered by an employer-sponsored health plan, Medicaid, or Medicare have a health insurance policy or face a tax penalty. In 2017, passage of the Tax Cuts and Jobs Act repealed the individual mandate
(a) The objective of Medicaid expansion was to enlarge the number of people with health insurance coverage. The expansion of Medicaid would apply to citizens and legal residents between the ages of 19 and 64 who had household incomes below 138 percent of the federal poverty level. Medicaid expansion primarily benefits childless adults who previously did not qualify for Medicaid regardless of their income level as well as low-income parents who previously did not qualify even if their children did qualify.
(b) Medicaid expansion was mandatory for all states; states that did not comply were to be penalized by the federal government. However, in 2012, the U.S. Supreme Court ruled the states could opt out of the Medicaid expansion. The court further ruled that the federal government could not penalize states through denial of federal funding. As of 2019, 37 states and the District of Columbia had expanded Medicaid eligibility.
(a) Health insurance exchanges (HIEs) are online marketplaces where people can research and review their options and purchase health insurance. To ensure price transparency, all participating insurance companies are required to post on HIEs the rates for their health insurance plans. Individuals can compare all plans and rates side by side and select plans that are affordable and meet their needs.
(b) There are different types of HIEs. Public exchanges are created by state or federal governments and are open to both individuals seeking personal insurance and small-group employers seeking insurance for their workers. All plans listed on an HIE are required to offer core benefits. Private exchanges are created by private-sector firms, such as health insurance companies.
(c) The ACA aimed to make insurance more affordable by offering subsidies to individuals below 400 percent of the federal poverty level that purchase insurance on HIEs. There are two types of subsidies: (1) premium tax credits that offset the amount of monthly premiums that an individual pays, and (2) cost-sharing subsidies that minimize the amount of out-of-pocket costs an individual pays.
Discuss the challenges that accompanied the creation of HIEs.
There are some challenges associated with HIEs. First, the federal exchange, along with many state exchanges, had a difficult launch from technological challenges. Consequently, lower enrollment resulted. Second, while coverage on the HIEs is largely affordable for individuals who receive subsidies, it is unaffordable for many individuals with incomes above 400 percent of the federal poverty level who do not receive subsidies.
High-deductible health plans (HDHPs) have low premiums and high deductibles. They are typically linked with health savings accounts or health reimbursement arrangements, under which enrollees can use these tax-advantaged accounts to pay for medical expenses. HDHPs aim to provide individuals with control over their health care expenditures. Individuals enrolled in an HDHP are required to meet minimum deductibles before the plan starts to cover health care expenses.
Categorize the broad approaches to health care reimbursement methodologies.
A limited number of payment methodologies are used to reimburse providers. Payment methodologies fall into two broad classifications: fee-for-service and capitation. Under fee-for-service, of which many variations exist, the greater the amount of services provided, the higher the amount of reimbursement. Under capitation, a fixed payment is made to providers for each covered life, or enrollee, independent of the amount of services provided.
There are three primary fee-for-service methods of reimbursement. They are costbased, charge-based and prospective payments.
(a) Under cost-based reimbursement, the payer agrees to reimburse the provider for the costs incurred in providing services to the insured population. Reimbursement is limited to allowable costs, usually defined as those costs directly related to the provision of health care services. Typically the payer makes periodic interim payments to the provider, and a final reconciliation is made after the contract period expires and all costs have been processed through the provider’s managerial (cost) accounting system.
(b) When payers pay billed charges, or simply charges, they pay according to a rate schedule, called a chargemaster, established by the provider. To a certain extent, this reimbursement system places payers at the mercy of providers in regard to the cost of health care services, especially in markets where competition is limited. Few insurers still reimburse providers according to billed charges; the trend for payers is toward other, less generous reimbursement methods (e.g., discounted charges).
(c) Under a prospective payment system, the rates paid by payers are established by the payer before the services are provided. Payments are not directly related to either costs or chargemaster rates.
Many conventional insurers have bargaining power because of the large number of patients they bring to a provider, so they can negotiate discounts from billed charges. Such discounts generally range from 20 to 50 percent, or even more, of billed charges. The effect of these discounts is to create a system where there are listed rates (e.g., chargemaster prices for providers) that few payers actually pay.
In this setting, the provider is paid a rate that depends on the patient’s diagnosis. Diagnoses that require higher resource utilization, and hence are more costly to treat, have higher reimbursement rates. Medicare pioneered this basis of payment in its diagnosis-related group (DRG) system, first used for hospital inpatient reimbursement in 1983.
With a per diem payment, the provider is paid a fixed amount for each day that service is provided, regardless of the nature of the service. Per diem rates, which are applicable only to inpatient settings, can be stratified. For example, there may be one rate for a medical/surgical day, a higher rate for a critical care unit day and yet a different rate for an obstetrics day. Stratified per diems recognize that providers incur different daily costs for different types of care. Per diem rates may also vary by the day of a patient’s stay, recognizing that early days of care may be more expensive than later in the patient’s stay.
In this system, payers make a single prospective payment that covers all services delivered in a single episode, whether the services are rendered by a single provider or by multiple providers. Bundled payments incent hospitals and providers to provide the most efficient and effective care at the lowest cost. At the extreme, a bundled payment may cover an entire population. In this situation, the payment becomes a global payment, which, in effect, is a capitation payment.
Explain the capitation reimbursement methodology and where it is most prevalently utilized.
Capitation, although it is a form of prospective payment, is an entirely different approach to reimbursement and deserves to be treated separately. Under capitated reimbursement, the provider is paid a fixed amount per covered life per period (usually a month) regardless of the amount of services provided. Capitation payment, which is used primarily by managed care plans, dramatically changes the financial environment of health care providers.
Do alternative reimbursement methodologies incentivize health care provider behavior?
Alternative reimbursement methodologies incentivize provider behavior. Under cost-based reimbursement, providers are given a “blank check” to acquire facilities and equipment as well as to incur operating costs. If payers reimburse providers for all costs, the incentive is to incur costs. Services that may not be medically required will be provided because more services lead to higher costs and hence lead to higher revenues.
What are the incentives to providers under the charge-based reimbursement methodology?
Under charge-based reimbursement, providers have incentives to set high charge rates, which lead to high revenues. In competitive markets, there will be a constraint on how high providers can go. Because charge-based payment is a fee-for-service type of reimbursement in which more services result in higher revenue, a strong incentive exists to provide the highest amount of services. Providers can increase utilization, and hence revenues, by churning—that is, by creating more visits, ordering more tests, extending inpatient stays and so on. Charge-based reimbursement creates incentives for providers to contain costs because (1) the spread between charges and costs represents profits, and the more the better, and (2) lower costs can lead to lower charges, which can increase volume. However, the incentive to contain costs is weak because charges can be increased more easily than costs can be reduced.
How does the discounted charge reimbursement approach influence provider behavior?
Discuss how prospective payment reimbursement affects provider behavior.
Under prospective payment reimbursement, provider incentives are altered. First, under per procedure reimbursement, the profitability of individual procedures varies depending on the relationship between the actual costs incurred and the payment for that procedure. Providers, usually physicians, have an incentive to perform procedures that have the highest profit potential. Furthermore, the more procedures, the better, because each procedure typically generates additional profit.
The incentives under per diagnosis reimbursement are similar to that under a procedure prospective payment system. Providers, usually hospitals, will seek patients with diagnoses that have the greatest profit potential and discourage (or even discontinue) those services that have the least potential. To the extent that providers have some flexibility in selecting procedures (or assigning diagnoses) to patients, an incentive exists to upcode procedures (or diagnoses) to ones that provide the greatest reimbursement.
In all prospective payment models, providers have an incentive to reduce costs because the amount of reimbursement is fixed and independent of the costs actually incurred. Note that when per diem reimbursement is used, hospitals have an incentive to increase length of stay. Because the early days of a hospitalization typically are more costly than the later days, the later days are more profitable. However, hospitals have an incentive to reduce costs during each day of a patient stay.
Describe how bundled pricing serves to contain health care costs.
Under bundled pricing, providers do not have the opportunity to be reimbursed for a series of separate services, which is called unbundling. The rationale for unbundling is usually to provide more detailed records of treatments rendered, but often the result is higher total charges for the parts than would be charged for the entire package of services. Bundled pricing, when applied to multiple providers for a single episode of care, forces involved providers to jointly offer the most cost-effective treatment. Such a joint view of cost containment may be more effective than each provider separately attempting to minimize its treatment costs because lowering costs in one phase of treatment could increase costs in another.
Capitation reimbursement changes the playing field by completely reversing the actions that providers must take to ensure financial success. Under all fee-for-service methods, the key to provider success is to work harder, increase utilization and hence increase profits; under capitation, the key to profitability is to work smarter and decrease utilization. As with prospective payment, capitated providers have an incentive to reduce costs, but now they also have an incentive to reduce utilization. Only those procedures that are truly medically necessary should be performed. Treatment should take place in the lowest-cost setting that can provide the appropriate quality of care. Providers have an incentive to promote health, rather than just treat illness and injury, because a healthier population consumes fewer health care services.
Medical coding is the process of transforming medical diagnoses and procedures into universally recognized numerical codes. The diagnoses and procedures are usually taken from a variety of sources within the medical record, such as doctor’s notes, laboratory results, and radiological tests. In practice, the basis for most feefor- service reimbursement is the patient’s diagnosis (in the case of inpatient settings) or the procedures performed on the patient (in the case of outpatient settings).
What are International Classification of Diseases (ICD) codes?
The International Classification of Diseases (ICD) is the standard for designating diseases plus a wide variety of signs, symptoms and external causes of injury. ICD codes are used internationally to record many types of health events, including hospital inpatient stays and causes of death. The U.S. has used ICD-10-CM since October 15, 2015. The ICD-10 codes are three to seven characters long. The first three characters refer to the category; the next three characters refer to etiology, anatomic site, severity, or other clinical detail; and the seventh character refers to extension. The application of ICD codes to diagnoses is complicated and technical. Hospital coders have to understand the coding system and the medical terminology and abbreviations used by clinicians.
What are Current Procedural Terminology (CPT) codes and how do they supplement the ICD codes?
While ICD codes are used to specify diseases and conditions, Current Procedural Terminology (CPT) codes are used to specify medical procedures (treatments). CPT codes were developed and are copyrighted by the American Medical Association. The purpose of CPT is to create a uniform language that accurately describes medical, surgical and diagnostic procedures. CPT and its corresponding codes are revised periodically to reflect current trends in clinical treatments. Federal law requires that physicians and other clinical providers, including laboratory and diagnostic services, use CPT for the coding and transfer of health care information. The same law also requires that ICD codes be used for hospital inpatient services.
In addition to improving health care delivery through focusing on access and quality, the ACA has significantly changed the way providers are reimbursed. The key reforms include an increased focus on quality and efficiency and a move from a fee-for- service model to a prospective payment model, which may include bundled payments or capitation. These payment methods aim to shift from reimbursement based on the amount of services provided (volume) to reimbursement based on value and better outcomes.
Summarize the aims of the ACA reimbursement reforms.
The ACA reimbursement reforms were specifically designed to accomplish the following:
(a) Encourage providers to deliver care in a high-quality, cost-efficient manner.
(b) Support coordination of care among multiple providers.
(c) Adopt evidence-based care standards and protocols that result in the best outcomes for patients.
(d) Provide accountability and transparency.
(e) Discourage overtreatment and medically unnecessary procedures.
(f) Eliminate or reduce the occurrence of adverse events.
(g) Discourage cost shifting.
What is meant by shared savings programs and how do these programs generally operate?
Shared savings is an approach to reducing health care costs and a mechanism for encouraging the creation of accountable care organizations (ACOs). Under shared savings, if a provider reduces total health care spending for its patients below the level that the payer expected, the provider is then rewarded with a portion of the savings. The benefits are twofold: (1) The payer spends less than they would otherwise, and (2) the provider gets more revenue than expected. The savings can arise from the more efficient, cost-effective use of hospital or outpatient services that enhance quality, reduce costs over time and improve outcomes. It can be applied to hospital episodes of care, including physician services, or to physician office care.
Discuss how bundled payment models support some of the aims of the ACA.
The objective of bundled payments is to promote more efficient use of resources and reward providers for improving the coordination, quality and efficiency of care. If the cost of services is less than the bundled payment, the physicians and other providers retain the difference. But if the costs exceed the bundled payment, physicians and other providers are not compensated for the difference.
In some circumstances, an ACO may receive the bundled payment and subsequently divide the payment among participating physicians and providers. In other situations, the payer may pay participating physicians and providers independently, but it may adjust each payment according to negotiated predefined rules to ensure that the total payments to all the providers do not exceed the total bundled payment amount. This type of reimbursement is called virtual bundling. For providers, the challenges of bundled payments include determining who owns the episode of care and apportioning the payment among providers.
Broad view of Employee Benefits (Mod 1.1)
Narrow view of Employee Benefits (Mod 1.1)
Impact of Labor Unions on Employee Benefits (Mod 1.2)
What is the Taft-Hartley Act? (Mod 1.2)
3 Examples of Tax Advantages of Employee Benefit Plans (Mod 1.2)
Examples of Questions that should be addressed when creating benefit objectives (Mod 1.3)
What is the Functional Approach to Employee Benefit Planning? (Mod 1.4)
1: EE Benefits Significant Element of EE Comp and are a Tax-Effective Way to Compensate
2: EE Benefit Represent Large Labor Cost, so ER’s should effectively plan/cost-control
3: In the past, EE Benefits were adopted on piece-meal basis; helps to now fill gaps/overlap
4: Systematic Approach to planning helps to keep the EBP current, competitive and in compliance with updated requirements (ACA)
5: Benefits to be integrated properly together
Compare Compensation/Service Oriented Benefit Philosophy with the Needs-Oriented (Mod 1.4)
Identify Steps in Applying Functional Approach (Mod 1.4)
1: Classify EE/Dep Needs & Objectives (in logical/functional categories)
2: Classify Categories of EE’s to be protected
3: Analyze present benefits in terms of functional categories of needs/objectives, persons to benefit, and regulatory requirements
4: Determine any gaps or overlap in benefits from all sources in terms of functional categories of needs & the persons to be protected
5: Consider recommendations for changes
6: Estimate costs/savings from each recommendation
7: Evaluate alternative methods of financing for those recommended benefits (and existing ben)
8: Consider other cost-saving techniques
9: Decide upon appropriate benefits and methods of financing as a result of analysis
10: Implement Changes
11: Communication Changes to Employees
12: Periodically re-evaluate EBP
Define Needs/Exposures covered under EBP (Mod 1.4)
1: Medical Expenses (EE/Dep)
2: Losses due to Disability (Short/Long Term)
3: Death (EE/Dep/Retirees)
4: Retirement Needs
5: Capital Accumulation Needs/Goals
6: Needs for Unemployment/Layoff/Termination
7: Needs for Financial/Retirement Counseling
8: Losses from property/liability exposures
9: Needs for Dependent Care Assistance
10: Needs for Educational Assistance (EE/Dep)
11: Needs for Custodial-Care Expenses (LTC)
12: Other Needs/Goals (Stock Purchase Plan)
Explain Concept of Replacement Ratio in terms of creating Retirement/Disability Plans (Mod 1.5)
Define Protection-Oriented Benefits (Mod 1.5)
Define Accumulation-Orientated Benefits (Mod 1.5)
Impact of making a plan Contributory on Employee Participation (Mod 1.5)
Argument 1: More flexibility EE has, more likely he or she will select a benefit that best meets needs/goals – thus, flexibility in plan design/options facilitates functional approach.
