Deck 2: Governance and Regulation

Question 1

Indigo Health Plan advertised a specific individual health insurance policy through a direct mail advertisement that provided detailed information about the product. In order to comply with the NAIC Model Rules Governing Advertisements of Accident and Sickness Insurance, Indigo must disclose whether the advertised policy contains any exceptions, reductions, or limitations. Thus, Indigo disclosed in the advertisement that one policy provision limits coverage for dental exams to $50 per exam and to one exam per calendar year. This information indicates that, with respect to the definitions in the NAIC Model Rules, Indigo's advertisement is an example of an

A) Invitation to contract, and it discloses a policy provision known as an exception
B) Invitation to contract, and it discloses a policy provision known as a reduction
C) Invitation to inquire, and it discloses a policy provision known as an exception
D) Invitation to inquire, and it discloses a policy provision known as a reduction

Answer 1

B

Question 2

The Nonprofit Institutions Act allows the Neighbor Hospital, a not-for-profit hospital, to purchase at a discount drugs for its 'own use'. Consider whether the following sales of drugs were not for Neighbor's own use and therefore were subject to antitrust enforcement: Elijah Jamison, a former patient of Neighbor, renewed a prescription that was originally dispensed when he was discharged from Neighbor. Neighbor filled a prescription for Camille Raynaud, who has no connection to Neighbor other than that her prescribing physician is located in a nearby physician's office building. Neighbor filled a prescription for Nigel Dixon, who is a friend of a Neighbor medical staff member. With respect to the United States Supreme Court's definition of 'own use,' the drug sales that were not for Neighbor's own use were the sales that Neighbor made to

A) Mr. Jamison, Ms. Raynaud, and Mr. Dixon
B) Mr. Jamison and Ms. Raynaud only
C) Mr. Dixon only
D) None of these individuals

Answer 2

A

Question 3

The Wentworth Corporation uses a self-funded plan to provide its employees with healthcare benefits. One consequence of Wentworth's approach to providing healthcare benefits is that selffunding

A) Requires that Wentworth self-administer its healthcare benefit plan
B) Requires that Wentworth pay higher state premium taxes than do insurers and health plans
C) Eliminates the need for Wentworth to pay a risk charge to an insurer or health plan
D) Increases the number of benefit and rating mandates that apply to Wentworth's plan

Answer 3

C

Question 4

Antitrust laws can affect the formation, merger activities, or acquisition initiatives of a health plan. In the United States, the two federal agencies that have the primary responsibility for enforcing antitrust laws are the

A) Internal Revenue Service (IRS) and the Department of Justice (DOJ)
B) Office of Inspector General (OIG) and the Department of Defense (DOD)
C) Federal Trade Commission (FTC) and the Department of Labor (DOL)
D) Federal Trade Commission (FTC) and the Department of Justice (DOJ)

Question 5

Determine whether the following statement is true or false: Failing to adopt and implement standards for the prompt investigation and settlement of claims is an example of an activity that would be considered an improper claims practice according to the NAIC Model Unfair Claims Settlement Practices Act.

Question 6

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. With respect to the type of change that constitutes a material change under the HMO Model Act's disclosure requirements, the termination of one healthcare provider from Greenpath's provider network

A) Always qualifies as a material change in the plan, and Greenpath must report the change to all plan enrollees
B) Always qualifies as a material change in the plan, and Greenpath must report the change to only those plan enrollees who have received care from the terminated provider
C) Qualifies as a material change in the plan only if the provider is a primary care provider, and in such a case Greenpath must report the change to all plan enrollees
D) such a case Greenpath must report the change to only those plan enrollees who receive primary care from the terminated provider

Question 7

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

Question 8

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

Question 9

The Surrey Medical Supply Company was formed as a limited partnership. In this partnership, Victoria Lewin is one of the limited partners and Oscar Gould is a general partner. This information indicates that, with respect to the typical characteristics of limited partnerships,

