Governance and Regulation v4.0

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Exam contains 76 questions

Nightingale Health Systems, a health plan, operates in a state that requires health plans to allow enrollees to visit obstetricians and gynecologists without a referral from a primary care provider. This information indicates that Nightingale must comply with a type of mandate known as a:

  • A. Direct access law
  • B. Scope-of-practice law
  • C. Provider contracting mandate
  • D. Physician incentive law


Answer : A

Third party administrators (TPAs) provide various administrative services to health plans or groups that provide health benefit plans to their employees or members. Many state laws that regulate TPAs are based on the NAIC Third Party Administrator Model Statute. One provision of the TPA Model Law is that it

  • A. Prohibits TPAs from performing insurance functions such as underwriting and claims processing
  • B. Prohibits TPAs from entering into an agreement under which the amount of the TPA's compensation is based on the amount of premium or charges the TPA collects
  • C. Requires TPAs, upon the termination of a TPA agreement with a group, to immediately transfer all its records relating to the group to the new administrator
  • D. Requires TPAs to notify the state insurance department immediately following any material change in the TPA's ownership or control


Answer : D

Health plans are allowed to appeal rules or regulations that affect them. Generally, the grounds for such appeals are limited either to procedural grounds or jurisdictional grounds.
The Kabyle Health Plan appealed the following new regulations:
Appeal 1 - Kabyle objected to this regulation on the ground that this regulation is inconsistent with the law.
Appeal 2 - Kabyle objected to this regulation because it believed that the subject matter was outside the realm of issues that are legal for inclusion in the regulatory agency's regulations.
Appeal 3 - Kabyle objected to the process by which this regulation was adopted.
Of these appeals, the ones that Kabyle appealed on jurisdictional grounds were

  • A. Appeals 1, 2, and 3
  • B. Appeals 1 and 2 only
  • C. Appeals 1 and 3 only
  • D. Appeals 2 and 3 only


Answer : B

SoundCare Health Services, a health plan, recently conducted a situation analysis. One step in this analysis required SoundCare to examine its current activities, its strengths and weaknesses, and its ability to respond to potential threats and opportunities in the environment. This activity provided SoundCare with a realistic appraisal of its capabilities.
One weakness that SoundCare identified during this process was that it lacked an effective program for preventing and detectingviolations of law. SoundCare decided to remedy this weakness by using the 1991 Federal Sentencing Guidelines for Organizations as a model for its compliance program.
By definition, the activity that SoundCare conducted when it examined its strengths, weaknesses, and capabilities is known as

  • A. An environmental analysis
  • B. An internal assessment
  • C. An environmental forecast
  • D. A community analysis


Answer : B

Several states have adopted clinical practice guidelines for treating workers' compensation injuries. Clinical practice guidelines can best be described as

  • A. Fee schedules that specify the maximum amount providers may charge for treating workers' compensation patients
  • B. A utilization management and quality management mechanism designed to aid providers in making decisions about the most appropriate course of treatment for a specific case
  • C. Detailed plans of medical treatment designed to facilitate a patient's return to the workplace
  • D. Payment practices that might technically violate the provisions of the anti-kickback statute but that will not be considered illegal and for which providers and health plans will not be subject to penalties


Answer : B

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock.
Tidewater is incorporated under the laws of Illinois, but it conducts business in the
Canadian provinces of Ontario and Manitoba.
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of
Diversified makes decisions about strategic planning and budgeting for each of the businesses.
In order to become the type of company that is owned by people who purchase shares of the company's stock, Tidewater must undergo a process known as

  • A. management buy-out
  • B. piercing the corporate veil
  • C. demutualization
  • D. mutualization


Answer : C

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock.
Tidewater is incorporated under the laws of Illinois, but it conducts business in the
Canadian provinces of Ontario and Manitoba.
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of
Diversified makes decisions about strategic planning and budgeting for each of the businesses.
In creating Diversified, Tidewater formed the type of company known as

  • A. A mutual holding company
  • B. A spin-off company
  • C. An upstream holding company
  • D. A downstream holding company


Answer : D

The board of directors of the Garnet Health Plan, an integrated delivery system (IDS), includes physicians and hospital representatives who sometimes feel compelled to represent a specific organization that is only one part of the IDS. Such a circumstance can lead to ___________, which is a situation in which the members of the board focus on the best interests of component parts of the enterprise rather than on the best interests of
Garnet as a whole.