Argument 2: Works against functional approach because some EE’s may not recognize all their needs and leave some uncovered.
Define concept of risk (Mod 2.1)
Define relationship between peril and hazard (Mod 2.1)
Define physical hazard, moral hazard, morale hazard (Mod 2.1)
Physical: Physical Condition (Defective Wiring, No Fire Extinguisher), increases chance of loss
Moral: Dishonesty increases chance of loss (Arson)…b/c of Moral, premiums are higher to all. Attempt to control by careful UW and provisions such as deductibles, waiting periods, exclusions
Morale: Carelessness or Indifference by insureds since they have insurance (protected from loss).
How does pure risk differ from speculative risk (Mod 2.2)
Pure Risk: Situations where two alternatives are possible – risk will happen (no loss) or it will happen and a financial loss takes place. Many EB Coverages fall into this classification. Nothing positive can result from Pure Risk, but many are insured (Fire, Auto, Illness, Disability)
Speculative Risk: Involve a possibility (that is not present in pure risk) of a gain. Three potential outcomes: Loss, No Loss, Gain (Ex: Purchase Stock, Gambling)
Most Important Type of Pure Risk (Mod 2.2)
Personal Risk (Death, Illness, DI, Unemployment)
Summarize Methods for Handling Risk (Mod 2.2)
1: Avoidance – does not take on risk/gets rid of
2: Control – attempts to prevent or reduce the probability/severity of a loss taking place
3: Retention – risk is assumed and paid for by the person suffering the loss
4: Transfer – one shifts the financial burden of risk to another party
5: Insurance – form of transfer which the financial burden is transferred to insurance company
How is insurance a mechanism for EBP’s? (Mod 2.3)
Compare insurance mechanism to gambling (Mod 2.3)
Insurance is a mechanism to handling existing risk – gambling creates risk where one did not previously exist. Risk caused by gambling is 100% speculative, while insurance deals with pure risk. Gambling involves a gain for one party while insurance is a mutual sharing of any losses. The loser in the gambling transaction remains in a negative situation while the insured is financially restored in whole or part to prior condition.
Define Indemnification (Mod 2.3)
Which risk handling technique is mutually exclusive (Mod 2.3)
Avoidance – when you avoid a risk, you have no losses so there is no need for other techniques
State advantages/disadvantages of using insurance to fund an EBP (Mod 2.3)
Describe characteristics of ideal insurable risk (Mod 2.3)
1: Must be large number of similar risks (law of large numbers)
2: Loss should be verifiable and measurable
3: Loss should not be catastrophic in nature
4: Chance of loss subject to calculation (avg frequency/severity) – adequate premium
5: Premium should be economically feasible – insured should afford premium/less than face value or amount of policy coverage
6: Loss should be accidental and unintentional from the insured’s standpoint/control (moral)
Describe Indemnity Plans (Mod 3.1)
Describe Managed Care (Mod 3.1)
Define common types of Employer Sponsored Health Plans (Mod 3.1)
How does an HMO operate? (Mod 3.1)
Requires individual to select primary care physician (PCP) from a network of providers. PCP is responsible for managing individual’s care and if care is required beyond scope of PCP, they will provide a referral to specialty care. No benefits (except emergency) are available outside the Network. Out of pocket expenses (PCP/Specialty) are routinely a flat dollar amount (copay) – no need to file for reimbursement.
How does a PPO operate? (Mod 3.1)
52% of Covered Workers Enrolled;
Designed in response to HMO criticism, allows limited benefits for care received out of the preferred network and requires no referral to see a specialist. If specialist is in-network, coverage may be similarly structured with copays under HMO. Outside network, cost is significantly higher.
How are POS plans part of a hybrid between HMO/PPO plans? (Mod 3.1)
Offers in-network (preferred) and out of network (nonpreferred) benefits. Individual may need to select PCP to obtain referrals for in-network specialty care. Out of pocket expenses for in-network providers are copays (similar to HMO cost…slightly higher) – no need to file for reimbursement. For out of network, out of pocket expenses are not a flat dollar amount but a percentage (ex: 40% common) of fees.
Contrast PPO’s vs POS’ (Mod 3.1)
Provides catastrophic insurance. Trades lower premium cost to higher deductible by paying benefits only after insured has incurred significant out of pocket expenses. Developed so individuals have greater financial stake in healthcare decisions – manage expenses, offers possibility of accumulating health care savings in tax-advantaged account (both ER/EE contrib’s)
What are the 3 types of savings options coupled with HDHP’s? (Mod 3.2)
1: FSA’s (Flexible Spending Accounts) – before plan year, elect a certain amount to be deducted on a pre-tax basis from check (not to exceed IRS limit of $2,650). Available throughout the year for qualified expenses – cannot be refunded for unused amount at end of plan year.
2: HRA’s (Health Reimbursement Arrangements) – Employer Funded accounts established to pay health care expenses – not required by law to roll over unused contributions over plan year.
3: HSA’s (Health Savings Accounts) – coupled with HDHP’s. Owned by the EE and funded with tax-free contributions made by EE, ER or both. Unused contributions can be rolled over year to year. Penalties for money used for nonmedical expenses before Age 65.
Contrast between an In-Network (Preferred) vs an Out-of-Network (Non-Preferred) Provider (Mod 3.3)
Describe special consideration given to preventative care (Mod 3.3)
Describe the history of prescription drug coverage (Mod 3.4)
In the early days, PDC was a small portion of overall health and such expenses were not covered. When coverage eventually became available, it was originally subject to same deductibles/coinsurance as office visits, lab work and other outpatient services. Today, it is traditionally carved out and administered by Pharmacy Benefit Managers (PBM’s), these are TPA’s contracted to process claims and reimburse pharmacies for dispensing drugs, as well as cost containment/disease management.
Impact of parity legislation of MH/SA (Mod 3.4)
Describe (MBHO’s) managed behavioral health care organizations (Mod 3.4)
In the 1980’s, behavioral health was carved out by many insurance plans and contracted out to MBHOs. These are independent organizations – key objective of separation was to control costs through oversight of expenses (case management and early intervention). Future is uncertain given ACA’s support of integrated/coordinated care rather than carveout.
List the insurance reforms enacted by (ACA) the Affordable Care Act (Mod 3.5)
1: Expansion of eligibility of medical benefits under the federal gov’t for low income individuals
2: Prohibition of denial of insurance benefits for physical or mental illness present before coverage began (pre-existing conditions)
3: Restrictions on variations in premium rates by insurers and tax credits/subsidies for low-income individuals purchasing individual coverage
4: Establishment of marketplace exchanges to standardize health care plans
5: Group health insurance mandates having direct/indirect impact on employer-sponsored.
Summarize impact of group health plans due to ACA (Mod 3.5)
1: Play or pay rules requiring medium/large ER’s to offer health insurance to ACA-defined FT EE’s or pay a penalty (must be affordable**)
2: Establishment of a list of essential health benefits
3: Elimination of lifetime maximums and the capping of out of pocket maximums.
4: Expansion of coverage for preventative services
5: Temporary tax subsidies to small employers who offer group health
6: New administrative/reporting requirements
How do payment methods affect delivery of healthcare? (Mod 3.6)
Discuss the eight basic payment structures for all healthcare providers (Mod 3.6)
1: Per Time Period (Budget/Salary) – Salaried Physicians and Government Hospitals
2: Per Beneficiary (Capitation) – Managed Care Org payment non-EE physician
3: Per Recipient (Contract Capitation) – physician specialist services
4: Per Episode (Case Rates, Payment Per Stay, Bundled Payments) – Medicare’s diagnosis related groups (DRGs) & resource based relative value scale (RBRVS)
5: Per Day (Per Diem, Per Visit) – payments for nursing facilities
6: Per Service (Fee for Service) – payments for physician services, dentists, medical equipment. Separate payments are often made for multiple services per day.
7: Per Dollar of Cost (Cost Reimbursement) – payments for critical access hospitals, gov’t owned providers and nursing facilities. Payers typically pay a percentage of cost.
8: Per Dollar of Charges (Percentage of Charges) – method can be used by any provider type. Based on billed charges.
-All correspond to division of financial risk b/w payer and provider. Financial risk gradually shifts from primarily being on providers when payment is per time period to primarily on payers when payment is per dollar of charges.
In the early 1980s, Medicare payment method was changed from paying according to hospital costs to pay for diagnosis related groups (DRG’s). Payment to DRG’s led to decreased hospital costs, shorter lengths of stay, reduced growth in medicare payment and even increases in hospital margins (also accelerated growth in outpatient/post-acute care). In the early 1990s, Medicare moved physician payment from per dollar of charges to per service – this change insulated Medicare from charge inflation but did not protect it from growth in service volume (over 8 years, grew more than twice as fast as spending for other services and was driven entirely by growth in volume).
Name three features associated with a (CDHP) Consumer Driven Health Plan (Mod 4.1)
-High Deductible
-Personal Spending Account
-Availability of information tools for enrollees
Goal is to encourage enrollees to be wise consumers of health care services by exposing to financial consequences of their choices. They emerged as backlash against managed care plans – intended to control costs and promote greater value in health care spending by shifting responsibility from insurers to consumers. Also they are a way to accommodate diverse consumer preferences.
Describe concerns made by critics of CDHPs (Mod 4.1)
What aspects of cost sharing are relevant to CDHPs (Mod 4.1)
1: Annual Deductible is the amount paid out of pocket before services are covered by plan
2: After deductible is met, services are subject to plan’s cost-sharing requirements (typ 20%)
3: Most plans have an Out of Pocket Maximum – max amount an enrollee must pay for covered services during a plan year before plan kicks in 100%.
Distinguish b/w HRAs and HSAs with regard to the account funder (Mod 4.1)
HRAs may be funded only by the employer; HSAs may be funded by the ER, EE or both
Distinguish between HRAs and HSAs with regard to the annual contribution limit (Mod 4.1)
HRAs have no federal limit on contributions
HSAs have a maximum allowable annual contribution limit
Distinguish between HRAs and HSAs with regard to the rollover provisions (Mod 4.1)
Distinguish between HRAs and HSAs with regard to the nonmedical use (Mod 4.1)
HRAs – nonmedical use not allowed
HSAs – nonmedical use allowed, but penalized before age 65
Evaluate the impact of ACA on CDHPs (Mod 4.1)
ACA created uncertainty on CDHPs because of concern they would not meet minimum actuarial requirements of the act (package of min essential benefits w/act value of 60%) – 1/2 enrolled didn’t meet min benefits.
ACA also made regulatory changes – penalty HSA risen from 10 to 20% & over the counter meds cannot be used for reimbursement on flexible spending accounts.
CDHPs still remain strong in post-ACA.
Enrollment trends in HDHPs with HSAs vs HDHPs with HRAs (Mod 4.2)
Effect of firm size on CDHP / Enrollment trends on group/individual market (Mod 4.2)
How do CDHP premiums compare to those of other plans? (Mod 4.2)
Compare premiums, contributions and deductibles of HDHP/HRAs vs HDHP/HSAs (Mod 4.2)
Describe concern of CDHP risk segmentation and summarize two ways in which it may occur (Mod 4.3)
Concern is development of CDHP’s will generate greater risk selection since this product is more attractive to low-risk (healthier) enrollees – early experience did reflect this.
Two ways it may occur: (Asymmetric info b/w insurer & enrollees) – insurers have incentives to design policies that will cause consumers to self-select into coverage based on their risk. (Low and High Risk Participants have different preferences for coverage).
Is risk selection among employer groups an issue for large or small employers? (Mod 4.3)
Describe how CDHPs impact spending and describe the resulting reductions (Mod 4.4)
CDHPs reduce healthcare spending substantially beyond the first year – primarily in low and medium risks (healthier enrollees). This is primarily driven by reductions in pharmaceutical and outpatient expenditures. In drug utilization, concentrated on drugs with asymptomatic (carrier, no symptoms) conditions – hypertension, high cholesterol – only modest reductions w/chronic conditions. Outpatient utilization declined in med to high risks.
Identify the affects CDHPs have on preventative and healthcare services (Mod 4.4)
CDHPs generate few/no reductions when use of preventative services are not subject to the deductible (Ex: Colonoscopy subj to ded, alternative option used).
Reduce use of less clinically appropriate care – RAND’s Health Insurance Experiment (HIE) conducted btw ’71-’82 (analyzed effects of cost sharing on service us/quality of care/health), one study shows CDHP enrollment led to reductions in physician visits for acute and chronic conditions and high/low priority.
To what extent have tools been provided to CDHP enrollees? (Mod 4.5)
CDHPs intended to control costs by shifting responsibility of health decisions to consumer. Most disappointing area of movement, tools have been lacking. Few allow enrollees to compare cost and quality across hospitals – even less with physicians. Costs are based on averages and estimates are procedure based rather than episode based.
Enrollees with chronic illness more likely to use tools.
How well do CDHP enrollees understand their plan features as well as control costs? (Mod 4.5)
Describe differences between medicine and dentistry (Mod 5.1)
1: Physicians practice in groups while dentists are solo.
2: Dental care is preventative and routine (2+ times a year); many people don’t visit doctor for years (only when symptoms present).
3: Dental treatment is elective and is sometimes is postponed.
4: Dental treatment never life threatening, charges can be discussed in advance.
5: Dental care often cosmetic.
6: Dentistry often offers variety of alternative treatments that are equally effective but vary in cost.
7: Dental expenses generally lower, budgetable
8: Greater emphasis on prevention in dentistry than in general medicine.
Under ACA, dentist coverage is not essential benefit for adults.
Discuss how dental plans resemble medical plans (Mod 5.1)
Identify the ten professional treatment categories (Mod 5.1)
Identify groupings of the ten dental procedures (Mod 5.1)
How does scheduled dental plan operate? (Mod 5.2)
Pays fixed allowance for each procedure ($50 for cleaning); may include deductibles (small, maybe lifetime)
-Advantages: Cost Control, Uniform Pay, Ease in understanding, employee relations
-Disadvantages: Levels must examined routinely, plan reimbursement will vary in different locations according to cost in area, dentists may increase cost if scheduled benefits are set near maximum of reasonable.
How does non-scheduled dental plan operate? (Mod 5.2)
Most common, cover percentage of usual (reasonable) charges in the community. Set between 75%-90%, trend towards lower number. Typically include deductible during a plan year, reimburse at different levels – preventative/diagnostic at 100%, then scaled down based on plan for others.
