A Major Health Insurance Company in Lagolia Pays for Special Procedures Prescribed by Physicians

Question: 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.

“A major health insurance company in Lagolia pays for special procedures prescribed by physicians”- is a GMAT critical reasoning passage with answers. This particular GMAT critical reasoning topic has been taken from the book “Official Guide for GMAT Verbal Review 2018.”

Candidates need a strong knowledge of English GMAT critical reasoning. This GMAT critical reasoning question consists of a comprehension question and 4 options to choose from. The GMAT critical reasoning questions are designed for the purpose of testing candidates’ abilities. They check if the candidates understand, analyse, and apply information or concepts.

Answer: C

Explanation: This is a GMAT critical reasoning question. We have to find the option that provides a strong justification for the company’s decision.

Let’s go through each of the available options and choose the best one.

Option A: Patients often register dissatisfaction with physicians who prescribe nothing for their ailments.
This option is incorrect because this option discusses dissatisfaction with physicians, it is totally irrelevant to the economic aspect. It does not save the company’s money in any way or sense, it is just a humanitarian aspect of the treatment. So, Option A is incorrect.

Option B: Physicians often prescribe special procedures that are helpful but not altogether necessary for the health of the patient.
This option is incorrect because again, it is just a humanitarian concern and does not talk about the economic aspect. It gives no reason why the company’s decision is justified. These procedures are not necessary for the health of the patient. It depends on the patients whether they choose to undergo the procedures or not. So, Option B is incorrect.

Option C: The review process is expensive and practically always results in approval of the prescribed procedure.
This option is correct because the review process is costly and most of the time results in the approval of the procedure prescribed. It implies that the procedures cost more money than it saves. It strengthens the company’s decision. So, we can say that Option C is correct.

Option 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.
This option is incorrect. This is just a professional concern of the doctors, it does not talk about the economic aspect or whether the procedure prescribed saves money or not. Since it is not relevant to the argument above, Option D is incorrect.

Option E: Incorrect
This option is incorrect. We don’t know for sure if changing the number of people on the review panel changes the company’s cost of running the review panel or not. This could strengthen the argument but we don't know for sure. So, Option E is incorrect.

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