Health Plan Finance and Risk Management v4.0

Page:    1 / 15   
Exam contains 215 questions

In the following paragraph, a sentence contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have selected.
The Igloo health plan recognizes the receipt of its premium income during the accounting period in which the income is earned, regardless of when cash changes hands. However,
Igloo recognizes its expenses when it earns the revenues related to those expenses, regardless of when it receives cash for the revenues earned. This information indicates that the (realization/capitalization) principle governs Igloo's revenue recognition, whereas the
(matching/initial-recording) principle governs its expense recognition.

  • A. realization / matching
  • B. realization / initial-recording
  • C. capitalization / matching
  • D. capitalization / initial-recording


Answer : A

The Fiesta Health Plan prices its products in such a way that the rates for its products are reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor of 0.6 to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that Murdock's experience rate is $180 PMPM. Fiesta would correctly calculate that its blended rate PMPM for Murdock should be Fiesta's retention charge plus

  • A. $152
  • B. $188
  • C. $192
  • D. $228


Answer : B

The Acorn Health Plan uses a resource-based relative value scale (RBRVS) to help determine the reimbursement amounts that Acorn should make to providers who are compensated under an FFS system. With regard to the advantages and disadvantages to
Acorn of using RBRVS, it can correctly be stated that

  • A. An advantage of using RBRVS is that it can assist Acorn in developing reimbursement schedules for various types of providers in a comprehensive healthcare plan
  • B. An advantage of using RBRVS is that it puts providers who render more medical services than necessary at financial risk for this overutilization
  • C. A disadvantage of using RBRVS is that it will be difficult for Acorn to track treatment rates for the health plan's quality and cost management functions
  • D. A disadvantage of using RBRVS is that it rewards procedural healthcare services more than cognitive healthcare services


Answer : A

Several federal agencies establish rules and requirements that affect health plans. One of these agencies is the Department of Labor (DOL), which is primarily responsible for
_________.

  • A. Issuing regulations pertaining to the Health Insurance Portability and Accountability Act (HIPAA) of 1996
  • B. Administering the Medicare and Medicaid programs
  • C. Administering ERISA, which imposes various documentation, appeals, reporting, and disclosure requirements on employer group health plans
  • D. Administering the Federal Employees Health BenefitsProgram (FEHBP), which providesvoluntary health insurance coverage to federal employees, retirees, and dependents


Answer : C

The Poplar Company and a Blue Cross/Blue Shield organization have contracted to provide a typical fully funded health plan for Poplar's employees. One true statement about this health plan for Poplar's employees is that

  • A. Poplar bears the entire financial risk if, during a given period, the dollar amount of services rendered to Poplar plan members exceeds the dollar amount of premiums collected for this health plan
  • B. Poplar and the Blue Cross/Blue Shield organization share the financial risk of paying for claims under Poplar's health plan
  • C. The Blue Cross/Blue Shield organization, upon acceptance of a premium, becomes the group plan sponsor for Poplar's health plan
  • D. The Blue Cross/Blue Shield organization, upon acceptance of a premium, bears the entire financial risk of paying for the administrative expenses associated with health plan operations


Answer : D

Health plans seeking to provide comprehensive healthcare plans must contract with a variety of providers for ancillary services. One characteristic of ancillary services is that

  • A. Physician behavior typically does not impact the utilization rates for these services
  • B. Package pricing is the preferred reimbursement method for ancillary service providers
  • C. These services include physical therapy, behavior therapy, and home healthcare, but not diagnostic services such as laboratory tests
  • D. Few plan members seek these services without first being referred to the ancillary provider by a physician


Answer : D

The Cardinal health plan complies with all of the provisions of HIPAA.
Cardinal has received requests for healthcare coverage from the following companies that meet the statutory definition of a small group:
-> The Xavier Company has excellent claims experience
-> The Youngblood Company has not previously offered group healthcare coverage to its employees
-> The Zebulon Company has poor claims experience
According to HIPAA's provisions, Cardinal must issue a healthcare contract to

  • A. Xavier, Youngblood, and Zebulon
  • B. Xavier and Youngblood only
  • C. Xavier only
  • D. None of these companies


Answer : A

When pricing its product, the Panda Health Plan assumes a 4% interest rate on its investments. Panda also assumes a crediting interest rate of 4%.
The actual interest rate earned by Panda on the assets supporting its product is 6%. The following statements can correctly be made about the investment margin and interest margin for Panda's products.

