PANCE Exam: Health Policy Review Questions & Answers

Question: How do Health Maintenance Organizations (HMOs) differ from traditional indemnity health plans?
In an HMO, the plan takes responsibility for the financing and delivery of health care services to a defined group of beneficiaries. The payment is usually prospective with a fixed payment for each person served regardless of the actual services provided (capitation). Indemnity insurance is based upon the fee-for-service model where the plans responsibility is limited to financial reimbursement and payment is made after services are rendered.

Question: In what sector of the U.S. health care system is the most money spent each year?
Hospital care represents the largest component of health care spending representing about one-third of the costs of health care in the United States. Prescription drugs are the fastest growing expense consuming 11% of the nation’s health care dollar.

Question: What is the largest source of funding for health care services in the United States?
Private health insurance is the largest source financing 37% of all health care expenditures. Medicare and Medicaid rank second and third at 18% and 17%, respectively.

Question: What is the definition of physician group practice?
The American Medical Association (AMA) defines group practice as three or more physicians organized to provide medical care, consultation, diagnosis, and/or treatment through the joint use of equipment and personnel with the practice income distributed utilizing a predetermined methodology.

Question: Which component of Medicare is mandatory for all enrollees?
Part A is provided to all Medicare enrollees. It covers hospital care, home health care, hospice care, and limited care in skilled nursing facilities. Medicare Parts B, C, and D are all optional.

Question: What are the key elements of financial success for a primary care provider working with patients enrolled in a managed care plan?
Avoid unnecessary hospitalizations; keep patients out of the emergency department for services that can be rendered in the office and limit referral to specialists. These are all high cost services that can impact withhold and bonus payments from managed care plans.

What are the differences between community-rated health insurance plans and experience-rated plans?
In community-rated health plans, the premium is based upon utilization in a defined geographic area without regard to age, gender, occupation or health status. In essence, healthy people subsidize the costs for the unhealthy, which leads to adverse selection. In experience-rated health plans, the premium is based upon demographic characteristics, occupation, and/or the actual experience of the group.

Question: Who is eligible for coverage under the Medicare Program?
U.S. citizens or permanent residents older than 65 years who have paid into Social Security system for 10 or more years and those eligible for benefits from the Railroad Retirement Board are eligible for Medicare coverage. In 1974, individuals who were disabled were added to the eligibility list and in 1978 individuals with end stage renal disease were included.

Question: What services are covered under Medicare Part B?
Medicare Part B Supplemental Medical Insurance covers Physician/Physician Assistant services, outpatient care, and durable medical equipment (DME).

Question: Who funds Medicaid Programs?
While individual states administer their own Medicaid programs, the federal government pays between 50% and 76% of the costs with larger contributions going to states with lower per capita incomes.

Question: How good are the health outcomes for Medicaid recipients?
There is general agreement that health outcomes for Medicaid recipients lag behind those for the privately insured. This gap is due in large part to the lack of access to care. Comparisons between Medicaid coverage and the uninsured are not quite as definitive. Studies have shown the Medicaid recipients fare somewhat better than the uninsured for some conditions; however, in many instances the health outcomes are as poor as those without insurance.

Question: What is the impact of not having health insurance?
It is estimated that in 2008, 47 million Americans did not have health insurance. People who lack health insurance delay treatment for care and have worse health outcomes than people who are insured. The uninsured also have a higher overall mortality rate. In 2004, the Institute of Medicine estimated that 18,000 deaths in the United States could be attributed to the lack of health insurance.

Question: How does gender impact health care?
According to the Agency for Healthcare Research and Quality (AHRQ), there are significant disparities between the care received by men and women in the United States. In a 2004 study, AHRQ found that women received better care than men for 18% of measures, worse care for 22%, and comparable care for 59%. The study also showed that women tend to receive better preventive care for cancer and cardiovascular disease than men, while men tend to receive better treatment for end stage renal disease and heart disease.

