Question 1

Amendments to the HMO act 1973 do not permit federally qualified HMO's to use

Accepted Answer

The amendments to the HMO act 1973 do not permit federally qualified HMO's to use retrospective experience rating.

Question 2

A particular health plan offers a higher level of benefits for services provided in-network than for out-of-network services. This health plan requires preauthorization for certain medical services.  With regard to the steps that the health plan's claims enforcement policy, clients:

Accepted Answer

Clients should investigate any conflicts between diagnostic codes and treatment codes before approving the claim to ensure that the appropriate payment is made for the claim. This is important as the health plan offers a higher level of benefits for services provided in-network, and preauthorization is required for certain medical services. Therefore, clients need to ensure that they are approving the claim for in-network services that have been preauthorized and for which the appropriate payment is made.

Question 3

All good Medical, Inc., a health plan, has contracted with Mercy Memorial Hospital to provide inpatient medical services to Allgood's plan members. The terms of the contract specify that Allgood will reimburse Mercy Memorial on the basis of a negotiated charge for each inpatient day allocated to one of its members. This negotiated charge represents a percentage discount that increases as patient volume increases. In this situation, the type of compensation agreement between Allgood and Mercy Memorial is best identified as a:

Accepted Answer

The type of compensation agreement between Allgood and Mercy Memorial is a per diem agreement because the contract specifies that Allgood will reimburse Mercy Memorial on the basis of a negotiated charge for each inpatient day allocated to one of its members. In other words, the payment is based on a daily rate or per diem rather than a fee-for-service or DRG agreement. A withhold agreement would involve holding back payment until certain conditions are met, which is not described in this scenario.

Question 4

A health plan may use one of several types of community rating methods to set premiums for a health plan. The following statements are about community rating. Select the answer choice containing the correct statement.

Accepted Answer

Standard (pure) community rating is a method of setting premiums for a health plan in which the plan charges all employers or other group sponsors the same dollar amount for a given level of medical benefits or health plan, without adjusting for factors such as age, gender, or experience. This is typically used for small groups, rather than large groups. Adjusted community rating (ACR) takes into account the actual experience of a group and adjusts premiums accordingly. The Centers for Medicare and Medicaid Services (CMS) does not prohibit health plans that assume Medicare risk from using ACR, but does require them to use a modified ACR method.

Question 5

A medical foundation is a not-for-profit entity that purchases and manages physician practices. In order to retain its not-for-profit status, a medical foundation must

Accepted Answer

To retain its not-for-profit status, a medical foundation must provide significant benefit to the community, as this is a key requirement for maintaining tax-exempt status under IRS regulations.

Question 6

After a somewhat modest start in 2004, enrollment in HSA-related health plans more than tripled in 2005, making them today's fastest growing type of CDHP. As of January 2006, enrollment in HSAs had reached nearly:

Accepted Answer

The answer of After a somewhat modest start in 2004,...

Question 7

A public employer, such as a municipality or county government would be considered which of the following?

Accepted Answer

A public employer is an employer that is funded by taxpayer money and hires employees (e.g. government officials, police officers, fire fighters). Therefore, it would be considered an employer-employee group, which is a group where the employer provides insurance benefits to its employees.

Question 8

A health savings account must be coupled with an HDHP that meets federal requirements for minimum deductible and maximum out-of-pocket expenses. Dollar amounts are indexed annually for inflation. For 2006, the annual deductible for self-only coverage must

Accepted Answer

According to the information given, the health savings account must be coupled with an HDHP that meets federal requirements for minimum deductible and maximum out-of-pocket expenses. For 2006, the annual deductible for self-only coverage must be at least $1,050. Therefore, Choice B is the correct answer.

Question 9

Arthur Moyer is covered under his employer's group health plan, which must comply with the Consolidated Omnibus Budget Reconciliation Act (COBRA). Mr. Moyer is terminating his employment. He has elected to continue his coverage under his employer's group

Accepted Answer

Under COBRA, an employee who is terminating employment can continue their group health coverage for up to 18 months. However, this coverage will cease if the individual obtains group health coverage through another employer.