A) Ms. Lewin has more freedom to opt out of the partnership than does Mr. Gould
B) Ms. Lewin has more liability for the debts of Surrey than does Mr. Gould
C) both Ms. Lewin and Mr. Gould participate in the day-to-day management of Surrey
D) the partnership will continue upon the death of Mr. Gould, whereas it will end with the death of Ms. Lewin

Question 10

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

Question 11

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

Question 12

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

Question 13

Certificate of need (CON) laws apply to health plans in a variety of ways, depending upon the state. By definition, CON laws are laws that are designed to

A) Regulate the construction, renovation, and acquisition of healthcare facilities as well as the purchase of major medical equipment in a geographical area
B) Protect commerce from unlawful restraint of trade, price discrimination, price fixing, reduced competition, and monopolies
C) Determine benefit payments when a person is covered by more than one plan, such as two group health plans 12
D) License and regulate health plans that wish to establish and operate an HMO

Question 14

The Sawgrass Health Center is an institution that trains healthcare professionals and performs various clinical and other types of healthcare-related research. Because Sawgrass receives government funding, it is required to provide medical care for the poor. Of the following types of health plans, Sawgrass can best be described as:

A) A medical foundation
B) An academic medical center (AMC)
C) A healthcare cooperative
D) A community health center (CHC)

Question 15

Regulatory and legislative bodies are among the important environmental forces in the health plan industry. The following statements are about such regulation and legislation. Select the answer choice that contains the correct statement.

A) Federal guidelines exist to direct health plans on compliance issues when a health plan encounters conflicting state laws in a given service area.
B) Administrative rules and regulations do not carry the force of law.
C) As stakeholders in the health plan industry, federal and state governments exert tremendous influence over a health plan's formation and operations.
D) In recent years, the number of health plan bills in the state and the federal legislatures has decreased.

Question 16

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. With regard to the state in which Tidewater is domiciled, it is correct to say that, from the perspective of both Ontario and Manitoba, Tidewater is considered to be the type of corporation known as:

A) A foreign corporation
B) An alien corporation
C) A sister corporation
D) A domestic corporation

Question 17

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. By combining under Diversified a group of businesses that produce unrelated products and by consolidating the management of the businesses, Tidewater has achieved the type(s) of integration known as

A) Conglomerate integration and operational integration
B) Horizontal integration and operational integration
C) Horizontal integration and virtual integration
D) Conglomerate integration only

Question 18

In the course of doing business, health plans conduct basic corporate transactions. For example, when a health plan engages in the corporate transaction known as aggressive sourcing, the health plan

A) Chooses to contract with vendors who provide specific functions that would otherwise be performed in-house, such as paying claims
B) Seeks to obtain the best deals from various vendors for equipment, supplies, and services such as telephones, overnight mail, computer hardware and software, and copy machines
C) Merges with one or more companies to form an entirely new company
D) Joins with one or more companies, but retains its autonomy and relies on the other companies to perform specific functions 6

Question 19

Some health plans qualify as tax-exempt organizations under Sections 501(c)(3) and 501(c)(4) of the Internal Revenue Code. One true statement regarding a health plan that qualifies as a 501(c)(4) social welfare organization, in comparison to a health plan that qualifies as a 501(c)(3) charitable organization, is that a

A) 501(c)(4)social welfare organization is allowed to distribute profits for the benefit of individuals, whereas a 501(c)(3) charitable organization can use surplus only for the benefit of the organization, the community, or a charity
B) 501(c)(4) social welfare organization can raise operating funds through the sale of tax-exempt bonds, whereas a 501(c)(3) charitable organization does not have this advantage
C) 501(c)(4) social welfare organization has less flexibility in determining use of funds for social or political activities than does a 501(c)(3) charitable organization
D) 501(c)(4) exemption is easier to obtain than a 501(c)(3) exemption, because 501(c)(4) social welfare organizations are allowed to benefit a comparatively smaller group of individuals

Question 20

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. From the following answer choices, select the response that identifies the type of market conduct examination that is being performed on Greenpath and the frequency with which the HMO Model Act requires state insurance departments to conduct an examination of an HMO's operations.

