Review Questions

Review Questions

1. How have methods for paying medical costs changed over the years?

In the past, patients paid the physician’s asking price for services provided either in cash or, occasionally, in trade. Subsequently, as health care became more sophisticated and complicated, insurance reimbursement of medical service costs became the preferred payment method. Today, in an effort to effect cost control, managed care, prepaid services, co-pay arrangements, and preferred group insurance policies are all being used, as are traditional fee-for-service and insurance payment plans.

2. What is the difference between fee-for-service and managed care?

Fee-for-service is a method of paying for particular health care services received. Managed care plans contain specific, built-in cost controls to increase efficiency in the provision of care.

3. What is the purpose of managed care? What are three methods used to control costs?

Managed care plans are designed to control health care costs. The purpose is to provide quality health care that patients can afford to access. Managed care costs are controlled by increasing efficiency, eliminating the duplication of services, and discouraging the incursion of unnecessary costs.

4. Who is covered by Medicare? What services are covered?

Medicare, established in 1965 as a part of Social Security, provides health insurance coverage to United States citizens over the age of 65 and other citizens eligible for Social Security, such as those with disabilities. Part A coverage is for most hospitalization, home care, and hospice services. Part B covers part of the cost of outpatient services, like physician fees, diagnostic tests, some equipment, and physical and occupational therapy.

5. What is Medicaid?

Medicaid is a cost assistance program designed to help pay the medical costs of low-income individuals and people with disabilities. Federally funded, the program is operated by the states. Medicaid eligibility and payment procedures vary by state.

6. Explain the meaning of DRGs.

DRGs (Diagnostic Related Groups) were established by Congress in 1983 as a cost control measure. DRGs establish the typical, expected hospital costs for a common injury/illness diagnosis and treatment. Care providers then receive that specific amount of cost reimbursement each time they care for a patient under that DRG.

7. What are the four major areas of expenditures incurred by a health care delivery system?

The four major areas of expenditures incurred by a health care delivery system:

* Financing
* Technology and supplies (pharmaceuticals and equipment)
* Facilities
* Personnel

8. What is the difference between accounts payable and accounts receivable?

Accounts payable is the money you owe. Accounts receivable is the money owed to you.

9. What is the meaning of “the cost of money”?

”The cost of money” refers to the value that could be earned on money if it were received by the facility and invested. The cost of money is lost income because you cannot invest money owed to you and you must pay interest on money you have borrowed.

10. What are five ways that the health care worker can assist in controlling facility costs?

To assist in controlling facility costs:

* Improve your personal efficiency.
* Focus on your job, and do your work well.
* Carefully use equipment and supplies.
* Bill and code your time/services correctly, and do not misplace or neglect any legitimate charges.
* Try to maintain an adequate, efficient inventory.
* Educate patients to reduce medical services.
* Be willing to cross-train and expand your skills.