©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
HCMG Exam 2 Questions And Answers.
Updated And Verified.
What are the ways that physicians are paid for providing treatment - Answer✔fee for service,
pay for performance/shared savings (FFS+), surgical fee/bundling, capitation
what are the incentives built into each different way of paying physicians - Answer✔FFS: high
cost, high volume
shared savings (FFS+)/bundling: low cost, high volume
capitation: low cost, low volume
how has growth in new payment models affected provider behavior - Answer✔the use of
alternative payment methods has incentivized less unnecessary spending on treatment
fine tuning payment methods hope to improve... - Answer✔quality, outcomes, value (QOV)
explain fee-for service payment - Answer✔historical basis for payment
every service is associated with a particular payment, which insurer agrees to pay
physicians decide on treatment course, bills fee for each service
incentive towards using more volume and more expensive services
insurer bears all the risk of any complications
how is payment for different services determined in a fee-for-service payment scheme? -
Answer✔resource-based relative value scale (RBRVS): used to develope relative prices
RBRV = total work* + practice cost* + professional liability cost
1|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
* total work = intensity* x time
*intensity = mental effort and judgement, technical skill, physical effort, stress
*practice cost = personnel, rent, etc.
what are concerns about fee-for-service - Answer✔encourage over utilization
distortion of care provision if relative prices not set exactly right
FFS still big part of the equation (popular payment scheme)
what are the criticisms of the RUC ( RVS Update Committee) and RBRVS? - Answer✔the
composition, billing practices for certain service don't match RVUs, valuation derived from
input costs, incentives for volume
what does RBRVS influence? - Answer✔procedure choice, health outcomes, total healthcare
costs
how is the conversion factor set up for determining levels of relative value in dollars? -
Answer✔
explain how Medicare's sustainable growth rate counters the spending driven by FFS? -
Answer✔annual budget target for doc payment tied to GDP growth
if spending above target, fees cut in next year to meet target
if spending below target, fees increased in following year
doc fix: Congress prevents cuts from going into effect
SGR replaced by Medicare Access and CHIP Reauthorization Act (MACRA)
why is the focus on Medicare for countering spending - Answer✔Center for Medicare and
Medicaid Innovation is leading charge into alternative payment models
great data
2|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
there is research that private prices follow Medicare: "price following"
- private payment to a profit-maximizing physician is correlated with outside option
what is the typical provider payment methods to physicians for the following services and rank
each by increased risk:
by procedure
by episode of illness
by patient - Answer✔by procedure: FFS (less risk)
by episode of illness: surgical fee/bundling
by patient: capitation (more risk)
what is the alternative provider payment model for physicians by procedure + - Answer✔by
procedure +: pay for performance, shared savings
explain the details of FFS+ (pay for performance) - Answer✔providers rewarded or penalized by
whether they meet pre-determined quality benchmarks
- bonus at end of year if exceed thresholds on quality measures, with higher bonuses for more
complex patients
goal: pay for quality of care and patient outcomes
what is the problem of FFS+? - Answer✔difficult to measure quality and health (low powered
cost reduction incentives)
what is an example of a shared savings program and how does it work - Answer✔example:
Accountability Care Organizations
facilitates coordination and cooperation among health care providers and improves the quality
of care/reduce costs
ACOs share percentage of savings they generate if expenditures of the assigned beneficiaries
are below benchmark and meet quality standards
"shared risk" = have to pay a penalty if expenditures are above threshold
3|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
what methods give the shared savings programs its "savings" and explain them -
Answer✔payment per episode (bundling): bundles together different facets of treatment
capitation: basis of payment per patient per time period
what is the benefit and limitation of bundling? - Answer✔benefit: incentive to decrease
costs/utilization per case, decrease skimping on care or cherry-picking patients
limitation: no incentive to decrease volume of cases
explain the risk model for bundling - Answer✔insurer at risk for # of cases
provider at risk for each case
what are the potential issues with using results from studies with voluntary participation? -
Answer✔providers will participate inly if they believe it is in their economic interest to do so
what is capitation and what are the three types of models for capitation - Answer✔basis of
payment per patient per time period
full capitation: a lot of risk for physicians
two tier: capitated to primary care physician, FFS for referrals
three-tier: intermediaries (IPA) receives capitated payment and assumes risk - determines how
to pay providers
what are the three variations of capitation - Answer✔carve outs: service outside of capitated
payments
stop loss: providers insure against high loss patients
risk-adjusted: monthly payment rate based on patient risk
what is the disadvantage of two-tier capitation? - Answer✔primary care physicians paid by
capitation, referred specialist or ER paid by FFS = no joint accountability for total spending
what is unique about salary (flat payment) - Answer✔instead of paying the provider directly,
the insurer pays a group (hospital or large group practice) that pays salaries to employed
physicians
*not common in US
4|Page
HCMG Exam 2 Questions And Answers.
