Test Bank for Introduction to Physical Therapy, 4th Edition: Pagliarulo

Test Bank for Introduction to Physical Therapy, 4th

Edition: Pagliarulo

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Pagliarulo: Introduction to Physical Therapy, 4th Edition

Chapter 06: Financing Health Care and Reimbursement in Physical Therapy

Test Bank

MULTIPLE CHOICE

1. What is the term for an individual who purchases a health insurance policy?
A. A Client
B. An Insurer
C. A Subscriber
D. Insured

ANS: C
RAT: Typically, to become insured (covered by the policy), a subscriber (individual who
purchases the policy) purchases a health insurance plan from an insurer (health insurance
company).
REF: 123

2. What is durable medical equipment (DME)?

A. Gloves and gowns used for the professional’s protection
B. Insurance documents
C. Complex machines such as MRI scanners
D. Personal medical equipment such as wheelchairs or hospital beds

ANS: D
RAT: DME is medical equipment (such as a wheelchair, hospital bed, or ventilator) that a
practitioner may prescribe for a patient’s use over an extended period.
REF: 124

3. Which of the following groups does not finance healthcare?

A. Health insurance companies
B. Individuals who purchase policies
C. Employers
D. The government

ANS: A
RAT: Health insurance companies do not finance healthcare. Fundamentally, healthcare is
financed by the individual directly, the employer, or the government.
REF: 124

4. Excluding Medicare, how are most individuals in the United States insured?
A. Private nongroup insurance
B. Medicaid
C. Employer-sponsored insurance

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.
Test Bank 6-2

D. Uninsured

ANS: C
RAT: Sixty percent of individuals in the United States have employer-sponsored insurance.
REF: 125

5. What is open enrollment?

A. The once a year period an individual can sign up for Medicare
B. The twice a year period an individual can sign up for Medicare
C. The once a year period an employee has the opportunity to switch to a new health insurance
plan from an employer
D. The twice a year period an employee has the opportunity to switch to a new health insurance
plan from an employer

ANS: C
RAT: Each year a period is designated as open enrollment, during which an employee has the
opportunity to switch to a new health insurance plan based on the individual and family needs
and health insurance plans available. Once a selection has been made, the subscriber is locked
into the choice for a defined period of time, usually 1 year.
REF: 125

6. Which of the following describes an insurance co-payment?

A. The amount the subscriber incurs before a health insurer will pay all or part of the remaining
cost of the covered services
B. A flat dollar amount a subscriber has to pay for specific health services
C. A cost sharing obligation under a health insurance policy, usually a percentage
D. The amount paid by an employer monthly for the health insurance plan

ANS: B
RAT: A co-payment is a flat dollar amount a subscriber has to pay for specific health services.
Choice A defines the deductable, and choice C defines a co-insurance payment.
REF: 126

7. State governments do not fund which of the following programs?

A. Medicare
B. Medicaid
C. Children’s Health Insurance Program “CHIP”
D. State-sponsored employee insurance

ANS: A
RAT: The federal government finances the Medicare program, and the federal and state
governments finance Medicaid and the CHIPs for each state. Each state offers an employer-
purchased health insurance program for its employees.
REF: 126

8. What agency is the largest purchaser of health insurance in the United States?

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.
Test Bank 6-3

A. The State of California

B. Centers for Medicare and Medicaid Services
C. The APTA
D. The State of New York

ANS: B
RAT: The Centers for Medicare and Medicaid Services (CMS), under the Department of Health
and Human Services, administers the Medicare Program and works with the states to administer
Medicaid, CHIP, and health insurance portability standards. This agency is the largest purchaser
of health insurance in the United States, and its policies have a significant impact on the rest of
the health insurance industry.
REF: 126

9. Which of the following populations is not eligible for Medicare?

A. People aged 65 and older
B. Low income individuals
C. Persons with end-stage renal disease
D. Those that are disabled and entitled to Social Security benefits

ANS: B
RAT: Medicare is the federally funded health insurance program that was enacted in 1965 to
cover the elderly population (aged 65 and over), persons with end-stage renal disease, and those
who are disabled and entitled to Social Security benefits. The Medicaid program is designed for
individuals with low income.
REF: 127

10. What part of Medicare covers inpatient hospital care?

A. Part A
B. Part B
C. Part C
D. Part D

ANS: A
RAT: Medicare Part A provides mandatory coverage for inpatient hospital care, skilled nursing
facility services, certain home health services, and hospice care.
REF: 127

11. What part of Medicare is funded from beneficiary premium payments and matched by
federal revenues?
A. Part A
B. Part B
C. Part C
D. Part D

ANS: B

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.
Test Bank 6-4

RAT: Medicare Part B or of supplementary medical insurance is a voluntary program.

Individuals entitled for Part A have the option to purchase Part B. Medicare Part B is funded
from beneficiary premium payments, which are matched by general federal revenues.
REF: 127

12. What part of Medicare helps pay for prescriptions?

A. Part A
B. Part B
C. Part C
D. Part D

ANS: D
RAT: Medicare Part D was enacted in 2003 and went into effect in 2006. This federal program
subsidizes the cost of prescription drugs and provides more choices in healthcare coverage for
Medicare beneficiaries.
REF: 127

13. According to a study in 2008 by the Centers for Medicare and Medicaid Services, where was
most of the money spent for US healthcare?
A. Physician clinical services
B. Nursing healthcare
C. Prescription drugs
D. Hospital care

ANS: D
RAT: According to the study, 31% of money was spent on hospital care in the United States in
2008. This was followed by physician and clinical services, prescription drugs, program
administration, and nursing home care. “Other spending” accounted for 25% of the total cost of
US healthcare in 2008.
REF: 129