-Advantage: Uniform percentage of total cost; built-in adjustment for inflation
-Disadvantage: Cost control, opportunities for modest benefit improvements limited, rarely clear in advance what payment of service is.
Define a combination dental plan (Mod 5.2)
Certain procedures on a scheduled basis while some are on a non-scheduled basis.
Define an incentive dental plan (Mod 5.2)
Describe orthodontics plan benefits (Mod 5.3)
Identify 3 factors that affect cost of dental plan and issues to be addressed in design (Mod 5.4)
What are advantages/disadvantages to lifetime deductibles in dental care (Mod 5.4)
Advantages: Avoiding the cost to the plan of accumulated dental neglect; must invest in own dental health as a condition of adequate coverage
Disadvantages: Promotes early overutilization; once satisfied, no further value; introduces employee turnover as cost consideration; may result in adverse reaction if costs/premiums rise
Summarize plan design dental care costs (Mod 5.4)
Describe pre-determination of dental benefits (Mod 5.5)
How does dental technology affect plan design? (Mod 5.5)
Constantly evolving; Once new techniques officially recognized by the American Dental Association (ADA), generally are covered as any other service under the plan. New procedures are not so fast – must be accepted by ADA and have a proven track record of success – then are approved or tabled for further study. If approved, separate decision applies if procedure will be covered routinely.
Vision care plans include what benefits (Mod 5.6)
Surgical procedures affecting the ear are standardly covered under medical policies and are generally included in HMO coverage. Some even include hearing aids.
Common package includes 80% reimbursement for services up to a max benefit every 36 months.
-Otologic Exams (doctor), audiometric exams (audiologist), hearing instruments
-PPO results in discounted cost.
PDP used to be within major medical or sold as a rider to medical policy. Members submitted receipts to a claims administrator/insurance co and were reimbursed for prescription drugs in the same manner as for medical expenses, often subject to annual deductible and 20% coninsurance – EE paid full cost at pharmacy and then filed a claim.
Today, carved out and administered by PBMs or TPAs. Offers discounts off pharmacy charges, claims admin and utilization reports. Also reduces costs through mail service and rebates for volume purchases.
Define AWP, WAC and MAC (Mod 6.1)
AWP = Average Wholesale Price – assigned by drug manufacturer, reference price for all discounts paid to pharmacies and PBMs.
WAC = Wholesale acquisition cost (average manufacturers price) – price at which wholesalers buy pharmaceuticals from manufacturers.
MAC = Maximum Allowable Cost – of generic places a ceiling on reimbursement for generic medicine. Concept of Medicaid/Medicare by Centers for Medicaid/Medicare Services (CMS). PBMs and TPAs developed their own MAC to cover all generics – due to variety, may be average cost of all manufacturers AWPs, lowest AWP, or some derived formula.
What design options available for pharmacy plans? (Mod 6.1)
What are some examples of medications excluded by prescription drug plan? (Mod 6.2)
What are the factors contributing to rising cost of PDP? (Mod 6.2)
10-25% of ER’s overall health costs
-Increased Volume, mix and availability of products, cost increases by pharm industry. Direct to consumer advertising has increased the demand.
-Demographics are aging
-Targeting “Young old” for prevention
-Substitute for other forms of healthcare
Note: Biotechnology drug spending expected to account for 50% of future growth in drug prices (inflammatory, mult. sclerosis, cancer) – drugs made from living cells that treat disease
Describe features of three-tier drug plan (Mod 6.2)
Lowest = Generics
Middle = Preferred
Highest = Non-Preferred/Non-Formulary
Explain the prior authorization program and quantity limits provisions in a drug plan (Mod 6.3)
Prior authorization (PA) = restricts coverage under the plan for certain drugs based on patient’s condition. Phys calls PBM to answer questions about condition to determine if covered.
Quantity Limits (QLs) = Predefined max quantities for specific medications – restrict number of drugs that can be dispensed in a 30, 60, 90 day window – for abuse/overuse. Goal is to obtain higher dose, less frequently
Reasons why standalone prescription drug plan is popular (Mod 6.3)
1 = Under traditional medical plan, no discounts for prescription drugs – could pay as much as 10% above AWP – more expensive
2 = Detailed receipts not required for prescriptions – could not review condition effectively as done with PBMs
3 = Limited data for trend analysis prior
4 = No rebates or cost-savings programs
What factors influence cost for prescription drug benefits? (Mod 6.3)
1 = Demographics (Disease mix based on age/gender),
2 = Benefits, Copays, Formulary Design influence what is covered
3 = Drug cost/mix of branded coverage
4 = Utilization
5 = Costs charged by PBM
6 = Fraud
7 = Ability to manage costs
Drug Mix = factor of preferred drug list; rebates may mitigate some cost if 100% of rebates returned to plan
Preferred drugs initially may cost more, but should net out less than nonpreferred due to rebates and incentives
Formulary = List of generic/brand drugs for optimum value
What are advantages of mail service program (MSP) that allows a more generous supply (Mod 6.3)
Common techniques to control pharmacy costs (Mod 6.3)
1 = Review design of benefits to see if they fit overall medical program (flat copays/no incr)
2 = Analyze experience to identify areas that need better management
3 = Reduce pharmacy network to smallest size w/o compromising access
4 = Offer mail service
5 = Promote generics
6 = Use/develop cost effective formulary
7 = Practice utilization management
8 = Physician profiling
9 = Educate and communicate to members the plan
10 = Anticipate financial impact of new drugs
What are 3 types of (DUR) drug utilization review programs? (Mod 6.3)
Concurrent = Occurs at Point of Service (Pharmacy); flags overuse based on clinical monitoring criteria programmed into PBM – too soon refills, duplicate claims
Retrospective = Pharmacy Case Management – pharmacists review patient profile to determine compliance – can suggest alternative cost-effective therapies – therapeutic switching
Prospective = Educating Physicians and patients on drugs/therapy
What is a Formulary? (Mod 6.3)
List of preferred drugs by a health plan or PBM. Developed by Pharmacy and Therapeutics Committee (P&T) to treat conditions indigenous with insured population; designed to be cost effective – centers around brand. Effective to move patients to lower cost drugs and maximum rebate potentials.
Drawback = constant communication b/w physicians and patients
Define Open, Closed and Preferred Formularies (Mod 6.3)
Open = Allow plan enrollees any covered prescription drug; most phys familiar with drugs they use most often, gives best chance to make better informed choices. List of preferred drugs distributed for informational use only.
Preferred = Popular; incentivizes use of preferred or formulary drugs in return for reduced copay.
Closed = plan does not cover non-formulary drugs (met with resistance from EE’s); typically found in hospital settings and tightly managed HMOs – ERs do not use this type.
Describe two main types of DSM programs (disease state management) and their criticisms (Mod 6.4)
Medical Model = Call Centers staffed by nurses to triage patients to appropriate levels of care
Therapy Directed Model = Administered by PBMs, pharm manuf, health plans and disease management co’s – improve compliance with medication therapy, education and testing
-Critics say neither model has method to judge success and ROI – argue thinly veiled advertisements from drug manufacturers.
Also say targeted diseases are easy to improve
What is (EBM) evidence based medicine? (Mod 6.4)
How does a network system in a PDP operate? (Mod 6.4)
Pharmacy Benefit Management
-Entity that administers managed pharm programs
-Streamlines/improves process of prescribing/dispensing through online/real time claims adjudication
-Maintain network of pharm/mail order options to reduce cost/offer discounts/track experience
-Offering limited DUR online at point of sale
-Providing data and reporting
-Controlling cost of prescriptions (formulary)
Methodology for PBM Prices (Mod 6.4)
How does a PBM generate profits? (Mod 6.4)
Typical stream through claim admin fees, mail service and rebates:
-Admin fee based on # of EE’s or claims
-Rebate admin fees w/manufacturers
-Filling mail order from owned pharmacies
-Disease management, education
-Securing discounts through pharm network
-Retaining pharmacy spread
-Retaining spread in MAC payments for generics greater than paid to pharm
-Reducing payments to pharm based on size
How does a drug rebate work? (Mod 6.4)
Describe the conditions to review before selecting PBM (Mod 6.4)
Define most severe mental illnesses (Mod 7.1)
Schizophrenia, Bipolar, Major Depressive Disorder – biologically based
List the categories of mental disorders (Mod 7.1)
After WWII, why did insurers place limits on outpatient medical care? (Mod 7.1)
Treatment continued for indefinite periods of time, much subjectivity regarding treatment.
What were typical MH benefits of Health Maintenance Organizations like in the 1980s? (Mod 7.1)
Extremely limited & differed from non-mental health coverage. Hospital coverage restricted to 30-45 days per mental illness or 30-60/yr. For medical illness, coverage unlimited.
Same for outpatient coverage – put a max dollar limit of $1,000/yr and a max reimbursement of $25 to $40 per visit.
Coinsurance rates varied dramatically as well.
What is a behavioral health carve-out plan? Why do employers choose it? (Mod 7.2)
Carves out MH/SA from medical plan and provides them under a separate contract managed by a Managed Behavior HealthCare Organization (MBHO)
-potential to produce savings since it is managed by firms that specialize in behavioral health treatment; allows large, self-funded ER’s to offer same behavioral health benefits across all health plans; allows plan to minimize adverse selection
Less common practice given ACA promotes integration, coordinated care
What are psychotropic medications and what challenge do they present MBHOs? (Mod 7.2)
Drugs that affect psychic function, behavior or experience; part of medical benefit and are administered by PBMs. Account for significant part of overall cost of healthcare because of chronic nature of Mental Illness – fractionalized system exists that prevents optimum management
Since MBHOs do not manage prescription drug benefit but bear responsibility for managing behavioral health, they are unaware if psychotropic meds have been given or if they are the right dosage/types or interventions
Establish parity (equality) between MH and other health benefits – prevented group plans (not individual), insurance co and HMOs from placing lower annual or lifetime dollar limits on MH benefits than other medical/surgical beenfits offered. The law did allow for limits on inpatient days, prescription drugs, outpatient visits and raising deductibles, which actually had the effect of subjecting MHB to dollar limits.
Applied to groups that offered MH and had 50+ EE’s. Didn’t require groups to offer MH if they didn’t already; also didn’t apply to substance abuse.
How did (MHPAEA) Mental Health Parity and Addiction Equality Act of 2008 expand on MHPA? (Mod 7.3)
MHPAEA continues MHPA rules and extends them to substance abuse, also states that financial requirements/treatment limitations applicable to MH/SA are no more restrictive than med/surgery
MHPAEA retains small employer exception and does not require MH/SA be added to existing plan – this exception only applies to grandfathered plans since ACA considers MH/SA as one of the 10 essential benefits.
Discuss the provisions of MHPAEA and how they interact with ACA (Mod 7.3)
-Plans may not impose financial requirements (deductibles/coinsurance) or treatment limitations on MH/SA that are more restrictive than med/surg. Parity required for both quantitative (freq of treatment, number of visits) and non-quantitative (formulary design) treatment limitations.
-Parity applies separately to Inpatient In-Network, Inpatient Out of Network, OutPatient In-Network, OutPatient Out of Network, Emergency Care, Prescription Drugs
-Separate cost sharing requirements for MH/SA are not allowed even if they are equal to med/surg: can’t have combined deductible
-2 Disclosure requirements – plans must make available criteria for determining medical necessity of MH/SA and reasons for denials.
Under ACA, MH/SA are essential benefits and as such, annual/lifetime limits may not be imposed.
Also under ACA, nongrandfathered groups must provide preventative services without cost sharing however not required to provide full range.
Under MHPAEA, what restrictions are imposed on a plan with multitier networks? (Mod 7.3)
Discuss the cost increase provision as it applies to MHPAEA (Mod 7.3)
Describe plan features of behavioral health plan (Mod 7.4)
What are the basic types of funding arrangements of a MBHO? (Mod 7.4)
How have EAPs formed? (Mod 7.4)
What is involved in provided an effective behavioral health program? (Mod 7.5)
Who makes up behavioral health network? (Mod 7.5)
Individual and multispecialty: clinical psych, social workers, therapists, psych nurses
Compare differences of behavioral health treatments: inpatient, partial (day), outpatient (Mod 7.5)
Describe cost containment practices of MBHO (Mod 7.5)
What are the 3 key benefits of comprehensive workplace wellness program? (Mod 8.1)
-Fewer absences
-Improved productivity
-Worker satisfaction/retention
What is normal cost PEPY for an employer? Primary cost drivers? (Mod 8.1)
What is primary goal of workplace wellness? (Mod 8.1)
Name six key ingredients that compromise an effective workplace wellness program (Mod 8.1)
Summarize three laws that directly deal with workplace wellness to prohibit discrimination (Mod 8.2)
-ERISA (Employee Retirement Income Security Act) – prohibits discrim in group health plans based on an individual’s health status….makes exceptions for wellness to offer premium/cost sharing discounts
-ADA (Americans with Disabilities Act) – forbids employers from inquiring about workers’ health status but makes an exception for med inquiries as part of a voluntary wellness program
-GINA (Genetic Information Nondiscrimination Act) – prohibits ER discrim based on genetic information, like family history; allows exception for voluntary wellness inquiries.
Which law deals with standards for protective privacy of personal health? (Mod 8.2)
HIPAA – Health Insurance Portability and Accountability Act
ADA standards for Wellness programs (Mod 8.2)
(2000) The program is considered voluntary so long as the employer does not require participation and does not penalize employees who do not participate. (2014) Employer groups urge that financial incentives should be permitted for wellness participation. (2016) EEOC issues rule allowing the use of financial incentive for programs that include medical inquiries with a maximum of 30% of the total cost of employee only coverage.
Fed Gov’t commissioned – review workplace wellness programs for experience in achieving cost savings/health improvement.
-Screening to identify health risks
-Lifestyle management services to reduce risks by encouraging healthy behavior
-Disease management services to support those with chronic conditions.
50% of all programs are limited in extent/nature of provided services
Only 13% were characterized as comprehensive
Describe the investment of “total well-being” as it relates to wellness programs (Mod 8.4)
Addresses financial fitness, stress reduction and emotional resiliency
What is most popular emotional well being program offered by large employers? (Mod 8.4)
Stress management by far (54%) – next highest is resiliency training (27%)
-Ever increasing cost in benefits
-Diverse workforce with vastly differing needs
Cafeteria plan assures ER maximizes value of its benefit dollars and avoids spending money on duplicated/unwanted benefits.
Flex Benefit Plan allows EEs to contribute on a tax-favored basis as certain programs have been more costly and they are being asked to share costs with ER.
Describe tax doctrine of constructive receipt within the context of cafeteria plans (Mod 9.1)
Describe concept of cafeteria plan and how it operates in connection with other EBPs (Mod 9.1)
Cafe plan is an umbrella plan under which tax favored EE benefits are offered. IRC Section 125 governs cafe plan arrangements while other IRC sections apply to the underlying benefits funded within. 125 was added to IRC in 1978 – prior the tax treatment was much different. If a participant had a choice in benefits, the tax doctrine required the EE be taxed on if they had elected the max available. Rationale was since they could elect these amounts in case, they should be taxed as such – even the case if EE elected benefits (paid by ER), could be offered on tax-free basis.
