Deck 13: Policies to Contain Costs

Question 1

Tthe top 25 most frequently used DRGs accounted for approximately _______ percent of all discharges under Medicare.

A)20.
B)30.
C)40.
D)50.
E)60.

Answer 1

50.

Question 2

The amount that a hospital will be paid for treating a Medicare patient is determined

A)before the patient ever sees a physician.
B).at the time of admission to the hospital.
C)at the point when the diagnosis is made.
D)after medical services are provided.
E)after the hospital bill is reviewed by Medicare auditors.

Answer 2

at the point when the diagnosis is made.

Question 3

Which of the following statements is true concerning DRGs?

A)Soon after their implementation in 1983, the average length of stay in U.S.hospitals fell significantly.
B)Hospital operating margins fell dramatically immediately after implementation of the program.
C)The system encourages over-treatment of elderly patients.
D)The system encourages physicians to over-diagnose, referred to as "DRG creep."
E)Both a and d are true.

Answer 3

Both a and d are true.

Question 4

Fuchs (1988) static model of cost savings provides little encouragement for the prospects of savings in medical care.He concludes our best chance for controlling costs may be

A)to limit input prices.
B)to improve efficiency in the production of medical care.
C)to reduce medical care utilization.
D)to increase the use of low-priced inputs and reduce the use of high-priced inputs.
E)all of the above are necessary according to Fuchs.

Question 5

The most important aspect of the 1983 changes to Medicare that introduced diagnosis-related groups (DRGs) was

A)defining 483 categories of illness for treatment.
B)switching from retrospective to prospective payment for hospitals.
C)setting up maximum hospital stays for certain procedures.
D)requiring physicians to seek second opinions before certain surgical procedures are approved.
E)all of these were important changes to Medicare.

Question 6

Suppose a price ceiling is set below the current market price.If the goal of the price ceiling is to reduce total expenditures, it will be successful

A)if the percentage change is price is greater than the percentage change in quantity.
B)if the percentage change is price is less than the percentage change in quantity.
C)if the percentage change is price is equal to the percentage change in quantity.
D)under all circumstances.Price ceilings always lower total spending.
E)if the markets remains in equilibrium.

Question 7

If a price ceiling is to accomplish its intended goal of lowering overall spending, which of the following must be true?

A)Demand must be relatively price inelastic.
B)Demand must be relative price elastic.
C)Demand must be perfectly inelastic.
D)Demand must be perfectly elastic.
E)Price elasticity of demand has nothing to do with overall spending.

Question 8

Global budgets coupled with price ceilings can control total spending as long as

A)the price ceilings are negotiated in good faith.
B)utilization of services does not increase significantly.
C)providers cooperate by only providing "medically-necessary" services.
D)patients are required to pay some of the expenses out-of-pocket.
E)none of the above.Global budgets can never work to control spending.

Question 9

The diagram below depicts a perfectly competitive market.P₁ represents the equilibrium price and P₂ a price ceiling set by law.Which of the following statements is true?

A)The price ceiling will cause the equilibrium quantity to rise from Q₁ to Q₂.
B)The price ceiling will create a surplus of Q₂ - Q₁.
C)The price ceiling will create a shortage of Q₂ - Q₁.
D)The price ceiling will create a shortage of Q₂ - Q₀.
E)The market will still be in equilibrium at the lower price.

Question 10

Suppose a market is controlled by a monopolist as depicted in the diagram below.P₁ represents the equilibrium price and P₂ a price ceiling set by law.Which of the following statements is true?

A)The price ceiling will cause the equilibrium quantity to rise from Q₁ to Q₂.
B)The price ceiling will create a surplus of Q₂ - Q₁.
C)The price ceiling will create a shortage of Q₂ - Q₁.
D)The price ceiling will create a shortage of Q₂ - Q₀.
E)The market will still be in equilibrium at the lower price.