14. What legislation passed in 1997 reduced Medicare payments to health providers and
hospitals significantly and quickly?
A. The Americans with Disabilities Act
B. The Balanced Budget Act
C. The Social Security Amendment Act
D. The Children’s Health Insurance Program Reauthorization Act

ANS: B
RAT: In 1997, anticipating that Medicare spending would continue to grow at approximately 9%
per year while the general economy would grow 5% per year. President Clinton passed the
Balanced Budget Act. Some of the imposed restrictions reduced Medicare by most healthcare
providers and hospitals significantly and quickly.
REF: 128

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.
Test Bank 6-5

15. In the United States’ current system of healthcare reimbursement, who is considered the
“third party” in the third party payer system?
A. The individual seeking healthcare
B. The provider
C. The hospital that employed the therapist
D. Health insurance companies

ANS: D
RAT: The person seeking healthcare is generally referred to as the first party in the system,
whereas the provider is preferred to as the third party. Healthcare providers are commonly
reimbursed by health insurance companies focusing as a third party payer.
REF: 124, 132

16. What method of healthcare reimbursement pays healthcare providers in advance of the client
actually receiving healthcare services?
A. Prospective payment system
B. Fee for service
C. Indemnity
D. Traditional reimbursement

ANS: A
RAT: Prospective payment refers to various methods to pay hospital, health systems, and
organizations of healthcare providers in which payments are established in advance. Healthcare
providers are paid these amounts regardless of the cost they actually incur.
REF: 132

17. Diagnostic related groups are indicative of what type of reimbursement system?
A. Fee for service
B. Retrospective reimbursement
C. Traditional health insurance
D. Prospective payment system

ANS: D
RAT: Social Security Amendments of 1983 created a new prospective payment system for
hospital inpatients covered under Medicare Part A. The principle of diagnostic related groups
(DRG) was introduced in which a patient’s diagnosis determines the amount the hospital will be
paid; the payment is a fixed amount based on the average cost of treatment of a particular
diagnosis.
REF: 132

18. Which of the following components was not a part of the resource based relative value scale
(RBRVS)?
A. Diagnosis of the client
B. Total work completed
C. Cost to practice medicine
D. Allowance for malpractice insurance expense

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.
Test Bank 6-6

ANS: A
RAT: A new physician reimbursement method was established by the US government in 1989
and became effective in 1992. The RBRVS replaced the fee for service system. RBRVS fees
were determined based on three components: the total work completed, cost to practice
medicine, and an allowance for malpractice injuries expense.
REF: 133

19. The healthcare provider in a managed care organization:

A. Can charge whatever he or she would like
B. Must charge according to the Medicare fee schedule
C. Must bill the patient directly
D. Agrees on a fixed payment schedule

ANS: D
RAT: In its simplest form, managed care consists of two components: a predetermined payment
schedule established by the insurance company based on utilization data, and a provider network
consisting of providers who contract with the insurance company and agree to accept the
payment schedule for their services.
REF: 133

20. What type of health maintenance organization (HMO) is the most popular today?
A. Independent practice association model
B. Staff model
C. Preferred provider organization
D. Health service plan

ANS: A
RAT: In the independent practice association model, individual physicians or physician groups
form a legal entity that contracts with the HMO to provide services without operating the
facilities where the services are provided. This has predominated over the staff model.
REF: 134

21. Which of the following managed care plans is considered the most restrictive?
A. HMOs
B. PPOs
C. POS plan
D. Traditional fee for service

ANS: A
RAT: The PPO and POS plans allow for a subscriber to go “out of network” for services, but
there is a higher fee. Generally HMO plans do not allow for out of network services.
REF: 134

22. Which of the following physicians would most likely not be a primary care provider (PCP) in
a managed care plan?
A. Family practice physician

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.
Test Bank for Introduction to Physical Therapy, 4th Edition: Pagliarulo

Test Bank 6-7

B. Orthopedist
C. Gynecologist
D. General internal medicine physician

ANS: B
RAT: The role of a primary care provider in a managed care plan is to direct the patient to an
appropriate level of service while avoiding unnecessary, possibly duplicative, redundant, or
costly referrals to specialists or for specialty services. A PCP is a generalist physician (family
practice, general internal medicine, general pediatrics, and sometimes obstetrics and gynecology
for female patients) who provides primary care services.
REF: 135

23. According to a study by the Kaiser Family Foundation, the majority of workers covered by
insurance in the United States are covered by which type of healthcare plan?
A. Conventional
B. HMO
C. PPO
D. POS

ANS: C
RAT: Approximately 60% of covered workers are enrolled in PPOs, whereas 20% are covered
by HMOs, and 10% are covered by POS plans. Coverage by conventional plans only makes up
1% of the covered population.
REF: 136

24. What coding system must PTs use in the outpatient setting to receive reimbursement?
A. Minimum Data Set (MDS)
B. Resource Utilization Groups (RUGS)
C. Current procedural terminology (CPT)
D. Outcome and Assessment Information Set (OASIS)

ANS: C
RAT: In outpatient physical therapy settings PTs use CPT codes to indicate what physical
therapy services were delivered to patients. In contrast, CMS requires PTs in skilled nursing
facilities to report rehabilitative therapy minutes on the MDS. The MDS is the assessment
instrument used in the skilled nursing facility PPS to classify patient’s one of 53 RUG categories.
REF: 139

Copyright © 2012, 2007, 2001, 1996 by Mosby, Inc., an affiliate of Elsevier Inc.

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