A) Type of examination: comprehensive; Required frequency: annually
B) Type of examination: comprehensive; Required frequency: at least every three years
C) Type of examination: target; Required frequency: annually
D) Type of examination: target; Required frequency: at least every three years

Question 21

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

Question 22

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

Question 23

In the paragraph below, a statement contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the statement. Then select the answer choice containing the two terms that you have chosen. In the case of Pacificare of Oklahoma, Inc. v. Burrage, the U.S. Court of Appeals for the Tenth Circuit considered whether ERISA preempts medical malpractice claims against health plans based on certain liability theories. In this case, the Tenth Circuit court held that ERISA (should /should not) preempt a liability claim against an HMO for the malpractice of one of its primary care physicians, and therefore the HMO was subject to a claim of (subordinated / vicarious) liability.

A) Should / subordinated
B) Should / vicarious
C) Should not / subordinated
D) Should not / vicarious

Question 24

Congress enacted three clauses relating to the preemptive effect of the Employee Retirement Income Security Act of 1974 (ERISA). One of these clauses preserves from ERISA preemption any state law that regulates insurance, banking, or securities, with the exception of the exemption for self-funded employee benefit plans. This clause is called the

A) Savings clause
B) Preemption clause
C) Deemer clause
D) De novo clause

Question 25

Arthur Dace, a plan member of the Bloom health plan, tried repeatedly over an extended period to schedule an appointment with Dr. Pyle, his primary care physician (PCP). Mr. Dace informally surveyed other Bloom plan members and found that many people were experiencing similar problems getting an appointment with this particular provider. Mr. Dace threatened to take legal action against Bloom, alleging that the health plan had deliberately allowed a large number of patients to select Dr. Pyle as their PCP, thus making it difficult for patients to make appointments with Dr. Pyle. Bloom recommended, and Mr. Dace agreed to use, an alternative dispute resolution (ADR) method that is quicker and less expensive than litigation. Under this ADR method, both Bloom and Mr. Dace presented their evidence to a panel of medical and legal experts, who issued a decision that Bloom's utilization management practices in this case did not constitute a form of abuse. The panel's decision is legally binding on both parties. Different types of compensation arrangements in managed care plans, from fee-for-service (FFS) arrangements to capitation arrangements, lead to different types of fraud and abuse. From the answer choices below, select the response that identifies the form of abuse in which Bloom is allegedly engaging, according to Mr. Dace's complaint, and whether this form of abuse is more likely to occur in FFS compensation arrangements or in capitation arrangements.

A) Type of abuse underutilization Type of compensation arrangement FFS arrangement
B) Type of compensation arrangement capitation arrangement
C) Type of abuse overutilization

Question 26

From the following answer choices, choose the term that best corresponds to this description. The SureQual Group is a group of practicing physicians and other healthcare professionals paid by the federal government to review services ordered or furnished by other practitioners in the same medical fields for the purpose of determining whether medical services provided were reasonable and necessary, and to monitor the quality of care given to Medicare patients.

A) Health insuring organization (HIO)
B) Independent practice association (IPA)
C) Physician practice management (PPM) company
D) Peer review organization (PRO)

Question 27

One typical difference between a for-profit health plan's board of directors and a not-for-profit health plan's board of directors is that the directors in a for-profit health plan

A) Can serve on the board for a period of no more than ten years, whereas the terms of service for a not-for-profit board's directors are usually unlimited by the director's age or by a preset maximum number of years of service
B) Must participate in raising capital for the health plan, whereas a not-for-profit board's directors are prohibited from participating directly in raising capital for the health plan
C) Are directly accountable to shareholders, whereas a not-for-profit board's directors are accountable to plan members and the community
D) Are not compensated for board participation, whereas a not-for-profit board's directors are compensated for board participation

Question 28

There are several exceptions to the Ethics in Patient Referrals Act and its amendments (the Stark laws), which prohibit a physician from referring Medicare or Medicaid patients for certain designated services or supplies provided by entities in which the physician has a financial interest. Consider whether the situations described below qualify as exceptions to the Stark laws: Situation A: Dr. Wong is a physician in the Marvel Health Plan's provider network and has a financial relationship with Marvel arising from the health plan's compensation for his services. Marvel is not a prepaid health plan. Situation B: Dr. Ryder is a physician in the provider network of the Glen Health Plan, which is not a prepaid health plan. In situations of medical necessity, Dr. Ryder refers Glen patients to a physical therapy clinic that leases office space from him. Situation C: Dr. Yost has a compensation arrangement with a health plan for providing health services under the Medicare+Choice program. An arrangement that is exempt from the Stark laws is described in