Question 10

Al Marak, a member of the Frazier Health Plan, has asked for a typical Level One appeal of a decision that Frazier made regarding Mr. Marak's coverage. One true statement about this Level One appeal is that:

Accepted Answer

A Level One appeal allows the member to challenge Frazier's decision, and if the decision is upheld, the member has the right to appeal to the next level.

Question 11

As part of its utilization management (UM) system, the Creole Health Plan uses a process known as case management. The following individuals are members of the Creole Health Plan: -Jill Novacek, who has a chronic respiratory condition. -Abraham Rashad.

Accepted Answer

The answer of As part of its utilization management (UM)...

Question 12

An exclusive provider organization (EPO) operates much like a PPO. However, one difference between an EPO and a PPO is that an EPO

Accepted Answer

An EPO generally provides no benefits for out-of-network care, while a PPO typically offers some coverage for out-of-network care. The other options are incorrect: A) An EPO is not regulated under federal HMO legislation; C) An EPO does have a provider network of physicians; and D) An EPO is subject to state insurance laws.

Question 13

Appropriateness of treatment provided is determined by developing criteria that if unmet will prompt further investigation of a claim which are also called:

Accepted Answer

These are called edits, which are rules programmed into computer systems used to process medical claims. They identify certain criteria that need to be met for a particular treatment or service to be considered appropriate, and if these criteria are not met, the claim will be flagged for further review. This helps ensure that insurers are only paying for services that are medically necessary and appropriate for the patient's condition.

Question 14

A health plan's ability to establish an effective provider network depends on the characteristics of the proposed service area and the needs of proposed plan members. It is generally correct to say that

Accepted Answer

Urban areas typically have a higher density of healthcare providers, giving health plans more options and flexibility when establishing a provider network. In contrast, rural areas often have fewer providers, making it more challenging for health plans to create an effective network. Therefore, statement B is correct.

Statement A is incorrect, as having providers affiliated with single entities can limit a health plan's contracting options and may result in higher costs.

Statement C is incorrect, as consumers and purchasers in markets with little health plan activity may not have much experience with any type of managed care plan and may not have a preference for HMOs or PPOs.

Statement D is incorrect, as large employers typically have more resources and are better equipped to adopt health plans than small companies.

Question 15

Although the process is voluntary for health plans, external accreditation is becoming more and more important as states and purchasers require health plans undergo some type of external review process. This process:

Accepted Answer

External accreditation is voluntary for health plans, but it is increasingly important as states and purchasers require some form of external review.

Question 16

All CDHP products provide federal tax advantages while allowing consumers to save money for their healthcare.

Accepted Answer

CDHP products, such as Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), provide federal tax advantages that allow consumers to save money on eligible healthcare expenses. This includes contributions being made with pre-tax dollars, tax-free withdrawals for qualified medical expenses, and potential interest or investment earnings accumulating tax-free.

Question 17

A physician-hospital organization (PHO) may be classified as an open PHO or a closed PHO. With respect to a closed PHO, it is correct to say that

Accepted Answer

The answer of A physician-hospital organization (PHO) may be classified...

Question 18

As part of its quality management program, the Lyric Health Plan regularly compares its practices and services with those of its most successful competitor. When Lyric concludes that its competitor's practices or services are better than its own, Lyric imports these policies and procedures for themselves. What is this called?

Accepted Answer

This is called benchmarking, where an organization compares its own processes and practices to those of its most successful competitors and then adopts these practices for itself. B) Standard of care refers to the level of care that is expected of a healthcare provider in a particular situation. C) An adverse event is an incident that causes harm or injury to a patient. D) Case-mix adjustment is a statistical method used to analyze healthcare data and adjust for differences in patient populations.

Question 19

According to the IRS, which of the following is not an allowable preventive care service?

Accepted Answer

According to the IRS, expenses for health club memberships are not an allowable preventive care service. The other options listed (smoking cessation programs, periodic health examinations, and immunizations) are all allowable preventive care services.

Question 20

An HMO that combines characteristics of two or more HMO models is sometimes referred to as a

Accepted Answer

A mixed model HMO combines characteristics of two or more HMO models. It may include elements of the network, group, and/or staff models.

Exam 3: Health Plan Finance and Risk Management