Updated And Verified.
What are the ways that physicians are paid for providing treatment - Answer✔fee for service,
pay for performance/shared savings (FFS+), surgical fee/bundling, capitation
what are the incentives built into each different way of paying physicians - Answer✔FFS: high
cost, high volume
shared savings (FFS+)/bundling: low cost, high volume
capitation: low cost, low volume
how has growth in new payment models affected provider behavior - Answer✔the use of
alternative payment methods has incentivized less unnecessary spending on treatment
fine tuning payment methods hope to improve... - Answer✔quality, outcomes, value (QOV)
explain fee-for service payment - Answer✔historical basis for payment
every service is associated with a particular payment, which insurer agrees to pay
physicians decide on treatment course, bills fee for each service
incentive towards using more volume and more expensive services
insurer bears all the risk of any complications
how is payment for different services determined in a fee-for-service payment scheme? -
Answer✔resource-based relative value scale (RBRVS): used to develope relative prices
RBRV = total work* + practice cost* + professional liability cost
1|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
* total work = intensity* x time
*intensity = mental effort and judgement, technical skill, physical effort, stress
*practice cost = personnel, rent, etc.
what are concerns about fee-for-service - Answer✔encourage over utilization
distortion of care provision if relative prices not set exactly right
FFS still big part of the equation (popular payment scheme)
what are the criticisms of the RUC ( RVS Update Committee) and RBRVS? - Answer✔the
composition, billing practices for certain service don't match RVUs, valuation derived from
input costs, incentives for volume
what does RBRVS influence? - Answer✔procedure choice, health outcomes, total healthcare
costs
how is the conversion factor set up for determining levels of relative value in dollars? -
Answer✔
explain how Medicare's sustainable growth rate counters the spending driven by FFS? -
Answer✔annual budget target for doc payment tied to GDP growth
if spending above target, fees cut in next year to meet target
if spending below target, fees increased in following year
doc fix: Congress prevents cuts from going into effect
SGR replaced by Medicare Access and CHIP Reauthorization Act (MACRA)
why is the focus on Medicare for countering spending - Answer✔Center for Medicare and
Medicaid Innovation is leading charge into alternative payment models
great data
2|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
there is research that private prices follow Medicare: "price following"
- private payment to a profit-maximizing physician is correlated with outside option
what is the typical provider payment methods to physicians for the following services and rank
each by increased risk:
by procedure
by episode of illness
by patient - Answer✔by procedure: FFS (less risk)
by episode of illness: surgical fee/bundling
by patient: capitation (more risk)
what is the alternative provider payment model for physicians by procedure + - Answer✔by
procedure +: pay for performance, shared savings
explain the details of FFS+ (pay for performance) - Answer✔providers rewarded or penalized by
whether they meet pre-determined quality benchmarks
- bonus at end of year if exceed thresholds on quality measures, with higher bonuses for more
complex patients
goal: pay for quality of care and patient outcomes
what is the problem of FFS+? - Answer✔difficult to measure quality and health (low powered
cost reduction incentives)
what is an example of a shared savings program and how does it work - Answer✔example:
Accountability Care Organizations
facilitates coordination and cooperation among health care providers and improves the quality
of care/reduce costs
ACOs share percentage of savings they generate if expenditures of the assigned beneficiaries
are below benchmark and meet quality standards
"shared risk" = have to pay a penalty if expenditures are above threshold
3|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
what methods give the shared savings programs its "savings" and explain them -
Answer✔payment per episode (bundling): bundles together different facets of treatment
capitation: basis of payment per patient per time period
what is the benefit and limitation of bundling? - Answer✔benefit: incentive to decrease
costs/utilization per case, decrease skimping on care or cherry-picking patients
limitation: no incentive to decrease volume of cases
explain the risk model for bundling - Answer✔insurer at risk for # of cases
provider at risk for each case
what are the potential issues with using results from studies with voluntary participation? -
Answer✔providers will participate inly if they believe it is in their economic interest to do so
what is capitation and what are the three types of models for capitation - Answer✔basis of
payment per patient per time period
full capitation: a lot of risk for physicians
two tier: capitated to primary care physician, FFS for referrals
three-tier: intermediaries (IPA) receives capitated payment and assumes risk - determines how
to pay providers
what are the three variations of capitation - Answer✔carve outs: service outside of capitated
payments
stop loss: providers insure against high loss patients
risk-adjusted: monthly payment rate based on patient risk
what is the disadvantage of two-tier capitation? - Answer✔primary care physicians paid by
capitation, referred specialist or ER paid by FFS = no joint accountability for total spending
what is unique about salary (flat payment) - Answer✔instead of paying the provider directly,
the insurer pays a group (hospital or large group practice) that pays salaries to employed
physicians
*not common in US
4|Page