A) All of these situations
B) Situations A and C only
C) Situation B only
D) Situation C only

Question 29

The following statements are about various provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Three of the statements are true and one statement is false. Select the answer choice that contains the FALSE statement.

A) HIPAA permits group health plans that offer coverage through an HMO to impose affiliation periods during which no benefits or services are provided to a plan member.
B) HIPAA created a new category of federal healthcare crimes, called federal healthcare offenses that apply to private healthcare plans as well as to federally funded healthcare programs.
C) One effect of Section 231(h) of HIPAA, which amended the Social Security Act, has been to permit health plans with Medicare contracts to provide enrollees with value-added services such as discounted memberships to health clubs.
D) HIPAA provides that any fines and penalties recovered through regulatory proceedings to enforce the federal fraud and abuse statutes will be turned over to enforcement agencies to conduct additional investigations.

Question 30

Arthur Dace, a plan member of the Bloom Health Plan, tried repeatedly over an extended period to schedule an appointment with Dr. Pyle, his primary care physician (PCP). Mr. Dace informally surveyed other Bloom plan members and found that many people were experiencing similar problems getting an appointment with this particular provider. Mr. Dace threatened to take legal action against Bloom, alleging that the health plan had deliberately allowed a large number of patients to select Dr. Pyle as their PCP, thus making it difficult for patients to make appointments with Dr. Pyle. Bloom recommended, and Mr. Dace agreed to use, an alternative dispute resolution (ADR) method that is quicker and less expensive than litigation. Under this ADR method, both Bloom and Mr. Dace presented their evidence to a panel of medical and legal experts, who issued a decision that Bloom's utilization management practices in this case did not constitute a form of abuse. The panel's decision is legally binding on both parties. This information indicates that Bloom resolved its dispute with Mr. Dace by using an ADR method known as:

A) Corporate risk management
B) An ombudsman program
C) An ethics committee
D) Arbitration

Question 31

There are several approaches to the interagency division of responsibility for managed care entity (MCE) oversight. In State M, the state Medicaid agency, the state department of health, and the state insurance department are all responsible for ensuring that quality improvement programs are in place among the same group of MCEs and that these programs meet each agency's rules and regulations for such programs. This information indicates that State M uses the approach known as the

A) Parallel model
B) Shared model
C) Concurrent model
D) PACE model

Question 32

States may impose nominal deductibles, coinsurance, or copayments on some Medicaid recipients for certain services. Services for which states can require copayments from Medicaid recipients include:

A) Emergency services
B) Family planning services
C) Both A and B
D) A only
E) B only
F) Neither A nor B

Question 33

The following statements are about market conduct examinations of health plans. Select the answer choice that contains the correct statement.

A) Multistate examinations are not appropriate for financial examinations, because regulatory requirements concerning a health plan's financial condition tend to vary from state to state.
B) Market conduct examinations of a health plan's advertising and sales materials include comparing the advertising materials to the policies they advertise.
C) Once an examination report is provided to the state insurance department, a health plan is not given an opportunity to present a formal objection to the report.
D) In imposing sanctions on health plans, state insurance departments are required to follow federal sentencing guidelines.

