gmatnub wrote:
Experts estimate that insurance companies' tardiness in paying doctors for legitimate medical claims adds approximately 10 percent in overhead costs for physicians. Insurance companies counter that the tardiness sometimes results from billing errors made by the doctors themselves. Since dealing with these billing errors costs the insurance companies time and money, it is clear that insurance companies do not have a significant economic incentive to delay claim payments to doctors.
Which of the following pieces of information, if true, weakens the conclusion above?
(A) Some doctors who submit accurate bills to insurance companies still receive tardy payments.
(B) The cost to the insurance companies to process incorrect bills from doctors' offices is roughly equivalent to the increased costs that physicians accrue as a result of tardy payments from insurance companies.
(C) A rising proportion of medical claims submitted by doctors to insurance companies are deemed illegitimate by those insurance companies.
(D) The billing errors made by doctors' offices are typically very minor, such as the submission of a claim with an outdated patient home address.
(E) The overhead costs incurred by doctors as a result of delayed insurance payments result in an increase in the premiums paid by consumers to health insurance companies that far exceeds any increase in the fees paid to doctors by insurance companies.
OFFICIAL EXPLANATION:
The conclusion of the argument is that insurance companies do not have a significant economic incentive to delay claim payments to doctors. To weaken this conclusion, an answer choice must provide some significant economic incentive for insurance companies to be tardy in paying doctors for legitimate medical claims.
(A) While the fact that some doctors who submit accurate bills to insurance companies still receive tardy payments seems to indicate that there must be something other than errors causing delayed payments, it fails to prove that the insurance company has an economic incentive to deliberately delay claim payments to doctors. For example, this fact could simply indicate that the insurance companies are inefficient at handling all of their paperwork.
(B) This choice compares costs insurance companies must absorb due to incorrect bills to costs physicians must absorb due to tardy payments. However, this information is irrelevant to establishing an economic incentive for insurance companies to delay claim payments to doctors.
(C) The argument is focused on the payment of legitimate claims; the rising proportion of illegitimate claims does not establish a clear economic incentive for insurance companies to delay payments of legitimate claims.
(D) The types of billing errors made by doctors' offices does not establish any economic motive for insurance companies to make a practice of delaying payments to doctors.
(E) CORRECT. This choice articulates a logical chain that establishes a clear economic motive for insurance companies to be tardy in paying doctors for legitimate medical claims. If insurance companies delay payments to doctors, this results in a 10 percent increase in overhead costs for physicians. These costs ultimately result in higher fees that doctors charge to insurance companies. Insurance companies, in turn, raise the premiums they charge consumers for health coverage. This choice states that the insurance companies increase their fees to consumers far more than the doctors increase their fees to insurance companies, enabling the insurance companies to pocket the difference; therein lies the economic motive for insurance companies to be tardy in paying doctors for legitimate medical claims.
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29 Jun 2008, 19:31
35%
(medium)
26%
(02:23)
wrong 