Question: How much does the United States spend on health care each year?
Total U.S. health care expenditures reached $2.2 trillion in 2007; this translates to $7,421 per person or 16.2% of the nation’s Gross Domestic Product. This represents nearly half of the $4.7 trillion that the World Health Organization estimates was spent worldwide on health care.

What is the difference between a medical error and an adverse event?
According to the Institute of Medicine, an error is the failure of a planned action to be completed as intended or the use of a wrong plan to complete an aim. An adverse event is an injury caused by medical management rather than the underlying condition of the patient.

Question: What are the key elements that define primary care?
In 1992, Barbara Starfield identified four elements that help delineate the breadth and depth of primary care. First, is that primary care is the point of first contact for a patient. It is the entry point into the health care system. The second element is coordination of care. In primary care, the practitioner must coordinate and integrate the services provided by other members of the health care system. This is closely aligned with the gatekeeper function of the primary care provider where they are expected to control referrals for specialist and diagnostic services. The third element is comprehensiveness. Primary care addresses the routine medical needs of a population. It is centered on the patient rather than a disease or body system. The fourth element is longitudinality, which refers to the management of the health care needs of a patient over an extended period of time. This is in contrast to episodic care provided by emergency departments and urgent care centers.

Question: Is there a shortage of physicians in the United States?
There are approximately 283 physicians per 100,000 population in the United States. The Department of Health and Human Services projects that number will increase to 313 per 100,000 population by 2020. While this increase suggests an improvement in physician supply, it does not reflect the impact of growing demand for medical services. The increase in demand is related to the aging of the population, the feminization of the physician workforce and the expansion of services to the 47 million Americans currently without health insurance. Current forecasts suggest that there will be a physician shortage for the foreseeable future with the greatest shortfall occurring in primary care.

Question: Are hospital emergency departments required to treat all patients even if they do not have health insurance?
The Emergency Medical Treatment and Labor Act of 1986 (EMTLA), also known as the Antidumping Act, requires that a hospital emergency department provide an appropriate medical screening examination within the capability of the hospital, to determine whether or not an emergency medical condition or active labor exists. They must also provide necessary stabilizing treatment and admission if necessary regardless of the patient’s ability to pay. Failure to meet comply with this federal statue can lead to penalties of up to $50,000 per incident.

Question: Who is eligible for hospice care?
Hospice services are considered to be palliative care with an emphasis on pain management and psychosocial and spiritual support. To be eligible for hospice services, patients must be terminally ill with a life expectancy of 6 months or less.

Question: What is the difference between a copay and a deductible?
Copays and deductibles are both cost-sharing mechanisms designed to reduce unnecessary utilization of health care services. A copayment is a set dollar amount or a percentage of a bill for services that is paid by the enrollee in conjunction with the benefits paid by a health plan. A deductible is an amount of money that must be paid out of pocket before insurance benefits are paid by a health plan.

Question: What proportion of physicians in the United States are International Medical Graduates?
As of 2005, approximately one in four physicians in the United States was an International Medical Graduate (IMG). Their numbers have grown in response to a need to fill geographic and specialty gaps. International Medical Graduates have also helped hospitals fill vacant residency slots, particularly in those hospitals with a large proportion of indigent patients.

Why does the United States rank poorly in life expectancy and infant mortality compared to other developed nations?
According to the Central Intelligence Agency Fact Book, the United States ranks 50th among nations for life expectancy and 180th for infant mortality out of the 224 nations studied. The main reason for this poor performance is the disparity in access to care most evident in the fact that there are 47 million Americans without health insurance.

Question: What is the ratio of specialist physicians to primary care physicians?
The ratio of specialist physicians to primary care physicians is 60:40. This proportion is fairly unique to the United States. In most other countries, there are far more primary care physicians than specialists. Medical students gravitate to the specialty areas due to the prestige and higher levels of compensation associated with specialty practice.

Question: What is the largest component of the health care workforce?
The largest component of the health care workforce is registered nurses. There are 2.4 million registered nurses and 531,000 licensed practical nurses in the United States.