Define a Cafeteria Plan (Mod 9.1)
What are primary advantages to EE in Cafe plan? (Mod 9.2)
What are primary disadvantages to EE in Cafe plan? (Mod 9.2)
-Primary disadvantage is elections must be made prior to beginning of plan year and election is irrevocable.
-FSA use it or lose it rule, which forfeits unused dollars at end of plan year
-Worse off financially paying for Dep Care Expenses through Cafe Spending Acct rather than taking credit on Tax Return
-Since no FICA SS Tax, EE may see slight reduction in SS Benefits
What are primary advantages to ER in Cafe Plan? (Mod 9.2)
-Financial incentives: payroll costs since the ER does not pay FICA or FUTA taxes on amounts contributed; deferral amounts are not considered wages to EE’s Workers Comp
-Cafe plans create greater EE awareness to value of benefits
-Control escalating costs, limiting ER contributions and prevent wasting benefit dollars on unneeded benefits
What are primary disadvantages to ER in Cafe Plan? (Mod 9.2)
-Ongoing cost/maintenance of plan (compliance, tax laws)
-If FSA offered, full amount of benefit elected must be available during entire plan year regardless of how much an EE has contributed to date. Cash flow risk if claims exceed EE contributions early in plan year; same with terminating EE’s claims
-Adverse selection opting in and out of various plans
-Cafe plans subject to complex coverage and nondiscrimination testing to comply with federal tax law – difficult to pass
List the different types of Cafeteria Plans (Mod 9.3)
Discuss characteristics of Premium Conversion Plan (Mod 9.3)
What benefits are offered in Premium Conversion Plan? (Mod 9.3)
Describe a cafe plan that includes FSAs (Mod 9.3)
When funded by salary deferrals, participant is choosing between 2 (or more) benefits consisting of cash and qualified benefits – funded on pre-tax basis through salary reduction. FSA can be used on health related expenses as well as dependent care/adoption assistance.
Through the plan year, EE incurs expenses and submits for reimbursement. Coverage period 12 months with up to 2 1/2 months grace. Instead of grace period, ERs can allow up to $500 of unused funds to next year.
What is meant by a full-flex plan? (Mod 9.3)
Discuss methods used to value credits used by plan participants (Mod 9.4)
Why do ERs develop credit values in flexible benefit plans than use actual dollar values? (Mod 9.4)
What is a core benefit within a flexible benefit plan? (Mod 9.4)
Establishes some minimum level of benefit coverage below which a company will not allow an EE to go. Sometimes can cash out core if proof of alternative coverage is shown. Supplies basic level so EE’s not underinsured.
Note: Under ACA, large ER’s (over 50 lives) must offer minimum value and affordable health coverage to EEs and children under 26. Affordability test applies to lowest cost option that meets ACA min value; non-tax deductible penalties are imposed.
Describe elements of Cafe Plan that appeals to various demographics of EE’s (Mod 9.4)
Discuss how ERISA affects a Cafe Plan (Mod 9.5)
Cafe Plans are subject to what other laws (Mod 9.5)
-COBRA
-FMLA
-HIPAA
-MHPA
-MHPAEA
-NMHPA
-WHCRA
-MMA
-WFTRA
-HEART
-Michelle’s Law
-GINA
-PPACA
For a Cafe plan to be considered qualified, what provisions must it include? (Mod 9.5)
-Specific description of each benefit
-Rules on eligibility and participation
-Procedures for elections (when/often/irrevocability)
-Manner contributions can be made
-Max ER contributions available
-The plan year
-If plan has welfare benefits
-If plan includes HRA, use it or lose it language
-If needs amendment, must be in writing and after the original effective date.
What qualified benefits can be included in a Cafe plan? (Mod 10.1)
What types of legal entities can sponsor Cafe plans? (Mod 10.2)
Discuss EE’s who would qualify as participants in a Cafe Plan (Mod 10.2)
Includes former and present employees (includes Common Law EEs – likely an EE if ER has control over what work is to be done and how it is done); while former can participate, such a plan cannot be established solely to benefit former EEs. Spouses and Dependents cannot participate but they can receive benefits via family coverage. DOMA (Defense of Marriage Act) ruled same-sex domestic spouse benefits receive same favorable tax treatment.
Explain restrictions of Self-Employed Individuals wishing to participate in a Cafe Plan (Mod 10.2)
A salary reduction agreement is made between and EE and ER – EE defers salary and avoids constructive receipt of compensation. In lieu of paying comp to the EE, the ER will contribute the same amount agreed upon to the cost of certain benefits on a tax-favored basis. EE is essentially buying benefits on a pre-tax basis without the monies being considered received (not considered wages). Deferred sums not subject to FICA/FUTA, but state and local taxes can apply.
To be valid, must be entered into b/w ER and EE prior to beginning of period of coverage (plan year).
What is a negative election and what makes it valid? (Mod 10.3)
What is an evergreen election in a Cafe Plan? (Mod 10.3)
In general, cafe plan participant cannot revoke an election during the period of coverage unless it is attributable to occurrence of certain permitted events (HIPAA sets forth rights):
-Loss of other health coverage (if waived)
-If a person becomes a spouse or dependent of an EE through birth, marriage or adoption.
If one of those two conditions occur, can revoke and make new election.
If HSA contributions are made through salary reduction in a Cafe Plan, can make changes at anytime during plan year.
Discuss pre-ACA special change in status rules (Mod 10.3)
Discuss post-ACA special events which an EE can revoke cafe election midyear (Mod 10.3)
FMLA: Must be allowed to revoke an existing election for all health coverage for remainder of coverage period. May revoke non-health benefits only under same rules that apply to those taking non-FMLA leave. Can choose to be reinstated when they return
USERRA: May elect to continue participation during leave. Amounts previously deferred may be paid in a single lump sum at the beginning of year or beginning of expected LOA or monthly.
HEART: Enhanced USERRA protections. Permits EEs called to active duty to receive a distribution of unused balance of FSA.
What is FSA? What requirements need to be met to qualify for special tax treatment? (Mod 10.4)
Flexible Spending Account: meets requirements under IRC Section 105. If in a Cafe plan, additional requirements.
-For Tax Treatment, must meet IRC Sec 105/106 that apply to all accident/health plans as well as IRC 125.
-Must exhibit risk shifting/distribution characteristics of medical insurance.
-Participants must be reimbursed specifically for medical expenses they have already incurred during coverage period (cannot be less than 1 yr)
-FSA cannot eliminate all risk of loss to ER
-Plan document must set forth maximum contribution by the ER
-Before reimbursement, independent 3rd party must substantiate the claim (insurance co)
-Unused funds in excess of $500 may not be refunded to the participants; up to $500 can be carried over to the following yr
What alternatives do ERs have regarding forfeited funds in an FSA? (Mod 10.4)
What is dependent care assistance plan? (Mod 10.4)
What are legal adoption expenses in a Cafe Plan? (Mod 10.4)
Define HSAs in a Cafe Plan (Mod 10.4)
Explain the meaning of “Cash” in Sec 125 Plans (Mod 10.4)
3 Overall Tests:
Eligibility Test: May not discriminate in favor of highly compensated EEs as the ability to participate
-classification/length of services/participation test
-no EE required to complete more than 3 YOS
-defining highly comped EE (5% owner, or highly paid person – subjectively)
-Aug 2007 added benefits component determination to ensure benefits equally available to all EEs
Contributions and Benefits Test: Plan must make contributions and benefits available on a non-discriminatory basis and plan fails test if highly comped EEs select more nontaxable benefits than non highly comped EEs
-Benefits component to determine if benefits/contributions are equally available to all EEs
-Utilization component: highly comped EEs are disproportionately using all benefits; uniformed opportunity to elect benefits
-If providing health benefits, not discriminatory if any contributions made on behalf of the EE are equal to: 100% of cost of health under the plan of the majority of highly comped are similarly situated; 75% of the cost of most expensive benefits elected by any similarly situated participant
Key EE Concentration Test: Plan’s Key EE contributions cannot exceed 25% of the total contributions into the plan.
-Key EE: Officer earning $175,000+, 5% Owner or 1% Owner Earning $150,000+
-Test is based on level of coverage as opposed to level of reimbursements
What happens if a Cafe Plan fails to pass nondiscrimination testing? (Mod 10.5)
What underlying benefits do nondiscrimination testing apply to in a Cafe Plan? (Mod 10.5)
-FSA
-Dependent Care Assistance
-Group Term Life
-HSA
ACA created “Simple Cafeteria Plans.” In what ways are these different? (Mod 10.5)
What are “other EE benefit plans” (as opposed to retirement plans) called under ERISA? (Mod 11.1)
How does ERISA regulate health plans? (Mod 11.1)
Summarize pre-ACA benefit improvements (Mod 11.1)
NMHPA: Newborns’ and Mothers’ Health Protection Act of 1996: establish min hospital stay requirements following birth of child
Women’s Health and Cancer Act of 1998: requires health plans providing mastectomy coverage to cover prosthetic devices and reconstructive surgery
Michelle’s Law (2010): extends ability of dependents to remain on parent’s plan for a limited period of time during a medical leave from full-time student status
Describe disadvantages of COBRA (Mod 11.2)
May require individuals to pay the full cost of coverage, plus a 2% administrative charge.
Often more expensive that the amount other EEs must pay since the ERs pay part of that coverage.
Another is that it only lasts for a limited period of time: 18 mo for reduction in hours, 36 mo for all other events
What ERs must offer COBRA? What benefits does it cover? Not cover? (Mod 11.2)
COBRA applies to all group health plans maintained by private sector employers (w/20+ EEs) or by state/local gov’t. Does not apply to federal gov’t or by churches.
It covers:
-Inpatient/outpatient hospital care
-Physician care
-Surgery/other medical benefits
-Prescription drugs
-Dental/vision care
Does not cover:
-Life insurance
-Disability insurance
-Providing additional opportunities to enroll in group health plan coverage when they lose other health coverage, get married or add dep
-Prohibiting discrimination in enrollment/premiums charged based on health
-Preserving the states’ role in regulating health insurance, including the states’ authority to provide greater protection that those available under federal law
What are the 2 special enrollment events under HIPAA? (Mod 11.3)
Describe HIPAA non-discrimination prohibitions (Mod 11.3)
Rules state EEs and their family members cannot be denied eligibility or benefits based on certain health factors; cannot be charged more premium either.
-Health factors include medical conditions, claims experience and genetic information
HIPAA/ACA provide protections from impermissible discrimination based on health factors in wellness programs related to group health (work out, stop smoking, cholesterol, etc)
How does HIPAA preserve role of states? (Mod 11.3)
How does ACA supplement HIPAA with regard to Pre-Ex? (Mod 11.3)
What were major policy objectives of the Affordable Care Act? (Mod 11.4)
Title II of ACA expanded and improved Medicaid for lower income adults and families. In 2012 case, the Supreme Court upheld Medicaid expansion but precluded the federal government from withholding all Medicaid federal funding if states failed to accept and comply with ACA Medicaid expansion requirements.
-Made expansion voluntary
-Text alludes to 19 states not expanding
Explain ACA pre-existing condition limitation (Mod 11.4)
Summarize which benefits are essential health benefits (EHBs) under ACA (Mod 11.4)
-Ambulatory patient services (outpatient)
-Emergency services
-Hospitalization
-Pregnancy, maternity, newborn care
-MH/SA/Behavioral Health
-Prescription Drugs
-Rehab Services
-Laboratory Services
-Preventive and wellness services/chronic disease management
-Pediatric services (oral/vision) – not adult
EHBs are 10 core benefits all plans offered on ACA exchange must offer
MEC (Min Ess Cov) is term ACA uses for types of coverages that qualify for satisfying shared responsibility provisions for EE/ERs.
How does ACA strive to make healthcare more affordable? (Mod 11.4)
Providing tax credits to people with income between 100% and 400% of the poverty line who are not eligible for other affordable coverage.
In 2016, 400% of poverty line is $47,250 for individual or $97,200 for family of four)
Tax credit is advanceable, so it can lower premium payments each month rather than waiting for tax time. Also refundable.
Define the ACA mandate known as shared responsibility for employers (Mod 11.5)
-If it does not offer MEC to at least 95% of its FT EE’s and at least 1 FT EE receives premium tax credit for purchasing coverage through the Marketplace
-Even if offers to 95% of FT EE’s, for each EE who receives premium tax credit on Marketplace.
FT EE Tax Credit = MEC ER offers is not affordable, MEC does not provide min value, EE is not one of 95%
Under ACA, FT EE works how many hours? (Mod 11.5)
Explain role of Marketplace established by ACA (Mod 11.5)
How does ACA impact ERs with less than 50 EEs? (Mod 11.5)
What is meant by grandfathered status in ACA? How can you lose it?(Mod 11.5)
In existence on March 23, 2010; exempt from most ACA reforms. Must disclose in plan documents they are considered grandfathered.
Lose it:
-Eliminate all or substantially all benefits to diagnose or treat a specific condition
-Increase cost-sharing requirement percentage
-Increase deductible or out of pocket max by an amount that exceeds medical inflation + 15%
-Increase a copay by more than the greater of $5 or med infl +15%
-Decrease ER contribution rate by more than 5%
-Impose annual limits on the dollar value of all benefit amounts
What circumstances can you take FMLA? (Mod 11.6)
12 Weeks Unpaid Job Protected Leave in a 12 Month Period:
-Birth of Child/Care for newborn w/o 1 year of birth
-Placement of adopted child
-Care for Spouse, Child or Parent w/serious health condition
-Serious Health Condition unable to perform essential functions of job
-Spouse, Child or Parent covered military active duty
Can be taken intermittently or on reduced leave schedule
What are key elements of (ADA) Americans with Disabilities Act of 1990? (Mod 11.6)
Prohibits ERs, state and local gov’t, employment agencies and labor unions from discriminating against individuals with disabilities in job applications, hiring, firing, advancement, training, etc
ADA covers ERs with 15 or more EEs including gov’ts
Disability is defined as impairment that limits one or more major life activities
Describe rights of USERRA (Mod 11.6)
Covers every individual in the country who serves or has served in uniformed services (including public/federal sector); establishes 5 years as cumulative length of time EE may be absent from work and retain employment rights w/same job/pay/status.
EEs performing military duty for more than 30 days can continue health up to 24 months, however they may be required to pay 102% of premium. Less than 31 days, continued as if working.
-EE is 65 or older is covered by group health through employment or spouse employment AND ER has fewer than 20 EEs: Medicare pays primary and group health pays secondary
-EE is 65 or older is covered by group health through employment or spouse employment AND ER has more than 20 EEs: Group health pays primary, Medicare pays secondary
-EE is 65 or older is self-employed and covered by group health through employment or spouse employment AND ER has more than 20 EEs: Group health pays primary, Medicare pays secondary
-EE is disabled, is covered by group health through his own or family employment AND ER has more than 100 EE’s: Group health pays primary, Medicare pays secondary.