Question 34

The Hanford Health Plan has delegated the credentialing of its providers to the Sienna Group, a credential verification organization (CVO). If the contract between Hanford and Sienna complies with all of the National Committee for Quality Assurance (NCQA) guidelines for delegation of credentialing, then this contract

A) Transfers to Sienna all rights to terminate or suspend individual practitioners or providers in Hanford's provider network
B) Describes the process by which Hanford evaluates Sienna's performance in credentialing providers
C) Both A and B
D) A only
E) B only
F) Neither A nor B

Question 35

The following statements appear in the Twilight Health Plan's strategic plan: Increase the percentage of preventive health interventions for total eligible membership during each of the next three calendar years for the following services: mammography, Pap smears, immunizations, and first trimester visits for prenatal mothers Improve customer satisfaction on an annual basis for each of the next three calendar years, as measured by satisfaction surveys for members, providers, and employer groups Increase by 30% the number of claims processed by the automated claim payment system and reduce by 10% the cost of paying claims during the next three years These statements are examples of Twilight's

A) Corporate objectives
B) Company mission
C) Company vision
D) Corporate strategies

Question 36

TRICARE, a military healthcare program, offers eligible beneficiaries three options for healthcare services: TRICARE Prime, TRICARE Extra, and TRICARE Standard. With respect to plan features, both an annual deductible and claims filing requirements must be met, regardless of whether care is delivered by network providers, under

A) TRICARE Prime and TRICARE Extra only
B) TRICARE Extra and TRICARE Standard only
C) TRICARE Standard only
D) None of these healthcare options

Question 37

The Opal Health Plan complies with all of the provisions of the Newborns' and Mothers' Health Protection Act of 1996 (NMHPA). Samantha Hill and Debra Chao are Opal enrollees. Ms. Hill was nhospitalized for a cesarean birth, and Ms. Chao was hospitalized for a normal delivery. From the following answer choices, select the response that indicates the minimum hospital stay for which Opal, under NMHPA, must provide benefits for Ms. Hill and Ms. Chao.

A) Ms. Hill: 72 hours; Ms. Chao: 24 hours
B) Ms. Hill: 72 hours; Ms. Chao: 48 hours
C) Ms. Hill: 96 hours; Ms. Chao: 24 hours
D) Ms. Hill: 96 hours; Ms. Chao: 48 hours

Question 38

One provision of the Mental Health Parity Act of 1996 (MHPA) is that the MHPA prohibits group health plans from

A) Setting a cap for a group member's lifetime medical health benefits that is higher than the cap for the member's lifetime mental health benefits
B) Imposing limits on the number of days or visits for mental health treatment
C) Charging deductibles for mental health benefits that are higher than the deductibles for medical benefits
D) Imposing annual limits on the number of outpatient visits and inpatient hospital stays for mental health services

Question 39

SoundCare Health Services, an MCO, 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 activityprovided 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 detecting violations 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

Question 40

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 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

Question 41

The following statements are about the Federal Employees Health Benefits Program (FEHBP), which is administered by the Office of Personnel Management (OPM). Three of the statements are true and one statement is false. Select the answer choice that contains the FALSE statement.

A) For every plan in the FEHBP, OPM annually determines the lowest premium that is actuarially sound and then negotiates with each plan to establish that premium rate.
B) Once a health plan has submitted its rate proposals for a contract year to the OPM, it cannot adjust its premium rate for any reason.
C) To cover its administrative costs, OPM sets aside 1% of all FEHBP premiums.
D) Each spring, OPM sends all plan providers its call letter, a document that specifies the kinds of benefits that must be available to plan participants and cost goals and procedural changes that the plans need to adopt.

Question 42

The following answer choices describe various approaches that a health plan can take to voice its opinions on legislation. Select the answer choice that best describes a health plan's use of grassroots lobbying.

A) The Delancey Health Plan is launching a media campaign in an effort to persuade the public that proposed health care legislation will increase the cost of healthcare.
B) The Stellar Health Plan is using direct mail and telephone calls to encourage people who support a patient rights bill to contact key legislators and voice their support for the bill.
C) The Bestway Health Plan is encouraging its employees to contribute to a political action committee (PAC) that is funding the political campaign of a pro-health plan candidate.
D) A representative of the Palmer Health Plan is attending a one-on-one meeting with a legislator to present Palmer's position on pending managed care legislation.

