New Mexico · Accident & Health SampleInteractive Mind Map
Cost Containment in Health Care Delivery
A visual breakdown of Cost Containment in Health Care Delivery — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the New Mexico Health Insurance sample is Cost Containment in Health Care Delivery — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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Utilization review is the umbrella over cost containment — and the exam mostly tests one thing: WHEN it happens.
UR evaluates whether care is medically necessary, in the right setting, and cost-effective. It can run before, during, or after care — and the timing names the tool.
🧠 Memory Aid — B-D-A (Before, During, After)PREcertification = BEFORE the service (prospective) · CONCURRENT review = DURING the hospital stay · RETROSPECTIVE review = AFTER care (claims audit).
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Precertification (Prospective Review) — BEFORE
Approval needed before certain services (elective surgery, MRI/CT, non-emergency hospitalization, DME). The patient learns in advance whether coverage applies. Skip it and the plan may deny the claim or reduce the benefit. Emergencies are generally exempt.
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Concurrent Review — DURING
Review during an active hospital stay: admission review, continued-stay review, and discharge planning. The aim is to prevent unnecessary hospital days — the most expensive care setting. (Appeals available if the patient/physician disagree.)
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Retrospective Review — AFTER
A claims audit after care: catches billing errors, upcoding, and medically unnecessary services. May lead to denials, reductions, or recoupment of overpayments.
The trap they setThey describe a UR nurse checking whether an already-admitted pneumonia patient still needs inpatient care → that’s concurrent (during), not precertification (before) or retrospective (after). Map the timing to the name and these are free points.
A second family of tools targets prescription drugs specifically — steering toward lower-cost options.
Prior authorization gates certain drugs; step therapy makes you try the cheap one first; the formulary organizes it all.
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Prior Authorization (PA)
Precertification, but for prescriptions
Before the pharmacist dispenses certain drugs, the prescriber must get plan approval documenting medical necessity.
Common PA drugs: brand-name when a generic exists, specialty/biologic/oncology agents, high-abuse-potential or safety-concern drugs.
Often used to enforce the formulary — justify a non-preferred drug before the plan covers it at preferred rates.
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Step Therapy (Fail First)
Try the cheaper drug before the costly one
The patient must first try a lower-cost / first-line drug (often a generic). Only if it fails or causes side effects do they step up to the pricier option.
Drives use of cheaper alternatives without necessarily hurting outcomes — though it can delay treatment, so many states have exception laws.
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Formulary Management
The plan’s tiered list of covered drugs — incentivizing generics and preferred brands over expensive non-preferred medications through different cost-sharing.
How they test this“Must try a generic first; brand covered only if the generic fails” = step therapy (fail first). “Prescriber must get plan approval before a drug is dispensed” = prior authorization.
The third family coordinates care for the people who drive the most cost — and double-checks big decisions.
These tools cut avoidable spending by managing complex patients well, not by denying care.
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Case Management
Intensive, individualized care coordination for complex or high-cost members. A dedicated nurse or social worker works with patient, family, and providers — scheduling, monitoring meds, arranging home health — to optimize care and prevent avoidable hospitalizations.
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Disease Management
Structured programs for members with specific chronic conditions (diabetes, asthma, heart disease, depression) — education, monitoring, and coordination to prevent costly complications and hospitalizations.
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Second Surgical Opinion
The plan may require or encourage a second physician’s opinion before elective surgery — confirming the recommended procedure is appropriate before committing to it.
How they test this“A dedicated nurse coordinates all care for a member with congestive heart failure — appointments, medications, home health” = case management (individual). A structured program for everyone with diabetes = disease management (condition-wide). UR is about necessity/timing; these are about coordination.
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Top Exam Tips — Cost Containment
1. B-D-A timing: precertification = BEFORE (prospective), concurrent = DURING the stay, retrospective = AFTER (claims audit). 2. Precert protects against surprise non-coverage; skip it and the claim may be denied or reduced. Emergencies are exempt. 3. Concurrent review targets unnecessary hospital days — the priciest setting. 4. Prior authorization = precert for prescription drugs. Step therapy = try the cheaper drug first (“fail first”). 5. Case management = one complex patient; disease management = a chronic-condition population. 6. Second surgical opinion verifies elective surgery is appropriate before it proceeds.
Exam vocabulary
Key Terms to Know
Utilization Review (UR)
Systematic evaluation of the medical necessity, appropriateness, and efficiency of health care services.
Precertification (Prior Approval)
Advance approval required BEFORE certain services are rendered; prospective review.
Concurrent Review
Utilization review DURING an inpatient stay, assessing whether continued hospitalization is medically necessary.
Retrospective Review
Claims review AFTER care; catches fraud, billing errors, and inappropriate utilization; may lead to recoupment.
Prior Authorization (PA)
Insurer approval required before dispensing certain prescription drugs; verifies medical necessity.
Step Therapy (Fail First)
Requires trying less expensive first-line treatments before the plan covers costlier alternatives.
Case Management
Intensive, individualized care coordination for complex or high-cost patients by a nurse or social worker.
Disease Management Program
A structured program for members with a chronic condition — education, monitoring, and coordination.
Formulary
The insurer’s tiered list of covered drugs; incentivizes generic and preferred-brand use.
Second Surgical Opinion
A tool requiring or encouraging a second physician’s opinion before elective surgery.
Recoupment
Recovery of overpayments identified through retrospective claims review.
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