Assignment 4 - Effect of Selective Contracting

Question 1

TEST

What insurance approach started in the 1980s has been credited for the growth of managed care?

Answer 1

selective contracting

Question 2

hospitals compete in the pre-managed care era by attracting physicians and their patients by providing more (3)

Answer 2

• services
• amenities
• quality.

Question 3

In the golden era of pre-managed care, as hospitals competed with their neighboring hospitals, they spent more on technology and amenities, driving up prices; and this outcome of escalating expenditures

Answer 3

medical arms race.

Question 4

an insurer agrees to pay for only the hospital and physician services provided by a small panel (relative to the market) of hospitals, physicians, therapists and drugstores

Answer 4

Selective contracting

Question 5

The findings of a study trying to explain the differences in prices as a function of hospital characteristics, local hospital market conditions and hospital and insurer bargaining power show that: (4)

Answer 5

1. the insurer was able to negotiate lower hospital prices when there were more hospitals in the local market.
2. the insurer obtained a lower price when it had a larger share of the hospital’s book of business.
3. the insurer obtained a lower price when the hospital had little bargaining power.
4. the insurer was able to get a lower price when the hospital had a lower occupancy rate.

Question 6

Studies conducted after 1988 indicate that the presence of HMOs resulted in lower hospital costs and more recent studies show that the role of _________ continues to be a key in determining the prices paid by managed care firms

Answer 6

hospital competition

Question 7

The question of how large the price concessions are that managed care plans can negotiate with hospitals is not easily answered because:

Answer 7

• hospital pricing strategies are complex
• the data are not publicly available

Question 8

Other than price being part of the decision-making calculation, what are some other effects of selective contracting that have been postulated and researched? (3)

Answer 8

1. some speculated that selective contracting would lead to an expansion of the geographic hospital market
2. an argument can be made that managed care should slow the proliferation of services
3. that selective contracting may result in nonprofit hospitals providing less charity care

Question 9

Has selective contracting had an adverse impact on the quality of health care?

Answer 9

no clear evidence

Question 10

When there are differences in health care expenditures per enrollee between managed care plans and indemnity plans, it is important to know which of the effects, favorable selection or selective contracting, dominates and by how much. If the difference is almost entirely attributable to ________

Answer 10

favorable selection,

Question 11

For a medical group, what are the disadvantages of a capitation payment arrangement?

Answer 11

it has essentially become an insurance company bearing risk.

Question 12

______ means that the physician or medical group is paid on the basis of the number of covered lives for which they are responsible. The physician or medical group will only make money if the visits they provide and the services they order cost less than the capitated amount.

Answer 12

Capitation

Question 13

three types of physician compensation arrangements under managed care plans.

Answer 13

• salary arrangement
• fee for service
• capitation

Question 14

Research suggests that managed care leads to somewhat ______ self-employed physicians

Answer 14

fewer

Question 15

an insurer negotiates prices with providers but then sets a maximum on how much it will pay for the procedure

Answer 15

reference pricing

Question 16

• an employer designates a world-renowned medical center such as the Cleveland Clinic for nonemergency cardiac procedures, such as angioplasty, bypass surgery and valve replacement.
• The employer develops a single national contract with the Cleveland Clinic and then an employee with a serious heart problem requiring the designated center-of-excellence services may use a local hospital or go to the Cleveland Clinic.

Answer 16

center-of-excellence pricing