Question 43

The Balanced Budget Act (BBA) of 1997 created the Medicare+Choice plan. One provision of the BBA under Medicare+Choice is that the BBA

A) Requires health plans to qualify as either a competitive medical plan (CMP) or a federally qualified HMO in order to participate in the Medicare program
B) Eliminates funding for demonstration projects such as the Medicare Enrollment Demonstration Project
C) Narrows the geographic variations in payments to Medicare health plans by lowering the growth rate of payments in high-payment counties and raising the rates in low-payment counties
D) Increases Graduate Medical Education (GME) payments to hospitals for the training and cost of educating and training residents

Question 44

A federal law that significantly affects health plans is the Health Insurance Portability and Accountability Act of 1996 (HIPAA). In order to comply with HIPAA provisions, issuers offering group health coverage generally must.

A) Renew group health policies in both small and large group markets, regardless of the health status of any group member
B) Provide a plan member with a certificate of creditable coverage at the time the member enrolls in the group plan
C) Both A and B
D) A only
E) B only
F) Neither A nor B

Question 45

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 14 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

Question 46

Any willing provider laws have their share of proponents and opponents. Arguments commonly made in opposition to any willing provider laws include

A) That such laws reduce the number of providers in a health plan's network
B) That such laws limit consumer choice to coverage options that are more costly than networkbased plans
C) That such laws encourage providers to offer discounts in exchange for patient volume
D) All of the above

Question 47

In 1994, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) revised their 1993 healthcare-specific antitrust guidelines to include analytical principles relating to multiprovider networks. Under the new guidelines, the regulatory agencies will use the rule of reason to analyze joint pricing activities by competitors in physician or multiprovider networks only if

A) Provider integration under the network is likely to produce significant efficiencies that benefit consumers
B) The providers in a network share substantial financial risk
C) The combining of providers into a joint venture enables the providers to offer a new product
D) All of the above

Question 48

The government uses various tools within the realm of two broad categories of public policyallocative policies and regulatory policies. In the context of public policy, laws that fall into the category of allocative policy include

A) The Balanced Budget Act (BBA) of 1997
B) The Health Insurance Portability and Accountability Act (HIPAA) of 1996
C) Laws affecting health plan quality oversight
D) Laws specifying procedures for health plan handling of consumer appeals and grievances

Question 49

One example of health plan's influence on the practice of medicine is that, during the past decade, the focus of healthcare has moved toward _________________, which is designed to reduce the overall need for healthcare services by providing patients with decision-making information.

A) Demand management
B) Managed competition
C) Comprehensive coverage
D) Private inurement

Question 50

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 detecting violations 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

Question 51

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

Question 52

After conducting a business portfolio analysis, the Acorn Health Plan decided to pursue a harvest strategy with one of its strategic business units (SBUs)-Guest Behavioral Healthcare. By following a harvest strategy with Guest, Acorn most likely is seeking to

A) Maximize Guest's short-term earnings and cash flow
B) Increase Guest's market share
C) Maintain Guest's market position
D) Sacrifice immediate earnings in order to fund Guest's growth

Question 53

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

Question 54

The National Association of Insurance Commissioners (NAIC) adopted the Health Maintenance Organization Model Act (HMO Model Act) to regulate the development and operations of HMOs. One true statement regarding the HMO Model Act is that the act

A) includes mental health services in its definition of basic healthcare services
B) authorizes only one state agency-the department of insurance-to regulate HMOs
C) requires HMOs to place a deposit in trust with the state insurance commissioner for the purpose of protecting the interests of enrollees should an HMO become financially impaired
D) requires HMOs that wish to offer a point-of-service (POS) product to contract with a licensed insurance company to provide POS options to plan members

Question 55

In examining accountability in the current managed care environment, one is likely to find that combinations of various models of accountability are in operation. Under one model of accountability, the primary mechanisms for accountability are the mechanisms of the marketplace-failure to meet standards will result in a loss of demand for services. By definition, this model of accountability is called the

A) Professional model of accountability
B) Political model of accountability
C) Due diligence model of accountability
D) Economic model of accountability

Question 56

Regulators of health plans have set standards in a number of areas of plan operations. Requirements with which health plans must comply typically include

A) providing enrollees and prospective enrollees with detailed information about various aspects of health plan policies and operations
B) maintaining internal grievance and appeals processes to resolve enrollee complaints against the organization
C) maintaining quality assurance programs that reflect the plan's activities in monitoring quality
D) all of the above

Question 57

The following situations illustrate per se violations of federal antitrust laws: Situation A - Two groups of providers agreed among themselves that each provider will do business with health plans only on a fee-for-service basis. Situation B - In order to avoid competing with each other, two independent, competing physicianhospital organizations (PHOs) divide the geographic areas in which they will market their services. From the following answer choices, select the response that correctly identifies the types of per se violations illustrated by these situations.

