NEWEST GBA PRACTICE QUESTIONS
AND 100% CORRECT ANSWERS
2026/2027
What was the purpose of the Health Maintenance Organization Act of 1973? -
ANSWER-The health maintenance organization action of 1973 provided federal
initiatives - consisted of federal grants and loans to organizations wishing to investigate
the feasibility of "federally qualified HMO"
How did the passage of the Health Maintenance Organization Act of 1973 affect the
growth of HMOs? - ANSWER-The government began to withdraw its funding during the
Reagan administration. Smaller plans did not survive.
Briefly explain why the preferred provider organization (PPO) concept was developed? -
ANSWER-PPO was sponsored by national insurance companies, third party
administrators, BCBS plans, and hotel organizations. PPO gained quick popularity with
employers that wanted cost savings but were unwilling to reduce provider choice as
much that required HMOs
Why didnt many employers realize long-term costs savings with PPO? - ANSWER-
Because they were primarily discounted fee-for-service arrangements with little focus on
utilization control.
What steps did PPO companies take to correct this problem? - ANSWER-Increase the
monitoring of utilization, implementing quality control and surveying member
satisfaction.
What do opponents of the PPO approach argue is the reason they are more expensive
than HMOs? - ANSWER-They argue that PPOs are weak form of managed care with
rich benefits, making them more expensive than HMOs.
Is there a universally accepted and used definition of managed care? - ANSWER-There
is no specific and uniformly accepted definition of the term "managed care"
What is the definition of managed care provided in the text to include the broad range of
managed indemnity plans, HMOs, PPOs, and PO plans? - ANSWER-Managed care
includes those programs intended to influence and direct the delivery of health care
through: 1) plan design failure 2) Restricted access to a specified group of preselected
providers 3) Utilization management programs
Define the concept of steerage - ANSWER-Is the managed care company's way of
directing members to in-network providers. Commonly accomplished through setting
, benefit differentials between in-and out-of-network care between 10%-30%. It is critical
to maximize financial results of managed care.
Utilization Management (UM) prgrams - ANSWER-1) Precertification of inpatient
admissions
2)Concurrent review of ongoing confinements for medical necessity
3)Discharge planning
4)Precertification for selected outpatient services
5)Second surgical opinion
6)Case management for high-dollar cases
Incentive design of PPO plan - ANSWER-Primary objective was to introduce a
managed care plan with the least amount of employee disruption. It offered members
richer preferred benefit while maintaining existing benefit levels for nonpreferred
benefits.
Ex.: 100% for preferred expenses, 80% for standard comprehensive medical plans
Disincentive design of PPO Plan - ANSWER-The primary objective was cost savings
with preferred benefits equal to the prior plan and nonpreferred benefits being
significantly reduced.
Ex.: 80% preferred expenses. 60% higher deductible.
Combination approach of PPO Plan - ANSWER-Some improvement in benefits while at
the same time saving money. Preferred benefits were set at a slightly higher level, for
example 90%, and the non preferred benefits at a lower level, 70%.
What is the key component of the point-of-service plan concept? - ANSWER-The
primary care physicians (pcp) is the key component of the POS concept, and preferred
benefits are available only for care rendered by or coordinated through the member
PCPs. The PCP acts like a gatekeeper to specialist care. The primary care generally is
family practitioner, general practitioner, internist or pediatrician.
What plan features are often included in POS plan to encourage care within the network
through the PCP? - ANSWER-1) No deductible and 100% coverage after a small copay.
2)Preventive services when obtained through the member's PCP
3) One routine gynecological exam per year
4) No member claim submission when the PCP renders care or coordinates care within
the network
5) The PCP directs medical care and obtains necessary precertifications for hospital
confinements and referral care.
What key distinction in level of coverage between HMOs and the PPO and POS plans?
- ANSWER-HMO - members receive no coverage for medical care or treatment outside
of the network.
PPO/POS - members can still obtain care out of network and receive benefits, though at
a reduced rate.