Question: What are diagnosis related groups (DRGs)?
Diagnosis related groups is a prospective payment system established by the federal government in 1983 to control hospital costs. The system assigns a numeric value to an acute care inpatient hospital episode of care. The patient’s diagnosis determines how much a hospital is paid, not the number of inpatient days or the procedures performed in the hospital. This provides financial incentives for hospitals to discharge patients as early as possible.

Question: How does Medicare’s “incident to” provision impact physician assistants?
Physician assistants providing outpatient services may bill under Medicare’s “incident to” provisions, if Medicare billing guidelines are met. This allows for payment at 100% of the physician’s Medicare fee schedule instead of the standard 85% normally paid for PA services.

Question: What are the defining features of public health care as compared to personal health care?
Personal health care focuses on the health care needs of an individual. The distinguishing feature of public health care is its central focus on the health of a population. The population-based approach uses a defined population as the organizing principle for determining interventions for the prevention and treatment of disease. The population can be any type or size of community; from an entire nation to a panel of patients in a managed care plan.

Question: Must physician assistants accept Medicare assignment?
When a provider accepts Medicare assignment, they agree to be paid by Medicare, to charge only the amount Medicare approves for their service, and to only charge the patient or their insurance plan the Medicare deductible or coinsurance amount. If they provide a Medicare covered service physician assistants must accept assignment.

Question: What is Medigap insurance?
On average, Medicare covers less than half of a beneficiary’s total annual health care costs. To minimize their out of pocket expenses, Medicare beneficiaries can purchase a supplemental policy from an insurance company. This additional policy is known as Medigap insurance.

Can providers waive Medicare copayments and deductibles?
Routine waiver of Medicare deductibles and copayments by providers is unlawful because it may result in false claims, violations of the anti-kickback statute, and excessive utilization of services paid for by Medicare. Providers may forgive the copayment if a patient demonstrates a financial hardship. This hardship exception, however, cannot be used routinely; it should be used only occasionally to address the special financial needs of a particular patient. Except in such special cases, the provider must make a good faith effort to collect deductibles and copayments. Penalties for violating this regulation can include imprisonment, criminal fines, civil damages, and forfeitures.

REFERENCES
Shi L, Singh D. Delivering Health Care in America; A Systems Approach. 4th ed. Sudbury, MA: Jones and Bartlett; 2008.
Williams SJ, Torrens PR. Introduction to Health Services. 7th ed. Clifton Park, NY: Delmar; 2008.
Sultz HA, Young KM. 2009. Health Care USA; Understanding Its Organization and Delivery. Sudbury, MA: Jones and Bartlett; 2009.
Bodenheimer TS, Grumbach K. 2009. Understanding Health Policy; A Clinical Approach. 5th ed. New York, NY: McGraw-Hill; 2009.
Women’s Healthcare in the United States; Selected Findings From the 2004 National Healthcare Quality and Disparities Reports, Agency for Health care Research and Quality.
Historical health care expenditure data. Centers for Medicare & Medicaid Services. http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage
To Err is Human; Building a Safer Health Care System. Institute of Medicine, National Academy Press; 2000.
Starfield B. Primary Care: Concept, Evaluation, and Policy. New York, NY: Oxford University Press, 1992.
Lee P, Estes C. The Nation’s Health. Sudbury MA: Jones and Bartlett; 2003.
U.S. Census Bureau; Facts for Features. http://www.census.gov/PressRelease/www/releases/archives/facts_for_features_special_editions/004491.html
American Academy of Physician Assistant, Third party reimbursement. Issue brief. http://www.aapa.org/images/stories/Advocacy-issue-briefs/3rdParty_transitional_6-09.pdf.
Williams SJ, Torrens PR. Introduction to Health Services. 7th ed. Clifton Park, NY: Delmar; 2008.
Medicare.gov
Department of Health and Human Services, Office of Inspector General, Special Fraud Alert: Routine Waiver of Copayments or Deductibles Under Medicare Part B, May 1991.