  • A. Panda most likely built the crediting interest rate of 4% into the investment margin of its product.
  • B. Panda's investment margin is the difference between its actual benefit costs and the benefit costs that it assumes in its pricing.
  • C. The interest margin for this product is 2%.
  • D. All of these statements are correct.


Answer : C

The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
The main purpose of Caribou's balance sheet is to

  • A. Reveal how Caribou obtained particular assets or liabilities
  • B. Show how much money Caribou has realized from its operations during an accounting period
  • C. Measure the owners' wealth
  • D. Reconcile the cash that Caribou has on hand at the beginning and at the end of an accounting period


Answer : C

With regard to capitation arrangements for hospitals, it can correctly be Back to Top stated that

  • A. The most common reimbursement method for hospitals is professional services capitation
  • B. Most jurisdictions prohibit hospitals and physicians from joining together to receive global capitations that cover institutional services provided by the hospitals
  • C. Ahealth plan typically can capitate a hospital for outpatient laboratory and X-ray services only if the health plan also capitates the hospital for inpatient care
  • D. Many hospitals have formed physician hospital organizations (PHOs), hospital systems, or integrated delivery systems (IDSs) that can accept global capitation payments from health plans


Answer : D

The Lighthouse health plan operates in a state that allows the health plan to use an underwriting method of determining a group's premium in which underwriters treat several small groups as one large group for risk assessment purposes. This method, which helps
Lighthouse more accurately estimate a small group's probable claims costs, is known as

  • A. Case stripping
  • B. The low-option rating method
  • C. The rate spread method
  • D. Pooling


Answer : D

Experience rating methods can be either prospective or retrospective. With regard to these types of experience rating methods, it can correctly be stated that

  • A. A health plan typically can expect much higher profit levels from using retrospective experience rating rather than prospective experience rating a health plan using prospective experience rating is more likely than a
  • B. Health plan using retrospective experience rating to have to pay an experience rating dividend if a group's experience has been better than expected during the rating period
  • C. The premium determined under retrospective experience rating is usually higher than the premium under prospective experience rating
  • D. Most states require HMOs to use retrospective experience rating rather than prospective experience rating


Answer : C

The following statements are about various reimbursement arrangements that health plans have with hospitals. Select the answer choice containing the correct statement.

  • A. A sliding scale per-diem charges arrangement differs from a sliding scale discount on charges arrangement in that only a sliding scale per-diem charges arrangement is based on total volume of admissions and outpatient procedures.
  • B. Under a typical reimbursement arrangement that is based on diagnosisrelated groups (DRGs), if the payment amount is fixed on the basis of diagnosis, then any reduction in costs resulting from a reduction in days will go to the health plan rather than to the hospital.
  • C. A negotiated straight per-diem charge requires payment of a single charge for a day in the hospital, regardless of any actual charges or costs incurred during the hospital stay.
  • D. A straight discount on charges arrangement is the most common reimbursement method in markets with high levels of health plans.


Answer : C

Under GAAP, three approaches to expense recognition are generally allowed: associating cause and effect, systematic and rational allocation, and immediate recognition. A health plan most likely would use the approach of systematic and rational allocation in order to

  • A. Report the payment of the health plan's utility bills
  • B. Spread the payment of sales force commissions over the premium paying period of healthcare coverage
  • C. Report the fees paid by the health plan to attorneys and consultants
  • D. Depreciate the cost of a new computer system over the useful life of the system


Answer : D

The Fiesta Health Plan prices its products in such a way that the rates for its products are reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor of 0.6 to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that Murdock's experience rate is $180 PMPM.
According to regulations, Fiesta's premium rates are reasonable if they

  • A. vary only on the factors that affect Fiesta's costs
  • B. are at a level that balances Fiesta's need to generate a profit against its need to obtain or retain a specified share of the market in which it conducts business
  • C. are high enough to ensure that Fiesta has enough money on hand to pay operating expenses as they come due
  • D. do not exceed what Fiesta needs to cover its costs and provide the plan with a fair profit


Answer : D

Page:    1 / 15   
Exam contains 215 questions

Talk to us!


Have any questions or issues ? Please dont hesitate to contact us

Certlibrary doesn't offer Real Microsoft Exam Questions.
Certlibrary Materials do not contain actual questions and answers from Cisco's Certification Exams.
CFA Institute does not endorse, promote or warrant the accuracy or quality of Certlibrary. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.