Medicare remains primary payer for individuals over 65 who are covered on ER retirement plan.
What stemmed the question: What are transferable lessons about effective change? (Mod 12.1)
Summarize lessons learned from formative realist case evaluation (Mod 12.1)
-Relationships b/w orgs are trusting with a history of collaboration rather than competition
-Approaches to integration are imaginative, responsive, negotiable and supported by tech rather than rigid and driven by technology
-External incentives are designed to reward collaborative performance and do not make organizations comepte
-Strategy for integration includes soft and hard approaches
-Solutions are participatory rather than developed by one party and imposed by others
By providing details of the change actions and context; info allows others to assess whether they are likely to obtain similar results/. Description of “mechanisms” or change principles and how they were triggered by intervention enables others to try to reproduce mechanisms in their different settings (possibly using different interventions).
What difficulties are involved with this type of formative realist case evaluation? (Mod 12.1)
Before it starts:
-assess whether it is feasible, to predict problems, help plan how to implement it
-This is a formative evaluation
During a reform:
-reason to make an evaluation is to help make corrections during implementation
After the reform:
-evaluation helps to explain lessons for future changes or reforms and contributes to scientific knowledge; more immediate reason is to hold those accountable for changes they did or did not make.
List and explain usual steps for evaluating a reform (Mod 12.2)
-Describing reform instrument (law which states intentions) and the implementation process (what was actually done)
-Gathering data about changes (outcome data)
-Assessing whether data really are outcomes of the reform (assessing extent to which reform caused or influenced changes registered in outcome indicators
Aim of reform:
-Present evidence of results
-Describe implementation process
-Assess strengths and weaknesses as implemented and judge value of results
-Recommend improvements
Distinguish between “immediate subjects” and “long term aims” of reforms (Mod 12.2)
Discuss the four steps typically utilized to evaluate health reforms (Mod 12.2)
Implementation Designs:
-do not look at effective of reform but describe what was done in implementing reform…review both strengths and weaknesses of process
Comparing achievements with reform objectives:
-compares intended goals of reform with the extent to which they are achieved
Before/after design:
-describes reform implementation process but also gathers data before the reform and then after reform has been proceeding for enough time to have an effect (most common)
Comparing one site with one or more others implementing the reform:
-gathers data about different sites or areas implementing the same reform; can be used cross nationally to compare similar types of reform.
What are aims of health system performance evaluations? (Mod 12.3)
Define and explain 3 types of health system performance evaluations (Mod 12.3)
Audit Performance Evaluations (APE):
-compares health system with a statement of what is expected; if ER wants to offer health benefits, they could contract with a health system; ER wants to know whether health system provides the services needed, so might use evaluator to specify; another example is National Committee for Quality Assurance (NCQA) accreditation of ACO – accountable care organization which is a network of doctors and hospitals that assume financial responsibility managing the health care of a specific group of patients – if able to provide lower costs, they receive financial awards. NCQA provides accreditation to all ACOs, which is ex of APE
Single-case time trend performance eval:
-track performance of health system over time; use routinely collected and reported data and compare at different times
Service-comparison performance evaluation:
-compare performance of a set of services at one time, in relation to one or more dimensions of service performance; most developed and longest running systems report quality and safety data but not costs, so value assessment not possible.
Detail steps in conducting a return on investment (ROI) evaluation (Mod 12.4)
Evaluation is planned and prospective, makes it possible to identify data needed beforehand and set up systems to gather/extract data
-Define the change that investments will be used to make
-List the time and other resources needed to make the change and sustain the change once it is made.
-Define the investment and the investor.
-Define the returns to be valued.
-Decide the ROI study design and data (involves defining methods to assess whether returns were due to investment change or some other influence; then it involves deciding which data to gather from which source
-Collect and analyze data and present investment costs and time period of investment, returns at year one from start and years 2 and 3, as well as ROI at 3 years.
-Specify assumptions, limits, and a degree of certainty in the evaluation.
Is an ROI evaluation the same as a business case assessment? (Mod 12.4)
Part of many business assessments; a business case is where the justification, plan and expected results are laid out in one document; this might include
-current problems/opportunies
-how and why a change will help solve issues
-time, money and other resources
-expected benefits and ROI at 1, 3 and 5 yrs
-risk and risk management strategies
-expected situation if change is not made
-outline draft plan of next steps
How are value improvements evaluated and predicted? (Mod 12.4)
Evaluated:
-value improvements are changes that both improve quality, reduce waste and usually reduce costs of producing a service; evaluations are needed to assess whether promised changes do improve quality and reduce waste, as whether cost is worth improved quality.
-one type of eval is a cost quality ROI (CQROI); this is broader than a typical ROI since it considers both the quality and resource returns. ROI usually only consider payback for the investor – money they get back by certain date
Predicted:
-assessing previous research to determine if change will be a value improvement.
-Process:
–> For studies with evidence of problems, select those that quantify problems and use these to estimate possible waste or costs
–>For interventions studies, exclude those with inadequate evidence of quality improvements
–> identify studies with acceptable evidence of quality improvement and some evidence of resources or cost
–> for studies with evidence of quality improvements only, identify whether they provide data to allow some estimate of resources used in intervention
How is value improvement estimated by local service providers? (Mod 12.4)
-Does previous research or info give strong evidence of quality improvement? If yes, than continue:
-How much does intervention cost?
-Is there any evidence of reductions in waste and more efficient use of resources?
-What is money value of reductions?
-If no evidence of research on prior 2 points, then use theory or estimations for cost range
-Overall what is ROI?
-Time to pay off: how are spending and savings distributed between different parties at years 1, 2, 3, 5 and 10…etc
What constitutes a good ROI evaluation? (Mod 12.4)
-Specifies user(s) of the evaluation and decisions the evaluation will inform
-Identifies all costs and benefits that are important to users decisions and measures in financial terms those that are feasible to measure
-Distinguishes in the findings the theoretical ROI and also the actual or likely monetized ROI at different times after it starts
-Specifies the limitations, assumptions and range of certainty of the results
Identify 3 types of total compensation/benefit policies that employers may adopt (Mod 1.4)
Define a Welfare benefit plan (Mod 9.5)
GINA standards for wellness programs (Mod 8.2)
Inducements for spouses to participate in wellness programs can be made whether or not the group offers medical coverage to the spouse and allows spouses to provide information about their own health status. Does not permit the wellness plan to offer incentives for children’s health or genetic information.
Definition of genetic information under GINA (Mod 8.2)
What has been shown to double worker participation in wellness programs? (Mod 8.1)
Incentives such as cash, movie tickets, discounts on premium and gift cards
What provisions of ACA apply to Grandfathered health plans? (mod 11)
ACA Provisions Apply:
-Prohibit Pre-Ex
-Prohibit Excessive Waiting Periods
-Prohibit Lifetime/Restricted Annual Limits
-Prohibit rescissions
-Extension of dependent coverage
-Summary of benefits/coverage/glossary
ACA Provisions don’t apply:
-Coverage of preventative services w/o cost sharing
-Internal claims and appeals and external review
-Patient protections
What is the realist context-intervention-mechanism theory? (mod 12.1)
one type of program/logic theory aims to explain how an intervention is understood to work.
For all performance evaluations, what are the 3 questions? (mod 12.3)
It is a mathematical process that removes anomalies that should not appear in the mortality data
Which of the following statements correctly describes phases of a group plan marketing?
Which of the following statements correctly describes a characteristic of an insurable risk?
They are involved in enrolling group members and installing new plans
Which of the following statements correctly describes an insured plan that is insurer-administered?
0.855 (P (Survive both years) = (0.95) x (1 – 0.1) = 0.95 x 0.90 = 0.855.)
Adjudicating and paying claims
Which of the following statements correctly describes a group insurance policy?
0.2% (Probability of a resident under the age of 50 dying is 20/10,000 = 0.002 = 0.2%.)
Which of the following statements best describes individual large amount pooling?
Nevaeh works full¬time as a business manager on her family’s dairy farm. She has an allergy to grain that is triggered by direct contact. If she becomes sick and is unable to work, she loses her only source of income and her lifestyle will change significantly. Which of the following risk management approaches would BEST address Nevaeh’s need to protect her income?
Plan of the parent with custody of the child
An example of a needs-oriented benefit is health care
Which of the following statements correctly describes static tables and tables with projection?
Which of the following statements correctly describes participation ratios in a benefits plan?
Which of the following statements correctly describes marketing a group benefits plan?
How is the funding arrangement for a nonunionized single-employer plan determined?
By the amount the employer is willing and/or able to contribute from revenue
Sick leave plans typically provide full pay for absences from work due to sickness or injury for a short period (A long-term disability (LTD) plan is the most common method of providing extended income replacement benefits to plan members who are disabled and unable to work due to prolonged illness or injury. Option C: Salary continuance plans typically provide benefits for the full period of short-term disability up to the end of the elimination period under an LTD plan. Option D: An LTD plan typically replaces 55¬-75% of a disabled plan member’s gross earnings, subject to a maximum monthly amount.)
Effective annual rate = (1 + (Nominal annual rate/m))^m − 1
= (1 + (.18/12))^12 − 1
= 19.56%
Which of the following statements correctly describes prospectively rated underwriting?
It bases premium rates in whole or in part on the group’s own claims experience
It is more difficult to predict morbidity than mortality, since there are fewer sources of credible data (Changes in mortality show a steady and gradual downward trend; changes in morbidity can be both positive and negative. Option C: Mortality tables are used to price policies where claim amounts are specified in advance; the potential claim amount under a policy based on morbidity tables is unknown. Option D: Mortality tables are used to forecast date of death and date of onset of the insured event; morbidity tables are used to forecast date of death, date of onset and severity, size and duration of each claim.)
First on Site is a new media company hiring 50 employees in the next few months. It recognizes that a comprehensive benefits plan can contribute to attracting qualified employees. Because the company is a start-up, cash flow is a bit unpredictable; it has limited capacity to cover either fluctuating or large claim amounts. Which of the following funding methods would BEST address First on Site’s concerns?
Under the functional approach to benefits plan design, one method for determining the length of service required for benefit eligibility considers whether the benefit is protection-¬oriented or accumulation-¬oriented. Under this method, which of the following types of benefit plans is likely to have the longest required waiting period?
Stock bonus (accumulation-oriented benefits are more likely to have a shorter WP)
Which of the following statements correctly describes the premium renewal rating process?
The choice of benefits and amount of coverage must be restricted
Which of the following statements correctly describes a disabled life reserve?
It is the estimate of the current value of all future periodic payments to an LTD claimant
Which of the following statements correctly describes mortality tables?
Claims fluctuation reserve (CFR)
The first carrier is the insurer or plan administrator first contacted in the event of a claim
Which of the following statements correctly describes a multi-employer plan (MEP)?
Employer contributions to a MEP are typically a specified amount per hour worked per employee
Long-term disability (LTD) (typically 2+ years, vs annually for other rates)
Which of the following statements correctly describes a fully pooled insurance arrangement?
Group life and health insurance contracts typically include a 31-day grace period for premium payment
If premium payments are not received by the end of the grace period, insurers may suspend claims payments until the account is brought up to date
An insurer can terminate the group insurance contract if premiums are not paid by the end of the grace period
Which of the following statements correctly describe(s) mortality data?
Which of the following statements correctly describe(s) group insurance marketing?
A plan sponsor or its advisor solicits proposals or bids from insurers for the purpose of implementing a new or modified group benefits plan or validating the competitiveness of the services and costs of its current plan
A plan sponsor can market a plan directly, using the insurer’s account executives as points of contact
A plan sponsor can market a plan indirectly, using an intermediary such as an agent, broker or consultant
Which of the following statements correctly describe(s) compound interest?
Which of the following statements correctly reflect(s) mortality rates?
In adjudicating claims under a group benefits plan, a claims analyst must confirm:
Danika Novikov of Caldwell Associates completed installation of a revised group benefits plan for a new client, Accurate Accounting. The revised plan was installed after a benefits review and a marketing of the plan resulted in a change of insurers. Danika explained the benefits and administrative requirements to the firm’s senior partner and controller. She provided written information about the new insurer, Haliburton Insurance, including a copy of the new commission scale. She disclosed that she owned 15% of Haliburton Insurance. She did not, however, advise Accurate Accounting that the commission scale with Haliburton Insurance was higher than the scale for any of the other quoting insurers and that, in placing this business with Haliburton Insurance, Danika and her spouse would be invited to the insurer’s upcoming conference in Bermuda. Which of the following Canadian Life and Health Insurance Association (CLHIA) advisor disclosure recommendations has Danika contravened?
Which of the following statements correctly define(s) underwriting?
Types of claims that can be made under a group life insurance policy include(s):
Which of the following statements correctly describe(s) the renewal rating process?
Which of the following statements correctly describe(s) future value?
The higher the interest rate, the higher the future value
Primary activities involved in administering a group benefits plan include(s):
Which of the following statements correctly describe(s) governance practices for benefit plans?
Which of the following statements correctly describe(s) mortality tables?
Which of the following statements correctly describe(s) an annuity?
All the following statements correctly describe a morbidity rate, EXCEPT:
(Morbidity rate varies by sex and age)
All the following types of insurance are contracts of indemnity, EXCEPT:
Life insurance is a valued contract. The others are contracts of indemnity.
All the following statements correctly describe deductibles used in group benefit plans, EXCEPT:
(Coinsurance has inflation and utilization changes built into it.)
All the following statements correctly describe premium preparation and remittance, EXCEPT:
(Analysis of quoted rates on current and alternative plans)
All the following statements correctly describe an individual association benefits plan, EXCEPT:
(There are no employer contributions to individual association benefits plans)
All the following statements correctly describe present value, EXCEPT:
(The higher the discount rate, the lower the present value)
(Collective bargaining agreements can be a factor, but not employees’ demands.)
(Cost of paying claims is a claims administration expense)
example of an accumulation-oriented benefit is weekly indemnity/short-term disability (WI/STD)
(Privacy legislation prevents plan sponsors from receiving plan member claim information.)
(Policyholder permission is required to change the agent of record)
All the following statements correctly describe the properties of probability, EXCEPT:
The denominator represents the number of outcomes that satisfy the condition.
(it’s the numerator)
All the following statements correctly describe CDAnet, EXCEPT:
(predeterminations that require x-rays or study models cannot be sent via CDAnet)
All the following statements correctly describe examples of a physical hazard, EXCEPT:
All the following statements correctly describe the role of actuaries, EXCEPT:
(Compliance with tax legislation is part of an actuaries role, but not their main function)
(A cost trend factor is used for health care and dental, but not for long-term disability (LTD))
According to the RAND Health Insurance Experiment, which variable has the greatest power in explaining health expenditures?
