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How does item Generation Work in Parties?

In D3, each monster killed will give different items to each player, unseen by the other players. But this gives good oppourtunity for low level characters to join Hell Baal runs(as an example), party with the other guys, wait till Baal is almost killed, get in a few free shots, and when Baal dies, you get free items for almost no effort. Even though this is a good system to prevent creatures from picking up your hard earned loot, they also get a break.
Anyway, how does this system work? Does any monster that dies spawn items for everyone, or does the player have to attack the monster and decrease its health by a bit to get the items?
Anyone with a Bizzard account can ask this on the official forums?
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