Question 1

In a fee-for-service (FFS) reimbursement method, providers are paid per treatment or per service that they provide.

One typical benefit of FFS reimbursement is that it:

Options :

A : Is highly effective in preventing excessive services that take the form of churning, unbundling, and upcoding

B : Provides physicians who attempt to control costs with a higher rate of compensation than is provided to physicians who make the effort to control costs

C : Is relatively easy to initiate, especially in markets where managed care penetration is low

D : Guards against the practice of defensive medicine

Answer: B

Question 2

The Fairway health plan is a for-profit health plan that issues stock. The following data was taken from Fairway's financial statements:

Current assets.....$5,000,000 -

Total assets.....$6,000,000 -

Current liabilities.....$2,500,000

Total liabilities.....$3,600,000

Stockholders' equity.....$2,400,000

Fairway's total revenues for the previous financial period were $7,200,000, and its net income for that period was $180,000.

Assume that the healthcare industry average for the debt-to-equity ratio is 0.90.

The following statement(s) can correctly be made about Fairway's debt to equity ratio:

Options :

A : Fairway-s debt-to-equity ratio is 1.50

B : Fairway relies less than most other healthcare organizations on borrowed funds to cover future and current benefit payments, to pay for ongoing business operations, and to finance growth

C : Both A and B

D : A only

E : B only

F : Neither A nor B

Answer: B

Question 3

Julio Benini is eligible to receive healthcare coverage through a health plan that is under contract to his employer. Mr. Benini is seeking coverage for the following individuals:Elena Benini, his wife -Maria Benini, his 18-year-old unmarried daughterJohann Benini, his 80-year-old father who relies on Julio for support and maintenanceThe health plan most likely would consider that the definition of a dependent, for purposes of healthcare coverage, applies to:

Options :

A : Elena, Maria, and Johann

B : Elena and Maria only

C : Elena only

D : Maria only

Answer: B

Question 4

The Jasmine Company, which self-funds the health plan for its 200 employees, has established a 501(c)(9) trust as a means of addressing possible claims fluctuations under the health plan. This plan is not a part of a collective bargaining process.A potential disadvantage to Jasmine of using a 501(c)(9) trust is that:

Options :

A : The cost of maintaining the trust may be prohibitive to Jasmine

B : The trust must always maintain enough assets to pay the health plan-s claims that have been incurred but not yet paid

C : Jasmine is prohibited from earning any return on the trust assets

D : The contributions to this trust are not deductible for federal income tax purposes

Answer: A

Question 5

With regard to the financial statements prepared by health plans, it can correctly be stated that:

Options :

A : both for-profit, publicly owned health plans and not-for-profit health plans are required by law to provide all interested parties with an annual report

B : a health plan-s annual report typically includes an independent auditor-s report and notes to the financial statements

C : any health plan that owns more than 20% of the stock of a subsidiary company must compile the financial statements for the health plan-s annual report on a consolidated basis

D : a health plan typically must prepare the financial statements included in its annual report according to SAP

Answer: B

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