A.) Welfare eligibility
B.) Prior utilization
C.) Physical health (based on self-reported measures)
D.) General health (based on self-reported measures)
E.) Mental health (based on self-reported measures)
B.) Prior utilization
A provision in some group life insurance plans that provides for the payment of all or part of the death benefit in the event of the insured’s terminal illness is called:
A.) Accelerated death benefits
B.) Waiver of premiums
C.) Maturity value benefits
D.) Continuation-of-protection
E.) Assignment
A.) Accelerated death benefits
What reasons are given for the Silver plan being a popular choice among all the Affordable Care Act (ACA) health plans?
A.) The Silver plan has the greatest actuarial value of all the plans.
B.) Cost-sharing subsidies to lower out-of-pocket costs are available only to people who select the Silver plan.
C.) The Silver plan has the greatest benefits, even more than the Gold and Platinum plans.
D.) The Silver plan has the lowest out-of-pocket costs of any plan even before any subsidies.
E.) Many people select the Silver plan because they are not eligible for the Gold or Platinum plans.
B.) Cost-sharing subsidies to lower out-of-pocket costs are available only to people who select the Silver plan.
Which of the following measures of cost is generally used by analysts when they are examining the impact of insurance premiums on employees’ choice of health insurance plans?
A.) The loading percentage
B.) The total gross premium
C.) The insurer’s profit
D.) The employee’s out-of-pocket price
E.) The expected future gross premium
D.) The employee’s out-of-pocket price
Which of the following statements regarding recognition as a patient-centered medical home (PCMH) is correct?
A.) The only organization that can officially recognize a PCMH is the Federally Qualified Health Center Demonstration.
B.) The only organization that can officially recognize a PCMH is the National Committee for Quality Assurance (NCQA).
C.) No single organization is responsible for recognizing PCMHs.
D.) The main organization that recognizes PCMHs is the Joint Commission and the Accreditation Commission for Health Care.
E.) A PCMH can be recognized only by the state in which it is domiciled.
C.) No single organization is responsible for recognizing PCMHs.
Which of the following statements regarding private health insurance exchanges and Small Business Health Options Program (SHOP) exchanges is correct?
A.) A lot of evidence has been produced to show that private exchanges have been designed to make it easier for small business to self-insure.
B.) The income tax incentives previously provided to small employers in the SHOP program have expired.
C.) Recently states were given the option of making SHOP exchanges mandatory for all employers with fewer than 200 employees.
D.) Private exchanges could affect SHOP exchanges by siphoning enrollment from them and thereby reducing revenue (administrative fees) critical to SHOPs’ financial viability.
E.) Unlike private exchanges, SHOP exchanges do not have the ability to offer small employers a number of plan choices.
D.) Private exchanges could affect SHOP exchanges by siphoning enrollment from them and thereby reducing revenue (administrative fees) critical to SHOPs’ financial viability.
What is the waiting period for Social Security Disability Income (SSDI) benefits?
A.) One month
B.) Three consecutive months
C.) Five consecutive months
D.) Six consecutive months
E.) Twelve consecutive months
C.) Five consecutive months
“Desktop medicine” is a fully integrated approach using information technology whose primary goal is to:
A.) Recruit prospective health plan subscribers
B.) Help track patients through their plan of care
C.) Encourage patient self-diagnosis using the Internet
D.) Gather health status metrics for large patient populations
E.) Expedite health provider use of technology
B.) Help track patients through their plan of care
Until now, the biggest source of cost savings with private health insurance exchanges has been:
A.) Transition to the defined contribution approach
B.) Increased use of technology
C.) Employees choosing less generous plans
D.) Better health education of employees
E.) Elimination or reduction in administrative waste
C.) Employees choosing less generous plans
Out-of-network health care accounts for approximately what percentage of total covered health insurance expenses?
A.) 3
B.) 10
C.) 20
D.) 25
E.) 30
B.) 10
The major advantage of term insurance for the policyowner is the fact that:
A.) A substantial amount of life insurance can be purchased for relatively modest premiums
B.) It provides lifetime protection if the insured continues to pay the premiums
C.) The premiums remain at the same level for the life of the insured
D.) With a policy rider it can be used to provide retirement
E.) Premiums are highly competitive especially for those at older ages
A.) A substantial amount of life insurance can be purchased for relatively modest premiums
Mr. Smith is insured in his company’s group life insurance plan. The plan is noncontributory and meets the requirements of Internal Revenue Code Section 79. How much group life insurance can be provided to Mr. Smith without him incurring a federal income tax liability on the value of his employer’s contributions?
A.) 0
B.) 25,000
C.) 50,000
D.) 100,000
E.) An unlimited amount
C.) 50,000
Which of the following statements regarding health expenditures and related research is correct?
A.) In general, risk adjustment models have been able to predict about 80 percent of total claims.
B.) Age and gender account for about 90 percent of explained variation in health care expenditures.
C.) Medicare currently pays Medicare Advantage plans on the basis of the Centers for Medicare & Medicaid Services Hierarchical Condition Categories (CMS-HCC) model, which uses approximately 70 clinical conditions.
D.) Health maintenance organizations (HMOs) that could predict health expenditures only five percentage points better than Medicare would not gain a significant amount of profit per enrollee.
E.) Inpatient expenditures are more predictable than outpatient expenditures.
C.) Medicare currently pays Medicare Advantage plans on the basis of the Centers for Medicare & Medicaid Services Hierarchical Condition Categories (CMS-HCC) model, which uses approximately 70 clinical conditions.
Which of the following has been a key focus of redesign and improvement efforts in healthcare?
A.) Hospital care
B.) Diagnostic/imaging services
C.) Critical care
D.) Orthopedic surgery
E.) Primary care medicine
E.) Primary care medicine
Reference pricing used by some managed care health plans:
A.) Is an example of center-of-excellence pricing.
B.) Is one method of giving subscribers an incentive to use lower-cost but quality providers.
C.) Can only be used in a capitation system.
D.) Is a model that has not been used in practice.
E.) Is designed to attract healthier individuals into the plan.
.
B.) Is one method of giving subscribers an incentive to use lower-cost but quality providers
The vast majority of long-term care needs are met by:
A.) Medicare
B.) Medicaid
C.) Individual health insurance policies
D.) Long-term care insurance policies
E.) Family members on an unpaid basis
E.) Family members on an unpaid basis
The practice of hospitals paid based on billed charges by commercial insurers and allowable costs by Medicare ended primarily because:
A.) Managed care plans introduced selective contracting into the market.
B.) Hospitals started using more advanced technology.
C.) Patients became less concerned about the cost of services.
D.) Hospitals started to focus more on the quality of services.
E.) Physicians gained a greater voice in the pricing of health care.
A.) Managed care plans introduced selective contracting into the market.
What is the provision in the Part D Medicare law that gives a significant benefit to pharmaceutical companies?
A.) The law allows only pharmaceutical companies registered with a specified trade association to market drugs under Part D and virtually all pharmaceutical companies are so registered
B.) The law guarantees a certain profit margin to all pharmaceutical companies that sell drugs under Part D.
C.) The law prohibits the government from using its purchasing power to negotiate widespread discounts with drug plans.
D.) The law gives all U.S. pharmaceutical companies special income tax benefits for an extended period of time.
E.) The law prohibits the widespread dissemination of information regarding specified drugs.
C.) The law prohibits the government from using its purchasing power to negotiate widespread discounts with drug plans.
The definition of disability for Social Security Disability Insurance benefits requires the impairment to be expected to result in death or to last for a continuous period of at least how many months?
A.) Three
B.) Four
C.) Five
D.) Six
E.) Twelve
E.) Twelve
A small employer has a self-funded health plan with reinsurance coverage. Which of the following statements regarding this type of reinsurance is correct?
A.) Aggregate stop-loss reinsurance limits the dollar amount of coverage on each employee’s health care costs.
B.) Reinsurers often help small employers revise their health plans.
C.) Lower “attachment points” decrease the employer’s financial risk.
D.) Federal law requires stop-loss insurers to provide policyholders an advance notice of at least 90 days before cancelling a policy.
E.) Specific stop-loss coverage reinsurance limits the dollar amount of health care costs for an entire employee population over a period of time.
C.) Lower “attachment points” decrease the employer’s financial risk.
Using private exchanges, employers have begun to implement the defined contribution model for medical benefits for which group of individuals?
A.) All active full-time employees
B.) Active full-time employees with dependent coverage
C.) All part-time employees
D.) Part-time employees with dependent coverage
E.) Retirees and their eligible dependents
E.) Retirees and their eligible dependents
Objective risk for health insurers is most closely related to which of the following concepts?
A.) Expense ratios
B.) Carve out coverage such as prescription drug benefits
C.) Dispersion (which is often measured by standard deviation)
D.) Investment underwriting
E.) Subjective risk
C.) Dispersion (which is often measured by standard deviation)
Which of the following statements regarding reimbursement methods for patient-centered medical homes (PCMHs) is correct?
A.) The most popular approach, by far, is fee-for-service.
B.) The most common approach is a capitation system.
C.) Typically reimbursement is based on a pay-for-performance approach.
D.) A negotiated, or modified, fee-for-service is the most common.
E.) Nearly all approaches utilize a blend of pay-for-performance, monthly per-enrollee payments, and fee-for-service.
E.) Nearly all approaches utilize a blend of pay-for-performance, monthly per-enrollee payments, and fee-for-service.
A life insurance policy in which the insurance provides lifetime protection, the premiums are level, but they are paid only for a certain period is referred to as:
A.) Endowment insurance
B.) Term to age 65
C.) Straight life
D.) Limited payment life
E.) Variable life
D.) Limited payment life
For long term care (LTC) purposes, the Internal Revenue Code defines a chronically ill individual as one who has been certified by a licensed health care practitioner as unable to perform, without substantial assistance from another individual, at least how many activities of daily living (ADLs) for a period of at least how many days due to a loss of functional capacity?
A.) One ADL, 90 days
B.) Two ADLs, 90 days
C.) Three ADLs, 90 days
D.) Two ADLs, 60 days
E.) Three ADLs, 60 days
B.) Two ADLs, 90 days
Which of the following statements regarding Small Business Health Options Program (SHOP) exchanges is correct?
A.) SHOP exchanges are marketplaces that are essentially online portals which enable small employers to select from a range of fully insured plans and contribution arrangements for their employees.
B.) Plans marketed on SHOP exchanges are exempt from all federal requirements for insurers.
C.) SHOP exchanges require employees to contribute at least 50-75% of premium costs.
D.) Employees who receive an employer offer of qualified health care coverage purchased on a SHOP exchange are eligible for federal subsidies.
E.) SHOP exchanges are primarily targeted to employers with 50-100 employees.
A.) SHOP exchanges are marketplaces that are essentially online portals which enable small employers to select from a range of fully insured plans and contribution arrangements for their employees.
Which of the following statements best describes the Affordable Care Act (ACA) approach to the problem of involuntary out-of-network emergency health care?
A.) Higher copayments and coinsurance for out-of-network emergency room care is permitted but limited and balance billing is prohibited.
B.) Higher copayments and coinsurance for out-of-network emergency room care is allowed, but only for certain specific types of care; balance billing is not allowed.
C.) Plans cannot impose higher copayments or coinsurance for out-of-network emergency room care and balance billing is still allowed within certain parameters; these requirements do not apply to grandfathered plans.
D.) Plans cannot impose higher copayments or coinsurance for out-of-network emergency room care and balance billing is not allowed; no plans are grandfathered.
E.) The ACA has yet to address this issue but new guidance is expected.
C.) Plans cannot impose higher copayments or coinsurance for out-of-network emergency room care and balance billing is still allowed within certain parameters; these requirements do not apply to grandfathered plans.
Which of the following statements best describes the financial liability of self-insured plans administered through private health exchanges?
A.) The plans can completely cap their financial liabilities by using these exchanges.
B.) Using these exchanges, the plans can completely cap their financial liabilities by offering plans with a fixed credit that is not indexed to the rate of general inflation.
C.) The plans can shift some of their financial liabilities to the private exchange vendor.
D.) The plans can cap most of their financial liabilities by participating in a risk pool established by the exchange vendor.
E.) The plans cannot, in general, completely cap their financial liabilities regardless of the delivery vendor they select.
E.) The plans cannot, in general, completely cap their financial liabilities regardless of the delivery vendor they select.
A medical group is paid fee-for-service up to a withhold amount. The group is paid 75 percent at the time of service and the remaining 25 percent is paid if the managed care plan:
A.) Is able to cover its overall claim costs.
B.) Covers the physician salaries.
C.) Anticipates providing less than two percent of out-of-network benefits in the next computation period.
D.) Provides virtually 100% in-network benefits in the computation period.
E.) Is efficient at recapturing capitation fees for late subscriber terminations.
A.) Is able to cover its overall claim costs.
The health insurance rating system in which insurers place policyholders into groups according to their loss producing characteristics is known as:
A.) Calibrated rating
B.) Manual rating
C.) Durational rating
D.) General liability rating
E.) Objective rating
B.) Manual rating
Developed countries other than the U.S. spend a much lower proportion of their gross domestic product on health care and enjoy better quality than the U.S. does. It is widely believed by policy makers that one major reason for this phenomenon is because:
A.) The medical educational programs are better in the other countries.
B.) The health care systems in such countries are built on a strong primary care base.
C.) Other countries use much better technology than the U.S. does.
D.) The U.S. has not made quality healthcare a high priority.
E.) Other countries have healthier populations.
B.) The health care systems in such countries are built on a strong primary care base.
The Affordable Care Act included several risk and market stabilization programs. Which of the following is one of the programs that dealt with limiting insurer losses and gains beyond an allowable range?
A.) Reinsurance program
B.) Risk adjustment program
C.) Medical loss ratio program
D.) Risk corridor program
E.) Bidding process program for qualified health plans
D.) Risk corridor program
Which of the following is the approximate percentage of the U.S. population covered in the specified U.S. healthcare scheme?
A.) 40% through private individual insurance
B.) 25% through employer-sponsored group insurance
C.) 25% through the Medicaid program
D.) 20% through the Federal Employees Health Benefits (FEHB) program
E.) 15% through the Medicare program
E.) 15% through the Medicare program
Which of the following statements regarding health insurance rating systems is (are) correct?
I. Both prospective and retrospective experience rating use an employer’s experience to calculate the insurance rate.
II. With prospective rating, the insured, not the insurer, bears the underwriting risk.
III. If experience in the year 20X1 is used to determine the rate for the subsequent year, 20X2, this would be retrospective rating.
A.) I only
Which of the following statements regarding the loading percentage for health insurance rates is (are) correct?
I. The loading percentage is lower for group health insurance rates than it is for individual health insurance rates.
II. The loading percentage is lower for small groups than for large groups.
III. The Affordable Care Act imposes penalties on insurers if their loading fees are too high.
D.) I and III only
Which of the following statements regarding low-cost, retail health care clinics is (are) correct?
I. While low-cost, retail health clinics offered the promise of lowering the cost of health care, actual experience has been negative and the number of these clinics has been declining.