  • A. An enterprise-focused board
  • B. Representational governance
  • C. Enterprise liability
  • D. Boundary spanning


Answer : B

Health plans should monitor changes in the environment and emerging trends, because changes in society will affect the managed care industry. One true statement regarding recent changes in the environment in which health plans operate is that

  • A. Women as a group receive more healthcare and interact more often with health plans than do men over the course of a lifetime
  • B. The focus of healthcare during the past decade has shifted away from outpatient care to inpatient hospital treatment
  • C. The uninsured population in the United States has been decreasing in recent years
  • D. The decline in overall inflation in the 1990s failed to slow the growth in healthcare inflation


Answer : A

Greenpath Health Services, Inc., an HMO, recently terminated some providers from its network in response to the changing enrollment and geographic needs of the plan. A provision in Greenpath's contracts with its healthcare providers states that Greenpath can terminate the contract at any time, without providing any reason for the termination, by giving the other party a specified period of notice.
The state in which Greenpath operates has an HMO statute that is patterned on the NAIC
HMO Model Act, which requires Greenpath to notify enrollees of any material change in its provider network. As required by the HMO Model Act, the state insurance department is conducting an examination of Greenpath's operations. The scope of the on-site examination covers all aspects of Greenpath's market conduct operations, including its compliance with regulatory requirements.
The contracts between Greenpath and its healthcare providers contain a termination provision known as

  • A. An 'economic credentialing' termination provision
  • B. A 'breach of contract' termination provision
  • C. A 'fair procedure' termination provision
  • D. A 'without cause' termination provision


Answer : D

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock.
Tidewater is incorporated under the laws of Illinois, but it conducts business in the
Canadian provinces of Ontario and Manitoba.
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of
Diversified makes decisions about strategic planning and budgeting for each of the businesses.
Tidewater's participating policy owners have the right to

  • A. Elect the board of directors on the basis of one vote per policy owner
  • B. Elect the board of directors on the basis of one vote for each policy a person owns
  • C. Participate in developing a corporate mission statement and strategic plans
  • D. Receive stock dividends for each policy they own


Answer : A

While traditional workers' compensation laws have restricted the use of managed care techniques, many states now allow managed workers' compensation. One common characteristic of managed workers' compensation plans is that they

  • A. Discourage injured employees from returning to work until they are able to assume all the duties of their jobs
  • B. Use low copayments to encourage employees to choose preferred providers
  • C. Cover an employee's medical costs, but they do not provide coverage for lost wages
  • D. Rely on total disability management to control indemnity benefits


Answer : D

The Good & Well Pharmacy, a Medicaid provider of outpatient drugs, is subject to the prospective drug utilization review (DUR) mandates of the Omnibus Budget Reconciliation
Act of 1990 (OBRA '90). One component of prospective DUR is screening. In this context, when Good & Well is involved in the process of screening, the pharmacy is

  • A. Updating a formulary to represent the current clinical judgment of providers and experts in the diagnosis and treatment of disease
  • B. Reviewing patient profiles for the purpose of identifying potential problems
  • C. Consulting directly with prescribers and patients in the planning of drug therapy
  • D. Denying coverage for the off-label use of approved drugs


Answer : B

Health maintenance organizations (HMOs) seeking federal qualification under the HMO Act of 1973 and its amendments must meet requirements in four basic operational areas. One operational requirement for qualification is that an HMO must

  • A. Ensure that at least 1/3 of its policy-making body is comprised of HMO members
  • B. Ensure that there is adequate representation of underserved communities on its policy- making body
  • C. Have an ongoing quality assurance program that meets the requirements of the Centers for Medicaid & Medicare Services (CMS), stresses health outcomes, and provides for review by health professionals
  • D. Test, safeguard, and promote quality of care by following detailed programmatic techniques that are explained in CMS's Federally Qualified HMO (FQHMO) Manual


Answer : C

Solvency standards for Medicare provider-sponsored organizations (PSOs) are divided into three parts: (1) the initial stage, (2) the ongoing stage, and (3) insolvency. In the initial stage, prior to CMS approval, a Medicare PSO typically must have a minimum net worth of

  • A. $750,000
  • B. $1,000,000
  • C. $1,500,000
  • D. $2,000,000


Answer : C

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Exam contains 76 questions

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