Lagolia insurance company

This topic has expert replies
Master | Next Rank: 500 Posts
Posts: 142
Joined: Sun Jun 12, 2011 7:55 am
Thanked: 5 times
Followed by:3 members

Lagolia insurance company

by metallicafan » Wed Mar 20, 2013 5:45 am
A major health insurance company in Lagolia pays for special procedures prescribed by physicians only if the procedure is first approved as "medically necessary" by a company-appointed review panel. The rule is intended to save the company the money it might otherwise spend on medically unnecessary procedures. The company has recently announced that in order to reduce its costs, it will abandon this rule.
Which of the following, if true, provides the strongest justification for the company's decision?
A. Patients often register dissatisfaction with physicians who prescribe nothing for their ailments.
B. Physicians often prescribe special procedures that are helpful but not altogether necessary for the health of the patient.
C. The review process is expensive and practically always results in approval of the prescribed procedure.
D. The company's review process does not interfere with the prerogative of physicians, in cases where more than one effective procedure is available, to select the one they personally prefer.
E. The number of members of the company-appointed review panel who review a given procedure depends on the cost of the procedure.

OA: C


My answer was right. However, it was difficult to eliminate the wrong choices. Please, explain why the other choices are wrong. Do you have a particular procedure to eliminate the choices? That would be very helpful, thanks.

Also, I have this question: If I have found a choice that performs the task required well, would I have to analyze the other choices and be sure why those are wrong? Thanks!

User avatar
GMAT Instructor
Posts: 646
Joined: Mon May 21, 2012 7:08 am
Thanked: 322 times
Followed by:143 members

by Kasia@EconomistGMAT » Wed Mar 20, 2013 8:19 am
Let me start from answering your second question. You always should go through all answer choices, even if you think that, for example, A is fine. Sometimes two choices are correct but one of them provides clearer or stronger evidence and thus it is the best option.

Now let's analyze this question. The argument states that the insurance company pays for medical procedures only when the review panel approves them. The company for some reason has decided that it wants to abandon this rule in order to SAVE MONEY. Thus we can infer that the practice is not profitable and we need to find the answer that will prove that it is cheaper not to employ the panel.

A - out of scope, if physicians don't prescribe any medical procedures, the insurance company does not have to incur any costs
B - incorrect, this choice shows that the panel might be really useful because physicians can prescribe unnecessary procedures. So this choice provides evidence against the company's decision
C - the panel does not eliminate any costs, moreover, the review process is expensive - bingo! this answer shows that the panel generates costs instead of reducing them
D - this answer is too narrow, it speaks about only some of the procedures and it does not prove that the panel is not effective
E - out of scope, this answer does not provide clear evidence that the panel should not be used, it only explains how it operates in different cases
Kasia
Senior Instructor
Master GMAT - the #1 rated GMAT course

"¢ If you found my post helpful, please click the "thank" button and/or follow me.

"¢ Take a 7 day free trial and find out why Economist GMAT is the highest rated GMAT course - https://gmat.economist.com/

"¢ Read GMAT Economist reviews - https://reviews.beatthegmat.com/economis ... mat-course

User avatar
Master | Next Rank: 500 Posts
Posts: 123
Joined: Fri Nov 09, 2012 2:34 am
Location: Bengaluru, India
Thanked: 46 times
Followed by:9 members

by Gowri@CrackVerbal » Sun Mar 24, 2013 10:20 pm
metallicafan wrote:A major health insurance company in Lagolia pays for special procedures prescribed by physicians only if the procedure is first approved as "medically necessary" by a company-appointed review panel. The rule is intended to save the company the money it might otherwise spend on medically unnecessary procedures. The company has recently announced that in order to reduce its costs, it will abandon this rule.
Which of the following, if true, provides the strongest justification for the company's decision?
A. Patients often register dissatisfaction with physicians who prescribe nothing for their ailments.
B. Physicians often prescribe special procedures that are helpful but not altogether necessary for the health of the patient.
C. The review process is expensive and practically always results in approval of the prescribed procedure.
D. The company's review process does not interfere with the prerogative of physicians, in cases where more than one effective procedure is available, to select the one they personally prefer.
E. The number of members of the company-appointed review panel who review a given procedure depends on the cost of the procedure.

OA: C


My answer was right. However, it was difficult to eliminate the wrong choices. Please, explain why the other choices are wrong. Do you have a particular procedure to eliminate the choices? That would be very helpful, thanks.

Also, I have this question: If I have found a choice that performs the task required well, would I have to analyze the other choices and be sure why those are wrong? Thanks!
The company has decided to abandon the review to reduce its costs. This indicates the line of thinking we must adopt: how does avoiding the review by the company panel lead to reduced costs?
Option C answers this directly: if the review process is expensive, and almost always concurs with the patient's result, we have 2 very good reasons why it is okay to avoid this process.

Now let's eliminate the other options to make sure that C is the right answer. Since we are looking for an option which at least mentions the review panel, options A and B are out right away.
Option D: We are not concerned with the working of the review panel. We just need to know the cost impact.
Option E: This just tells us that the number of panel members depends on the cost of the procedure - but how does it affect the cost is not really answered.

To answer your question, you must ALWAYS look at all the options, even if you feel that you have arrived at the answer - this is because GMAT CR questions always ask you to pick the best choice of the lot. This very question asks you to pick the choice that 'provides the strongest justification' for the company's decision - so there may be other chocies that are okay, but you need to pick the best.
Gowri N Kishore
Verbal Specialist & Mentor
CrackVerbal

If you find my posts useful, please hit the 'Thank' button. :)

Get a FREE Profile Evaluation from CrackVerbal experts!
https://applications.crackverbal.com/fre ... valuation/

Attend Live, Instructor-led Online classes by 99th p'cile instructors!
https://gmat.crackverbal.com/gmat-course ... ve-course/