II. This approach requires the onsite, day-to-day management of a physician.
III. These clinics can offer a range of medical services from basic triage and prevention to management of chronic conditions like diabetes and heart disease.
B.) III only
Which of the following statements regarding self-insured health plans is (are) correct?
I. Self-insured health plans want to be exempt from state insurance regulation.
II. Relatively few, less than 20 percent, of workers are in some type of self-insured preferred provider organization (PPO) health plans.
III. A third-party administrator (TPA) may be used when an employer wants to have a self-insured plan but does not want the burden of administering the plan.
C.) I and III only
Which of the following statements regarding the size of price concessions managed care plans can negotiate with hospitals is (are) correct?
I. Virtually no managed care plans pay full billed
II. Discounts rarely exceed 40 percent.
III. There apparently is no direct relationship between the size of the discount and the actual price of hospital services.
C.) I and III only
Studies regarding hospital price negotiations in selective contracting include which of the following implications?
I. Insurers and consumers generally should encourage the entry of new and additional capacity in the local health care market if the purpose is to reduce prices.
II. The existence of numerous self-employed pediatricians is likely to hinder selective contracting efforts.
III. If a local hospital market has idle capacity, it is likely that neighboring hospitals will tend to have healthy financial results.
A.) I only
Which of the following are key assumptions that were proven to be incorrect for long-term care (LTC) policies sold from when first introduced in the 1980s to the 1990s?
I. Morbidity experience was higher than expected
II. Lapse rates turned out to be higher than expected
III. Higher-than-expected margins were needed to account for adverse selection
C.) I and III only
Which of the following is (are) recommendations that have been made to address certain issues including adverse selection related to Small Business Health Options Program (SHOP) exchanges?
I. The premium subsidies that have been made available to firms that purchase SHOP plans should be increased.
II. SHOP exchanges should invest in technology and operations to make the process of purchasing a plan as simple and easy as possible.
III. SHOP exchanges should dissuade small firms from continuing their relationships with traditional brokers once they have signed on with an exchange.
D.) I and II only
Which of the following statements describe(s) the federal income tax treatment of qualified long-term care (LTC) insurance premiums?
I. If an individual who is not self-employed pays qualified LTC insurance premiums, the premiums are not deductible under any circumstances.
II. If an S corporation, partnership, or LLC pays qualified premiums for an employee who is also an owner of the business, the premium is considered compensation.
III. If a Subchapter C corporation pays for qualified LTC insurance premiums for an employee, officer, or owner, the amount is 100 percent deductible to the business as a business expense, and the premium is not considered compensation to the employee, officer, or owner.
D.) II and III only
Which of the following statements describe(s) the objectives of the risk and market stabilization programs in the Affordable Care Act?
I. To redistribute funds from plans with lower-risk enrollees to plans with higher-risk enrollees.
II. To provide payments to plans that enroll higher-cost individuals.
III. To limit insurer losses and gains beyond an allowable range.
E.) I, II and III
Reinsurance is especially important in self-funded health insurance plans. Which of the following statements regarding stop-loss reinsurance for these plans is (are) correct?
I. “Lasering” is the process of excluding selected high-cost employees from reinsurance coverage.
II. The stop-loss reinsurance contract is almost always limited to one year.
III. Stop-loss reinsurance for self-funded health plans is currently regulated almost exclusively at the federal level.
B.) II only
Which of the following entities have participated in the risk adjustment program of the Affordable Care Act?
I. All qualified health plans offered outside the exchange
II. Self-insured health plans offered on private exchanges
III. Medicare Part D plans
A.) None
Which of the following statements regarding the Affordable Care Act (ACA) is (are) correct?
I. The ACA puts a limit on the medical loss ratio for large and small groups.
II. The ACA prohibits medical underwriting.
III. The ACA should produce lower health premiums for men and for younger people relative to the premiums for the same coverage prior to the law.
D.) I and II only
Studies concerning employees’ willingness to change health plans when faced with changes in out-of-pocket premiums show that not all employees have the same degree of price sensitivity. Which of the following groups of employees are less likely to change plans for a given increase in the out-of-pocket premium?
I. Enrollees of point-of-service (POS) plans
II. Enrollees of health maintenance organization (HMO) plans
III. Employees with chronic health conditions
C.) III only
Which of the following is (are) among the limitations of ordinary whole life insurance?
I. Relatively high cost
II. Limited flexibility
III. No savings fund
A.) I only
In the patient-centered medical home (PCMH) model, which of the following statements regarding primary care visits is (are) correct?
I. The first contact person during such visits might be a generalist, a specialist, or a nurse practitioner.
II. Some medical homes use secure messaging through electronic health records for real-time specialist consultation during primary care visits.
III. In many practices, it is common to have daily team “huddles” to preview cases.
E.) I, II and III
Which of the following statements regarding different approaches by which to compensate physicians in managed care plans is (are) correct?
I. Some managed care organizations may prefer to use arrangements that provide no direct link between quality or quantity of physician effort and compensation.
II. Some managed care organizations preferring to provide a link between quantity of physician effort and compensation will use a fee-for-service arrangement.
III. Some managed care organization will use a capitation arrangement to create incentives for physicians to provide visits and referrals that cost less than the capitated amount.
E.) I, II and III
Which of the following statements regarding insurer payments and consumer out-of-pocket payments for out-of-network providers is (are) correct?
I. Out-of-network providers are not limited to an insurer fee schedule when setting price and often charge more than insurers are willing to reimburse.
II. There is evidence that cost-sharing for using an out-of- network provider is decreasing.
III. Some out-of-network providers will accept as full payments reimbursements made by insurers or they will negotiate with consumers on price.
D.) I and III only
Which of the following statements regarding the methodology used by the Affordable Care Act’s risk adjustment program is (are) correct?
I. The risk adjustment program transfers funds from plans with lower-risk enrollees to plans with higher-risk enrollees.
II. Individual risk scores based on an individual’s age and sex are specifically prohibited.
III. If an enrollee is receiving subsidies to reduce his or her cost sharing, an induced utilization factor is applied to account for induced demand.
C.) I and III only
Which of the following statements regarding the strategies that can be used to pursue quality improvement (QI) is (are) correct?
I. One of the top strategies that has been identified is to delegate authority to the implementation planners.
II. It is now believed that a universal implementation approach for the various practice settings is better than a tailored implementation approach for each practice setting.
III. One of the best strategies is to focus on special projects using a team of volunteers.
A.) I only
Which of the following statements regarding the self-funding of health benefits by small firms are correct?
I. Total costs in self-funded plans are lower relative to fully insured product options in large part because traditional insurance premiums include carrier marketing costs and profit margins—factors that are not applicable to self-funded plans.
II. With a self-funded plan, a small employer can personalize a benefits package to reflect the needs of its workers.
III. A shift to self-insurance may lead to adverse selection in the fully insured market for small groups.
E.) I, II and III
Which of the following statements regarding the financing of workers’ compensation programs is (are) correct?
I. Workers’ compensation programs are based on the principle that the cost of work-related accidents is a business expense.
II. Employers can purchase workers’ compensation insurance from a private carrier or state fund but no state allows this exposure to be self-insured.
III. Most state workers’ compensation programs rely heavily on the general taxing power of the state to finance workers’ compensation.
A.) I only
Disadvantages of group term life insurance for employees include which of the following?
I. Coverage is rarely portable
II. Only pure protection is provided
III. Coverage is not guaranteed to be permanent
E.) I, II and III
Research has shown which of the following statements regarding managed health care to be correct?
I. While the prevailing public view is that managed health care results in lower quality, little evidence exists on this issue in part because of the difficulty in measuring quality.
II. Favorable selection of patients does contribute to the overall lower claims experience that managed care plans enjoy over indemnity plans.
III. Managed care plans can provide actual cost savings because of their ability to selectively contract with providers.
E.) I, II and III
Which of the following statements regarding the amount of benefits provided in private long-term disability income (PLTDI) and Social Security Disability Income (SSDI) plans is (are) correct?
I. Most PLTDI plans replace 60 percent of the insured’s predisability income, and 60 percent generally exceeds what he would receive if he met the SSDI definition of disability and applied for and received Social Security disability benefits.
II. High income workers often get more than 60 percent of their predisability income replaced by SSDI.
III. SSDI benefits replace about 85 percent of lifetime predisability earnings for the average worker even if he does not receive the maximum family benefit.
A.) I only
Which of the following statements regarding the advantages of private health exchanges is (are) correct?
I. They provide more health insurance options to employees.
II. They have provided substantial administrative cost savings.
III. They can relieve the employer of having to choose one or two plans for an entire workforce.
C.) I and III only
Which of the following statements regarding the so-called “death spiral” in health insurance premiums is (are) correct?
I. The fundamental cause of the “death spiral” is the great disparity between the size of large health insurance plans and the size of small health insurance plans.
II. To counter problems arising from adverse selection, risk adjustment methods can be used to transfer funds from plans with below-average costs to plans with above-average costs.
III. Several industry reports argue that risk adjustment is needed in the multicarrier exchange market, and there is strong evidence and detailed procedures for such adjustments.
A.) II only
The Affordable Care Act specifically refers to which of the following patient-centered medical home features or characteristics?
I. Expanded access to health care
II. Payments that recognize added value from additional components of patient-centered care
III. Safe and high-quality care through evidence informed medicine
E.) I, II and III
Which of the following statements regarding the condition of the delivery of health care is (are) correct?
I. Studies show that regions in the U.S. with higher numbers of subspecialists have lower costs (attributable to lower malpractice costs) and better health outcomes.
II. Studies show only incremental improvements in health care disparities among different segments of the U.S. population.
III. Most primary care practices are financially insecure.
D.) II and III only
In which of the following ways does the U.S. health care market not function like a “normal” market?
I. The health care market has significant asymmetry in information between consumers, providers and insurers.
II. Moral hazard is a problem because the marginal cost of covered care is zero, causing some to overconsume medical care.
III. Doctors are initially chosen from websites providing physician reviews rather than from recommendations by friends or relatives.
C.) I and II only
Which of the following statements regarding health care providers and out-of-network coverage is (are) correct?
I. The Affordable Care Act’s “Summary of Benefits and Coverage” is expected to make it easier for individuals to navigate the complex system of out-of-network coverage.
II. Many plans allow out-of-network expenses to count toward an individual’s out-of-pocket maximum.
III. In some states insurers are required to report statistics related to driving distance to providers.
E.) I and III only
How did the Affordable Care Act change Medicare?
I. The law provides strong incentives for health care providers to return to traditional fee-for-service compensation.
II. The law mandates that consumers choose the most cost- effective plan for them.
III. The law expanded Medicare’s wellness and prevention benefits.
C.) III only
Which of the following statements regarding patient-centered medical homes (PCMHs) is (are) correct?
I. PCMHs institute a team approach to patient care.
II. The medical home model emphasizes patient involvement through shared decision making.
III. The PCMH model requires a greater number of visits with physicians than traditional health care delivery methods.
B.) I and II only
All the following are major requirements of a qualified long-term care (LTC) policy EXCEPT:
A.) The policy must only provide coverage for qualified LTC services.
B.) The policy must provide a cash surrender value or other money that can be paid, assigned, or pledged as collateral for a loan.
C.) The policy must be guaranteed renewable.
D.) The policy must provide that all policyholder dividends and premium refunds be applied against future premiums or to increase benefits.
E.) The policy must provide certain consumer protection provisions.
B.) The policy must provide a cash surrender value or other money that can be paid, assigned, or pledged as collateral for a loan.
All of the following are underwriting methods used in health insurance EXCEPT:
A.) Adjusted community rating
B.) Retrospective experience rating
C.) Community rating by class
D.) Administrative rating
E.) Prospective experience rating
D.) Administrative rating
All the following are reasons why insurance companies have been dissatisfied with the long term care (LTC) insurance product structure EXCEPT:
A.) The use of unisex rates, which insurers would prefer, has been prohibited.
B.) LTC insurers have been subject to reinvestment risk because interest rates have been low for so long and insurers have been forced to invest cash flows from expiring assets at rates lower than what they have assumed.
C.) Insurers have been concerned that the Genetic Information Nondiscrimination Act (GINA) may prevent the use of genetic information for underwriting, but potential policyholders may have this personal information, thereby creating a situation for adverse selection.
D.) Insurers have been concerned about the negative consequences when applying for rate increases.
E.) Insurers find it difficult to objectively specify claim criteria due to the complexity of disability.
A.) The use of unisex rates, which insurers would prefer, has been prohibited.
A study examined the elements that affect health insurer price negotiations in selective contracting with hospitals. The study concluded that insurers are able to obtain lower prices in all the following situations EXCEPT:
A.) When there are more hospitals in the local market.
B.) When the insurer had a larger share of the hospital’s book of business.
C.) When the hospital had little bargaining power.
D.) When the insurer is small, i.e., has assets lower than a certain amount.
E.) When the hospital had a lower occupancy rate.
D.) When the insurer is small, i.e., has assets lower than a certain amount.
All the following statements regarding self-insured health plans are correct EXCEPT:
A.) Self-insurance may not be a wise choice for group plans with low credibility factors.
B.) The Affordable Care Act unintentionally has made self-funding more attractive to small employers.
C.) The concept of objective risk leads one to anticipate that employers with fewer covered lives prefer self-insurance.
D.) Self-insurance dominates the large group health market.
E.) Self-insured plans have the option of adjudicating their claims in-house.
C.) The concept of objective risk leads one to anticipate that employers with fewer covered lives prefer self-insurance.
All the following statements regarding patient-centered medical homes are correct EXCEPT:
A.) One critical component of this model of health delivery is electronic health record systems.
B.) This model has been used for a long time as a coordinated care model for children (pediatrics).
C.) Growth of PCMHs in recent years has been powered by the steady growth of consumer-driven health plans.
D.) PCMHs rely heavily on medical technology.
E.) Tracking patient engagement and satisfaction plays a significant role in PCMH assessments by payers and the public.
C.) Growth of PCMHs in recent years has been powered by the steady growth of consumer-driven health plans.
To become eligible for Social Security Disability Insurance benefits, a worker must meet all the following requirements EXCEPT:
A.) File a claim for disability insurance benefits
B.) Meet the definition of disability set forth in the Social Security Act
C.) Be insured for disability under the Social Security Act
D.) Be at least 30 years old
E.) Not have attained normal retirement age
D.) Be at least 30 years old
All of the following are criteria utilized by the National Committee For Quality Assurance (NCQA) in awarding a “Distinction in Patient Experience Reporting” to medical homes EXCEPT:
A.) Access to care
B.) Shared decision making
C.) Provider personality ratings
D.) Self-management support
E.) Coordination of care
C.) Provider personality ratings
All the following statements regarding the Diamond Project, cited as a case study in the readings, are correct EXCEPT:
A.) The Diamond Project was built on Institute of Clinical Systems Improvement’s years of experience.
B.) Member groups developed considerable expertise in implementing the organizational changes necessary for major Quality Improvement.
