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PHSC 2 Lecture Notes - Lecture 3: Perfect Competition, Moral Hazard, Free Market

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greyrabbit304
7 Feb 2020
School
Santa Clara University
Department
Public Health
Course
PHSC 2
Professor
Clark

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Document Summary

Health insurance plan not the patient, is the real buyer in the health care transaction. Knowledge of the product lies with provider, impairing patient"s ability to make an informed. Is the insurance plan, is negotiation with the provider of the service, that sets the payment purchasing decision. Need rather than demand, drives utilization, but. Patients, insensitive to price when provider is paid by insurance plan, creates demand based on perceived need. Providers with financial interest in a service direct patient to receive more are than in medically. Free market = open competition for product/service & price necessary. Price is determined by the seller based on a buyer/seller relationship grounded in supply & demand. Customer in the buyer and the buyer is knowledgeable and price sensitive. Medicaid = federal & state health care. Medicare = all federal government (65+, disabilities) Health care market - alters the definition of buyer . Insurance as the payer is the dominant buyer.

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Related Questions

Managed care organizations

a) compete with each other on quality and low cost provision of services.

b) exclude health maintenance organizations.

c) exclude preferred provider organizations.

d) exclude closed-panel HMOs.

e) are often run by the federal government.

All of the following are examples of substituting cheaper forms of care for more expensive ones, except

a) prescribing a generic (vs. brand name) medication.

b) recommending chiropractic care instead of back surgery.

c) authorizing outpatient vs. inpatient surgery.

d) recommending nursing home care vs. hip replacement surgery.

e) using a physician assistant (vs. doctor) to see patients with uncomplicated health issues.

15) A physician graduates from medical school and must decide whether to take a job as a junior member of a large group practice or work for an HMO directly. For the physician, a positive aspect of working for the HMO is

a) lack of utilization controls.

b) very little peer review.

c) higher salary than with the group practice.

d) a steady stream of patients and income.

e) lower salary than with the group practice.

When it comes to attempts of managed care to control costs, cutting prices is one of the most popular methods. Which of the following is not among the valid explanations of the rationale behind this practice?

a) Price cuts would put money directly into the pocket of patients.

b) Compared to other methods, prices are easier to cut.

c) Large insurers have bargaining power to negotiate lower prices with providers.

d) When certain markets go through periods of excess supply, large insurers use it to negotiate lower prices.

e) Large insurers can threaten providers with taking the patients away unless discounts are provided.

You give birth to healthy twins. After two days in hospital, case control nurse reviews your records to determine if it is medically necessary for you to remain another day in hospital. This is an example of

a) pre-admission testing.

b) concurrent review.

c) retrospective review.

d) discharge planning.

e) database profiling.

An actuarial assistant at your HMO presents graphs and charts of the number of colonoscopies performed per 1,000 patients by each doctor in the plan. This is an example of

a) pre-admission testing.

b) concurrent review.

c) retrospective review.

d) discharge planning.

e) database profiling.

29.Which of the following payment initiatives are included in healthcare reform legislation (the Affordable Care Act)?

a. Value-based purchasing

b. New models of bundled payment

c. Patient age-based reimbursement

d. Initiatives a. and b. are both correct.

e. Initiatives a., b., and c. are all correct.

28.Which of the following statements about Medicares payment system for physicians services is most correct?

a. Each patient is assigned a Medicare Patient Identification Code (PIC) that reflects the severity of the patients diagnosis.

b. Patients are divided into five groups (A-E) based on diagnosis, with the E group reimbursement being the greatest.

c. Each service performed has a relative value unit (RVU) assigned that reflects the amount of physician work, practice expenses, and liability insurance costs.

d. Physicians are paid using Medicares Outpatient Observation Payment System (OOPS).

e. Physicians are paid using Medicares Ambulatory Patient Payment System (APPS).

27.Which of the following statements about Medicares inpatient prospective payment system (IPPS) is most correct?

a. Each discharge is assigned to a Medicare severity diagnosis-related group (MS-DRG) with a specified relative rate.

b. The relative weight is multiplied by a base dollar payment amount adjusted for local input prices to obtain the reimbursement amount. c. The relative weight is multiplied by a base dollar payment amount adjusted for the size of the hospital to obtain the reimbursement amount.

d. Statements a. and b. are both correct.

e. Statements a., b., and c. are all correct.

21.Which of the following statements about medical coding is incorrect?

a. ICD, CPT, and HCPCS provide a standard set of codes used to transform medical diagnoses and procedures into code numbers that can be universally recognized and interpreted.

b. ICD codes are published by the World Health Organization.

c. CPT codes were developed and are copyrighted by the American Medical Association.

d. HCPCS expands the CPT codes to include nonphysician services and durable medical equipment.

e. Because the coding process is technical and complex, there is little concordance between the information in the medical record and the classifications produced by medical coding.