A) Situation A: price fixing; Situation B: horizontal division of markets
B) Situation A: price fixing; Situation B: tying arrangement
C) Situation A: horizontal group boycott; Situation B: horizontal division of markets
D) Situation A: horizontal group boycott; Situation B: tying arrangement

Question 58

Determine whether the following statement is true or false: Although most-favored-nation (MFN) clauses in contracts between health plans and healthcare providers are not per se illegal, they should be reviewed under the rule of reason analysis for antitrust purposes.

A) True, because the Federal Trade Commission (FTC) ruled that MFN clauses are not per se illegal and the FTC encourages health plans to include them in provider contracts.
B) True, because although MFN clauses are not per se illegal, they violate antitrust laws if they have a predatory purpose and an anticompetitive effect.
C) False, because MFN clauses involve decisions by providers concerning the level of fees to charge, and thus they are per se illegal.
D) False, because MFN clauses are not per se illegal, and thus they are exempt from antitrust laws and regulation by the FTC.

Question 59

State X issued a nonresident license to Tamara Pensky, a sales representative of the Verity Health Plan. In doing so, State X imposed a countersignature requirement, which requires that

A) An officer of Verity sign a written statement which indicates that Verity appoints Ms. Pensky as an agent who is authorized to market Verity's products
B) An officer of Verity sign a written statement which certifies that Verity has investigated Ms. Pensky's qualifications and background and believes she is trustworthy and competent
C) Applications solicited by Ms. Pensky must be signed by an individual who holds a resident License
D) Applications solicited by Ms. Pensky must be signed by an officer of Verity

Question 60

n the paragraph below, a statement contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the statement. Then select the answer choice containing the two terms that you have chosen. Every employee benefit plan governed by the Employee Retirement Income Security Act (ERISA) must distribute a summary plan description (SPD) to participants within (90 / 120) days after the date on which the plan is adopted or made effective. Thereafter, if the plan is amended, a new SPD must be distributed every (5 / 10) years.

A) 90 / 5
B) 90 / 10
C) 120 / 5
D) 120 / 10

Question 61

In developing its corporate strategies, the Haven Health Plan decided to implement a growth strategy that is focused on increasing the percentage of preventive health office visits from its current plan members. To accomplish this objective, Haven will send a direct mail kit to existing plan members to remind them of the variety of preventive health services that Haven currently offers, including physical exams, cholesterol tests, and mammograms. This information illustrates Haven's use of

A) An intensive growth strategy known as market penetration
B) An integrated growth strategy known as product development
C) An integrated growth strategy known as market development
D) A diversified growth strategy known as market penetration

Question 62

The Department of Health and Human Services (HHS) has delegated its responsibility for development and oversight of regulations under the Health Insurance Portability and Accountability Act (HIPAA) to an office within the Centers for Medicaid & Medicare Services (CMS). The CMS office that is responsible for enforcing the federal requirements of HIPAA is the

A) Center for Health Plans and Providers (CHPPs)
B) Center for Medicaid and State Operations
C) Center for Beneficiary Services
D) Center for Managed Care

Question 63

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

Question 64

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

Question 65

In the paragraph below, a statement contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the statement. Then select the answer choice containing the two terms that you have chosen. One type of acquisition is called a stock purchase. In a typical stock purchase, a company acquires (51% / 100%) of the voting shares of another company's stock, thereby making the acquired company a subsidiary. The (acquired / acquiring) company holds all of the assets and liabilities of the acquired company.