C.) Success was built on the high degree of trust and common mission between medical groups and health plan sponsors.
D.) Success was built on several years of collectively trying to improve depression care by a number of other means.
E.) Of the many successes of the Diamond Project, much of it has been with patients covered by Medical Assistance fee-for-service insurance.
E.) Of the many successes of the Diamond Project, much of it has been with patients covered by Medical Assistance fee-for-service insurance.
The Age Discrimination in Employment Act (ADEA), as amended and clarified, stipulates all the following for group term life insurance benefits for active employees after age 65 EXCEPT:
A.) An employer may be able to make greater reductions in benefits on the basis of its own demonstrably higher cost experience.
B.) An employer may reduce coverage each year starting at age 65 by 8 to 9 percent of the declining balance of the life insurance benefit.
C.) An employer generally may terminate life insurance coverage for active employees at age 70 while continuing to provide coverages for younger employees.
D.) An employer may make a one-time reduction in life insurance benefits at age 65 from 35 to 40 percent and maintain this until retirement.
E.) An employer may use a “benefit-by-benefit” analysis to ascertain if a reduction in older workers’ benefits is permissible.
.
C.) An employer generally may terminate life insurance coverage for active employees at age 70 while continuing to provide coverages for younger employees.
As quality improvement (QI) has been implemented in health care, the approach has evolved over time with certain lessons learned and various improvements made. All the following statements involving this evolutionary process are correct EXCEPT:
A.) When QI was first imported from other industries into medical care, it usually adopted an approach of creating specific projects managed by special QI teams that applied.
B.) A revised model of QI was greatly simplified and instead of many steps, the model proposed that QI teams first answer three basic questions.
C.) QI teams need a solid understanding and application of systems thinking, measurement, variation, and change management.
D.) A modification of the QI process involved the focus on macrosystems.
E.) One step recognizes that QI effort must be incorporated into the normal management of the primary care organization rather than being conducted as special projects using ad hoc teams of volunteers.
D.) A modification of the QI process involved the focus on macrosystems.
The Affordable Care Act defines a Patient Centered Medical Home (PCMH) as a model of care that has six core features. All of the following are included in this list of core features EXCEPT:
A.) The safe and high-quality care through evidence-informed medicine.
B.) The rare use of personal physicians.
C.) A whole person orientation.
D.) The appropriate use of health information technology.
E.) A payment that recognizes added value from additional components of patient-centered care.
B.) The rare use of personal physicians.
Using out-of-network health providers is often difficult and/or unavoidable for consumers. All the following statements regarding issues related to in- and out-of-network care are correct EXCEPT:
A.) Often the amount the insurer will reimburse for out-of-network care and the amount the consumer will pay are not transparent to the consumer.
B.) Consumers may find themselves unknowingly relying on inadequate or outdated directories to determine provider network participation.
C.) Some specialties have noticeably lower provider participation (in-network) rates.
D.) Excess charges for out-of-network hospital-based providers (e.g., anesthesiologists) that are not chosen by the consumer are the responsibility of the hospital if it fails to notify consumers of the providers’ out-of-network status.
E.) Out-of-network coverage may need to be accessed if an appropriate in-network provider is not available within a reasonable distance from a consumer’s home.
D.) Excess charges for out-of-network hospital-based providers (e.g., anesthesiologists) that are not chosen by the consumer are the responsibility of the hospital if it fails to notify consumers of the providers’ out-of-network status.
Self-funded health care insurance plans are exempt from several key requirements in Affordable Care Act (ACA), Employee Retirement Income Security Act (ERISA), and state regulations. All the following are included in these exemptions EXCEPT:
A.) The ACA exempts self-funded plans from essential health benefit (EHB) and community rating requirements that apply to insurers selling to small groups.
B.) Self-funded plans are not subject to medical loss ratio requirements that apply to fully insured plans.
C.) Self-funded plans are exempt from annual and lifetime caps on coverage.
D.) Self-funded plans are exempt from state premium taxes.
E.) ERISA effectively exempts these plans from state insurance laws, including mandated benefits, reserve requirements and consumers protections.
C.) Self-funded plans are exempt from annual and lifetime caps on coverage.
All the following statements regarding benefits under private long-term disability income (PLTDI) plans are correct EXCEPT:
A.) Some of these plans offer lifetime benefits.
B.) Many of these policies pay benefits up to age 65 or the individual’s retirement age.
C.) Some of these plans pay benefits for a set number of years (sometimes as few as two or five).
D.) It is not uncommon for benefit periods arising from mental health conditions to be significantly shorter than for those arising from physical conditions.
E.) These plans can have no restrictions on coverage for preexisting conditions.
E.) These plans can have no restrictions on coverage for preexisting conditions.
All the following are included in the ten guiding principles in Medicare’s current risk adjustment approach EXCEPT:
A.) The measures should be based on large enough sample sizes that they yield accurate and stable predictions.
B.) The health status-related measures should be clinically meaningful. This means they should face validity and be sufficiently clinically specific to make it difficult for plans to assign a beneficiary with a vaguely defined condition.
C.) Transitivity must hold. If condition A results in a greater payment than condition B and if B is paid more than C, then A should be paid more than C.
D.) Providers should not be penalized for reporting many conditions.
E.) Discretionary diagnostic codes should be permitted.
E.) Discretionary diagnostic codes should be permitted.
In the calculation of health insurance rates, the pure premium is determined to be $1,300 and the loading percentage is 35 percent. All of the following statements regarding these figures are correct EXCEPT:
A.) The gross premium must be $2,145.
B.) The loss ratio is 65 percent.
C.) The expense ratio is 35 percent.
D.) The loading percentage is also known as the expense ratio.
E.) The pure premium is the amount allocated for the expected losses.
A.) The gross premium must be $2,145.
All of the following statements concerning the concept of a free market are correct EXCEPT:
A.) One of its basic assumptions is that consumers are rational and will make informed decisions about value, quality, and price.
B.) One of its premises is that producers meeting consumer demands will be rewarded with market share and profit.
C.) Consumer choices must be limited for a free market to empower consumers, regulate producers and operate efficiently.
D.) Certain economists and sociologists have challenged the basic assumptions underlying the concept of free market.
E.) The theory of bounded rationality casts doubt on the concept.
C.) Consumer choices must be limited for a free market to empower consumers, regulate producers and operate efficiently.
All the following statements regarding the services that third-party administrators (TPAs) provide to self-funded health plans are correct EXCEPT:
A.) TPA services provided to self-funded plans are highly uniform among TPA firms.
B.) TPAs handle a broad range of administrative services for self-funded plans.
C.) Most TPAs will arrange access to provider (physician and hospital) networks, pharmacy benefits and review claims.
D.) TPAs may also perform some of the customer services in lieu of brokers, such as enrolling employees and resolving customer disputes.
E.) In many cases, TPAs are owned by large insurance companies that license out their physician network and help administer claims for self-funded groups.
A.) TPA services provided to self-funded plans are highly uniform among TPA firms.
All of the following statements regarding legal protection from out-of-network medical bills incurred unknowingly by patients are correct EXCEPT:
A.) Very few states extend balance billing protection to health plan enrollees from out-of-network providers.
B.) A patient-plaintiff facing surprise medical bills from out-of-network providers is likely to prevail in a breach-of-fiduciary-duty claim against the hospital.
C.) The doctrine of unconscionability permits courts to void a contract if no sensible person would accept and no honest person would offer such a contract.
D.) Courts have been reluctant to find hospital admission contracts for those receiving out-of-network care billed at chargemaster rates as unenforceable.
E.) Addressing the problem of involuntary balance billing at the state level has the benefit of allowing citizen preferences to have a more direct role in policy.
B.) A patient-plaintiff facing surprise medical bills from out-of-network providers is likely to prevail in a breach-of-fiduciary-duty claim against the hospital.
All the following statements regarding salary continuation programs are correct EXCEPT:
A.) One advantage of a salary continuation program is that it may encourage employees to conserve their sick days for extended disability protection.
B.) Insurance companies that provide this type of coverage often provide expertise in state regulatory requirements.
C.) These programs are not deemed to be Employee Retirement Income Security Act (ERISA) plans and therefore are not subject to ERISA reporting and disclosure requirements and fiduciary standards.
D.) Employers subject to Statement 112 of the Financial Accounting Standards Board (FAS 112) (or ASC 712) need to annually estimate the accrued liability for these benefits, put aside (reserve) funds for it and report it on their financial statements.
E.) The burden of making determinations regarding disability criteria and duration of disability of these programs typically rests on the employer.
B.) Insurance companies that provide this type of coverage often provide expertise in state regulatory requirements.
All the following could be the beneficiary of an employer-sponsored group term life insurance contract EXCEPT:
A.) The employee’s estate
B.) The employee’s children
C.) A charity
D.) The employer
E.) The employee’s former spouse
D.) The employer
All of the following are factors a stop-loss insurer might consider when underwriting a health care policy for an employer EXCEPT:
A.) Previous health care experience and anticipated trends going forward for the employer
B.) Anonymized medical surveys of existing policies’ covered employees
C.) The employer’s preferred physician network
D.) The geographic location of the employer
E.) The third-party administrator selected by the employer
B.) Anonymized medical surveys of existing policies’ covered employees
All the following statements regarding private health insurance exchanges are correct EXCEPT:
A.) In private exchanges, the exchange vendor can be relied on to help explain exchanges to each employee, rather than have employers try to do it on their own.
B.) The technology deployed by most private exchanges renders telephone hotlines and face-to- face customer service redundant.
C.) Private exchanges typically provide extensive software to aid consumers in decision support.
D.) The more advanced software of private exchanges allows side-by-side comparisons as the employee adjusts particular characteristics.
E.) Exchange websites can include pop-up information to explain facets of the benefits as the employee is looking at a particular item, such as the drug coverage in a health plan.
B.) The technology deployed by most private exchanges renders telephone hotlines and face-to- face customer service redundant.
All of the following are reasons cited for consumers being reluctant to purchase long-term care (LTC) insurance EXCEPT:
A.) Rate increases announced by insurers and the negative publicity that follow such announcements erode public trust in LTC insurance companies.
B.) Fears of not being able to change carriers due to the underwriting practice of not accepting policyholders with an existing five-plus-years policy in force with another carrier.
C.) The onerous process required to receive benefits.
D.) The cost is considered too expensive.
E.) The fact that many elderly disabled individuals are unable to satisfy the requirements to be eligible for LTC benefits.
B.) Fears of not being able to change carriers due to the underwriting practice of not accepting policyholders with an existing five-plus-years policy in force with another carrier.
All the following statements regarding Medicare Advantage (Medicare Part C) plans are correct EXCEPT:
A.) These plans give recipients the option to enroll in a health plan with a narrower network of hospitals and providers than that of Medicare Parts A and B, but with less out-of-pocket costs.
B.) These plans are likely to include their own prescription drug coverage.
C.) These plans are voluntary and beneficiaries always have the option of going back to the traditional program.
D.) These plans are often chosen because of lower cost and greater care coordination.
E.) These plans have minimal state variation.
E.) These plans have minimal state variation.
Studies of physician markets show all the following regarding the employment and compensation of physicians in managed care plans EXCEPT:
A.) Health maintenance organizations (HMOs) were able to negotiate lower fees than were preferred provider organizations (PPOs).
B.) Managed care plans paid lower fees when there were more physicians per capita in the metropolitan area.
C.) Managed care plans paid lower fees for procedures when there was greater managed care penetration in the area.
D.) Studies show that the use of the capitation method of compensation has been increasing for many years.
E.) Managed care leads to somewhat fewer self-employed physicians.
D.) Studies show that the use of the capitation method of compensation has been increasing for many years.
Long-term care insurance may cover all the following types of services EXCEPT:
A.) Custodial care
B.) Home health care
C.) Hospice care
D.) Assisted living care
E.) Short-term hospital stays
E.) Short-term hospital stays
All the following statements regarding the usual and customary rate (UCR) used in health insurer reimbursement practices are correct EXCEPT:
A.) An investigation by one large state alleged conflict of interest between a major insurer and the entity responsible for managing the database used to calculate UCR.
B.) An independent, nonprofit company has been established to manage the database for computing UCR.
C.) More and more insurers are abandoning the traditional UCR pay formulas.
D.) Changes involving the UCR have greatly decreased the amount of balance billing.
E.) The use of the Medicare rate has increased recently.
D.) Changes involving the UCR have greatly decreased the amount of balance billing.
The Health and Medicine Division (formerly known as Institute of Medicine) promulgated six goals following the two landmark reports that identified widespread quality problems within the U.S. healthcare system. All the following are included among these six goals EXCEPT:
A.) Equity
B.) Convertibility
C.) Timeliness
D.) Effectiveness
E.) Patient centeredness
B.) Convertibility
All the following are advantages cited for noncontributory financing of group-term life insurance EXCEPT:
A.) Greater control of plan by employer
B.) Economy of installation
C.) Greater employee interest
D.) Simplicity of administration
E.) Coverage of all eligible employees
C.) Greater employee interest
All the following statements regarding healthcare quality improvement collaboratives (QICs) are correct EXCEPT:
A.) QICs are one of the more promising ways to help clinics and medical groups to improve their quality.
B.) The most well-known QICs are those short-term ones that have been run for specific topics by the Institute for Healthcare Improvement (IHI).
C.) QICs are very expensive for participants and tend to attract mainly large care delivery organizations or those paid for by the government.
D.) Enough separate QICs have been implemented in the U.S. that they now have their own national association, the Network for Regional Healthcare Improvement.
E.) The conclusion, in a systematic review of the evidence of the value of QICs, was that QICs indeed provide significant value that can be predicted with much certainty.
E.) The conclusion, in a systematic review of the evidence of the value of QICs, was that QICs indeed provide significant value that can be predicted with much certainty.
After extensive study and research, certain conclusions can be drawn regarding the various approaches to achieve quality improvements in health care. All the following statements concerning these conclusions are correct EXCEPT:
A.) Performance measures, incentives and penalties focused on health plans are not likely to be very successful in bringing about effective and extensive quality improvement.
B.) External bodies have limited ability to foster the redesign of care unless there is a change in the payment system.
C.) Physicians and care delivery organizations must take a leading role in any serious improvement in care and costs.
D.) Payment systems have little impact on quality improvements.
E.) Basing physician payments on the volume of services provided neither incentivizes significant changes in care approach nor covers the costs of making such changes.
D.) Payment systems have little impact on quality improvements.
All the following statements regarding the definition and features of a “private health exchange” are correct EXCEPT:
A.) In general, private health exchanges involve web portals through which employees can shop for health insurance.
B.) Private health exchanges often include advanced decision making tools, such as benefit calculators.
C.) These exchanges are really a shopping experience.
D.) There is a lack of consensus on the defining characteristics of private health exchanges.
E.) An exchange operator statutorily cannot vary plan offerings across geographic regions.
E.) An exchange operator statutorily cannot vary plan offerings across geographic regions.