AND 100% CORRECT ANSWERS
2026/2027
What was the purpose of the Health Maintenance Organization Act of 1973? -
ANSWER-The health maintenance organization action of 1973 provided federal
initiatives - consisted of federal grants and loans to organizations wishing to investigate
the feasibility of "federally qualified HMO"
How did the passage of the Health Maintenance Organization Act of 1973 affect the
growth of HMOs? - ANSWER-The government began to withdraw its funding during the
Reagan administration. Smaller plans did not survive.
Briefly explain why the preferred provider organization (PPO) concept was developed? -
ANSWER-PPO was sponsored by national insurance companies, third party
administrators, BCBS plans, and hotel organizations. PPO gained quick popularity with
employers that wanted cost savings but were unwilling to reduce provider choice as
much that required HMOs
Why didnt many employers realize long-term costs savings with PPO? - ANSWER-
Because they were primarily discounted fee-for-service arrangements with little focus on
utilization control.
What steps did PPO companies take to correct this problem? - ANSWER-Increase the
monitoring of utilization, implementing quality control and surveying member
satisfaction.
What do opponents of the PPO approach argue is the reason they are more expensive
than HMOs? - ANSWER-They argue that PPOs are weak form of managed care with
rich benefits, making them more expensive than HMOs.
Is there a universally accepted and used definition of managed care? - ANSWER-There
is no specific and uniformly accepted definition of the term "managed care"
What is the definition of managed care provided in the text to include the broad range of
managed indemnity plans, HMOs, PPOs, and PO plans? - ANSWER-Managed care
includes those programs intended to influence and direct the delivery of health care
through: 1) plan design failure 2) Restricted access to a specified group of preselected
providers 3) Utilization management programs
Define the concept of steerage - ANSWER-Is the managed care company's way of
directing members to in-network providers. Commonly accomplished through setting
, benefit differentials between in-and out-of-network care between 10%-30%. It is critical
to maximize financial results of managed care.
Utilization Management (UM) prgrams - ANSWER-1) Precertification of inpatient
admissions
2)Concurrent review of ongoing confinements for medical necessity
3)Discharge planning
4)Precertification for selected outpatient services
5)Second surgical opinion
6)Case management for high-dollar cases
Incentive design of PPO plan - ANSWER-Primary objective was to introduce a
managed care plan with the least amount of employee disruption. It offered members
richer preferred benefit while maintaining existing benefit levels for nonpreferred
benefits.
Ex.: 100% for preferred expenses, 80% for standard comprehensive medical plans
Disincentive design of PPO Plan - ANSWER-The primary objective was cost savings
with preferred benefits equal to the prior plan and nonpreferred benefits being
significantly reduced.
Ex.: 80% preferred expenses. 60% higher deductible.
Combination approach of PPO Plan - ANSWER-Some improvement in benefits while at
the same time saving money. Preferred benefits were set at a slightly higher level, for
example 90%, and the non preferred benefits at a lower level, 70%.
What is the key component of the point-of-service plan concept? - ANSWER-The
primary care physicians (pcp) is the key component of the POS concept, and preferred
benefits are available only for care rendered by or coordinated through the member
PCPs. The PCP acts like a gatekeeper to specialist care. The primary care generally is
family practitioner, general practitioner, internist or pediatrician.
What plan features are often included in POS plan to encourage care within the network
through the PCP? - ANSWER-1) No deductible and 100% coverage after a small copay.
2)Preventive services when obtained through the member's PCP
3) One routine gynecological exam per year
4) No member claim submission when the PCP renders care or coordinates care within
the network
5) The PCP directs medical care and obtains necessary precertifications for hospital
confinements and referral care.
What key distinction in level of coverage between HMOs and the PPO and POS plans?
- ANSWER-HMO - members receive no coverage for medical care or treatment outside
of the network.
PPO/POS - members can still obtain care out of network and receive benefits, though at
a reduced rate.
