Which of the Following Best Describes What Insurance Companies Did

question 20

Multiple Choice

Which of the following best describes what insurance companies did to decrease their constantly increasing costs? (Select all that apply.)

• A) Did not cover any illnesses that were diagnosed before the person (or his or her employer) purchased insurance
• B) Limited coverage to only certain services, eliminating any that were experimental, nontraditional, or too costly
• C) Reimbursed only the care that was requested by the patient's primary physician
• D) Limited providing insurance to companies who hired mainly young, healthy persons
• E) Required preapproval before expensive services were used
• F) Ceased coverage on any person who used an exorbitant number of services, whenever possible

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Definitions:

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products based on a predetermined activity base.

Machine-Hours

A measure of the amount of time machines are operated in the production of goods or services, used as a basis for allocating manufacturing costs.

Manufacturing Overhead

The indirect costs related to manufacturing, not including direct labor or materials, such as utility costs and maintenance expenses.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, based on a predetermined formula.