19.Which of the following reimbursement methods creates the greatest incentive for providers to control the cost of delivering health services?

a. Cost-based reimbursement

b. Charge-based reimbursement

c. Discounted charge based reimbursement

d. Per diagnosis prospective payment

e. Capitation

23.Which of the following statements about capitation is most correct?

a. Capitation creates a delay between providing services and receiving payment.

b. The capitation payment amount to providers varies significantly from month to month and hence is difficult to predict.

c. Capitation encourages providers to focus on prevention and wellness.

d. Capitation places a greater administrative burden on providers than does fee-for-service payment.

e. Capitation uses a per diagnosis methodology to set hospital payment rates.

8.Which of the following tax-related benefits are generally granted to not-for- profit corporations?

a. Exemption from federal and state income taxes

b. Exemption from property taxes c. Ability to issue tax-exempt (municipal) debt

d. Ability to accept contributions that are tax deductible to the donor

e. Answers a., b., c., and d. are correct.

16. True or False: Under current law, the profits of not-for-profit corporations can be distributed to individuals.

14.Which of the following is NOT expected to result from healthcare reform initiatives?

a. Increased formation of accountable care organizations (ACOs)

b. Increased emphasis on population health

c. Decreased need for data analytics

d. Increased provider consolidation

e. Staffing shortages in selected areas

13. True or False: Because the organizational and financial goals of for-profit and not-for-profit provider organizations differ, their financial decision-making processes usually lead to very different decisions.

10. A good cost driver does all of the following except a. Allocates costs fairly. b. Helps in controlling costs. c. Can be traditional or activity based. d. Provides greater benefits than its cost. e. All of the above are elements of a good cost driver.

11. In allocating support services to other support service departments, which method is easiest? a. Direct method b. Reciprocal method c. Step-down method

12. In allocating support services to other support service departments, which method is most accurate? a. Direct method b. Reciprocal method c. Step-down method

13. Activity based costing is a. Generally better than traditional costing, but more expensive to implement than traditional costing. b. Is only suitable for large organizations. c. Generally not as accurate as traditional costing. d. Is generally less expensive to implement than traditional costing.

14. Which of the following is not true? a. A price setter usually has a large market share, b. Price setters must watch costs more closely than price takers, c. A health provider in a competitive market is usually a price taker, d. A health care provider can be both a price setter and a price taker, e. All of the above are true.

15. Health care providers are a. Price takers. b. Price setters. c. A price setter or price taker, depending on their costing method. d. Either a price setter or price taker, depending on the competition.

16. To allocate the cost of Financial Services in a Health Care setting a. Patient revenues is a better cost driver. b. The number of bills is a better cost driver. c. We are better to not allocate the cost of Financial Services. d. Using both the number of bills and patient revenues may be the best method.

17. Which is more likely to be used by a price taker? a. Target costing, b. Full cost pricing, c. Cross subsidization, d. Marginal cost pricing.

18. Which is more likely to be used by a price setter wanting to provide a full range of services to constituents at various wealth levels? a. Target costing b. Full cost pricing c. Cross subsidization d. Marginal cost pricing

19. Government intervention in healthcare, to insure care for the poor, will likely move healthcare providers toward a. Being price takers and using target costing b. Being price setters and using target costing c. Being price setters and using cross subsidization d. Being price takers and using cross subsidization

20. If long-run prices are set on the basis of marginal costs, the organization may a. not recover its total costs. b. not recover its direct costs. c. temporarily build market share. d. not recover its overhead fixed costs. e. all of the above.

21. To set capitation rates, which method is best? a. fee-for-service method, b. demographic approach, c. budgetary, or cost approach, d. in general, one approach is as good as another.

22. Which is least likely to change? a. Corporate goals b. Vision statement c. Values statement d. Mission statement e. Corporate objectives

23. Which is most likely the shortest? a. Vision statement b. Corporate goals c. Values statement d. Mission statement e. Corporate objectives

24. Using the bottom-up, or participatory approach a. budgets are first developed by individuals who are most knowledgeable regarding their departments’ or programs’ financial needs. b. often initially results in an organizational budget that is not financially feasible. c. requires component budgets to be sent back to the original preparers for revision. d. does not reflect top management’s perspective from the start. e. All of the above.

25. Which of the following will provide the largest differences? a. Comparing the static budget to the flexible budget, b. Comparing the static budget to the actual results, c. Comparing the actual results to the flexible budget, d. We cannot tell without the actual details.

26. During an economic downturn a. Conventional budgeting is more useful because the budget is likely to have a great deal of change. b. Zero-based budgeting is more useful because the budget is likely to have a great deal of change. c. Conventional budgeting is more useful because the previous budget provides a good starting point. d. Zero-based budgeting is more useful because the previous budget provides a good starting point.

27. A cash budget is useful a. For liquidity planning. b. To project cash inflows and outflows. c. Can show when the organization can invest excess cash. d. Can show when the organization needs to borrow cash. e. All of the above.