A) 51% / acquired
B) 51% / acquiring
C) 100% / acquired
D) 100% / acquiring

Question 66

The Westchester Health Plan is using a pricing strategy that involves setting a low price in a highly price-sensitive market to stimulate revenue growth. In following this strategy, Westchester is sacrificing short-term profits for fast growth in selected markets. This information indicates that Westchester is following the pricing strategy known as

A) Market skimming
B) Buying market share
C) Price skimming
D) Unitary pricing

Question 67

Brighton Health Systems, Inc., a health plan, wants to modify its advertising and marketing materials to avoid liability risk under the principle of ostensible agency. One step that Brighton can take to reduce the likelihood of being liable for provider negligence under the theory of ostensibleagency is to

A) Guarantee the quality of medical care provided to Brighton members
B) Use advertising materials which state that Brighton itself provides healthcare
C) Add disclaimers to advertising materials indicating that only physicians and not Brighton make medical decisions
D) Use advertising materials to characterize Brighton's role as providing physicians, hospitals, and other healthcare professionals rather than arranging for healthcare.

Question 68

Health plans typically divide their costs into medical and administrative expenses. Examples of medical expenses are.

A) Equipment costs
B) Salaries and benefits for executives and for all functional areas
C) Sales and marketing costs
D) Payments to providers for the delivery of healthcare

Question 69

The following statements describe various state benefit mandates. Select the answer choice that describes a state law pertaining to off-label uses for drugs.

A) State A mandates that health plans provide benefits for experimental drugs for the treatment of terminal diseases such as AIDS and cancer.
B) State B mandates that health plans have a procedure in place to allow a patient to have a nonformulary drug covered under certain conditions.
C) State C mandates that, in dispensing generic drugs, pharmacies must label drug containers with the name of the substituted generic medication.
D) State D mandates that health plans provide benefits for the treatment of one form of cancer with specific drugs that had originally been approved by the Food and Drug Administration (FDA) to treat other forms of cancer.

Question 70

Directors on a health plan's board must demonstrate their compliance with three duties in all their decisions. Directors who exercise their duties in good faith and with the same degree of diligence and skill that an ordinary, reasonable person would be expected to display in the same situation are meeting the duty known as the

A) Duty of loyalty
B) Duty to supervise
C) Duty of care
D) Trustee duty

Question 71

In the paragraph below, a statement contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the statement. Then select the answer choice containing the two terms that you have chosen. Inflation plays a role in the health plan environment by influencing the prices of healthcare services, supplies, and coverage. During an inflationary period, consumers typically have (more / less) purchasing power because the prices of goods and services increase (more / less) quickly than income.

A) More / more
B) More / less
C) Less / more
D) Less / less

Question 72

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 detecting violations of law. SoundCare decided to remedy this weakness by using the 1991 Federal Sentencing Guidelines for Organizations as a model for its compliance program. With respect to the Federal Sentencing Guidelines, actions that SoundCare should take in developing its compliance program include

A) Creating a system through which employees and other agents can report suspected misconduct without fear of retribution
B) Holding management accountable for the misconduct of their subordinates
C) Assigning a high-level member of management to the position of compliance coordinator or administrator
D) All of the above

Question 73

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

Question 74

From the following answer choices, choose the term that best corresponds to this description. Barrington Health Services, Inc. contracts with a state Medicaid agency as a fiscal intermediary. Barrington does not provide medical services, but contracts with medical providers on behalf of the state Medicaid agency.

A) Health insuring organization (HIO)
B) Independent practice association (IPA)
C) Physician practice management (PPM) company
D) Peer review organization (PRO)

Question 75

One federal law amended the Social Security Act to allow states to set their own qualification standards for HMOs that contracted with state Medicaid programs and revised the requirement that participating HMOs have an enrollment mix of no more than 50% combined Medicare and Medicaid members. This act, which was the true stimulus for increasing participation by health plans in Medicaid, is called the

A) Omnibus Budget Reconciliation Act of 1981 (OBRA-81)
B) Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
C) Employee Retirement Income Security Act of 1974 (ERISA)
D) Federal Employees Health Benefits Act of 1958 (FEHB Act) 8