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AHM 520 Health Plan Finance and Risk Management >>>>> TEST SERIES <<<<<<

Chapte ! A"
Test 1: Health Plan Financial Information Users of the Fulcrum Health Plan financial information include: The independent auditors who review Fulcrum's financial statements Fulcrum's controller (comptroller) Fulcrum's plan members The providers that deliver healthcare services to Fulcrum plan members Fulcrum's competitors Of these users, the ones that most li el! can correctl! be classified as e"ternal users with a direct financial interest in Fulcrum are the independent auditors, the plan members, the providers, and the competitors onl! independent auditors, the controller, and the providers onl! controller and the competitors onl! plan members and the providers onl!

################################################################################ $% The &clipse Health Plan is a not#for#profit health plan that 'ualifies under the (nternal )evenue *ode for ta"#e"empt status% This information indicates that &clipse has onl! one potential source of fundin+: borrowin+ mone! does not pa! federal, state, or local ta"es on its earnin+s must distribute its earnin+s to its owners#investors for their personal +ain is a privatel! held corporation ################################################################################ ,% The *hallen+er -roup is a t!pe of mana+ement services or+ani.ation (/0O) that purchases the assets of ph!sician practices, provides practice mana+ement and administrative support services to participatin+ providers, and offers ph!sicians a lon+#term contract and an e'uit! position in *hallen+er% This information indicates that *hallen+er is a t!pe of health plan nown as an inte+rated deliver! s!stem ((10) a medical foundation a provider#sponsored or+ani.ation (P0O) a ph!sician practice mana+ement (PP/) compan! ################################################################################

2% 3 e! factor that distin+uishes the various t!pes of health plans is the t!pe and amount of ris that a health plan assumes with respect to the deliver! and financin+ of healthcare benefits% 3n e"ample of a t!pe of health plan that t!picall! assumes the financial ris of deliverin+ and financin+ healthcare benefits is a third part! administrator (TP3) utili.ation review or+ani.ation (U)O) preferred provider or+ani.ation (PPO) pharmac! benefit mana+ement (P4/) plan ###############################55 *orrect 3nswers 55################################################# 6% Users of the Fulcrum Health Plan financial information include: The independent auditors who review Fulcrum's financial statements Fulcrum's controller (comptroller) Fulcrum's plan members The providers that deliver healthcare services to Fulcrum plan members Fulcrum's competitors Of these users, the ones that most li el! can correctl! be classified as e"ternal users with a direct financial interest in Fulcrum are the 3% independent auditors, the plan members, the providers, and the competitors onl! 4% independent auditors, the controller, and the providers onl! *% controller and the competitors onl! 1% plan members and the providers onl! 7our correct answer: 1 *orrect8 Health plan members, providers, outside a+ents and bro ers, creditors, stoc holders, and potential investors are e"amples of e"ternal users with a direct financial interest in the financial performance of a health plan% ################################################################################ $% The &clipse Health Plan is a not#for#profit health plan that 'ualifies under the (nternal )evenue *ode for ta"#e"empt status% This information indicates that &clipse 3% has onl! one potential source of fundin+: borrowin+ mone! 4% does not pa! federal, state, or local ta"es on its earnin+s *% must distribute its earnin+s to its owners#investors for their personal +ain 1% is a privatel! held corporation 7our correct answer: 4 *orrect8 Ta"#e"empt or+ani.ations do not pa! federal, state, or local ta"es on earnin+s% ################################################################################

,% The *hallen+er -roup is a t!pe of mana+ement services or+ani.ation (/0O) that purchases the assets of ph!sician practices, provides practice mana+ement and administrative support services to participatin+ providers, and offers ph!sicians a lon+#term contract and an e'uit! position in *hallen+er% This information indicates that *hallen+er is a t!pe of health plan nown as 3% an inte+rated deliver! s!stem ((10) 4% a medical foundation *% a provider#sponsored or+ani.ation (P0O) 1% a ph!sician practice mana+ement (PP/) compan! 7our correct answer: 1 *orrect8 3 PP/ purchases the assets of of ph!sician practices, provides practice mana+ement and administrative support services to participatin+ providers% ################################################################################ 2% 3 e! factor that distin+uishes the various t!pes of health plans is the t!pe and amount of ris that a health plan assumes with respect to the deliver! and financin+ of healthcare benefits% 3n e"ample of a t!pe of health plan that t!picall! assumes the financial ris of deliverin+ and financin+ healthcare benefits is a 3% third part! administrator (TP3) 4% utili.ation review or+ani.ation (U)O) *% preferred provider or+ani.ation (PPO) 1% pharmac! benefit mana+ement (P4/) plan 7our correct answer: * *orrect8 H/Os, PPOs, and P0Os, assume the financial ris s of deliverin+ healthcare benefits to plan members% 9########## &nd of the Test ##########:

Chapte 2 A
Test 2: Types of Risk 6% The followin+ statements are about pure ris and speculative ris ;two inds of ris that both businesses and individuals e"perience% 0elect the answer choice containin+ the correct statement% Healthcare covera+e is desi+ned to help plan members avoid pure ris , not speculative ris % Onl! pure ris involves the possibilit! of +ain% 3n e"ample of speculative ris is the possibilit! that an individual will contract a serious illness% Onl! speculative ris contains an element of uncertaint!% ################################################################################ $% The followin+ para+raph contains an incomplete statement% 0elect the answer choice containin+ the term that correctl! completes the statement% Health plans face four contin+enc! ris s (*#ris s): asset ris (*#6), pricin+ ris (*#$), interest#rate ris (*#,), and +eneral mana+ement ris (*#2)% Of these ris s, <<<<<<<<<<<<<<<< is t!picall! the most important ris that health plans face% This is true because a si.able portion of the total e"penses and liabilities faced b! a health plan come from contractual obli+ations to pa! for future medical costs, and the e"act amount of these costs is not nown when the healthcare covera+e is priced% asset ris (*#6) pricin+ ris (*#$) interest#rate ris (*#,) +eneral mana+ement ris (*#2) ################################################################################ ,% The Health /aintenance Or+ani.ation (H/O) /odel 3ct, developed b! the =ational 3ssociation of (nsurance *ommissioners (=3(*), represents one approach to developin+ solvenc! standards% One drawbac to this t!pe of solvenc! re+ulation is that it uses estimates of future e"penditures and premium income to estimate future ris fails to ad>ust the solvenc! re'uirement to account for the si.e of an H/O's premiums and e"penditures assumes that the amount of premiums an H/O char+es alwa!s directl! corresponds to the level of the ris that the H/O faces fails to mandate a minimum level of capital and surplus that an H/O must maintain ################################################################################ 2% The =3(* has developed a ris #based capital ()4*) formula for all health plans that accept ris % One true statement about the )4* formula for health plans is that it

is a set of calculations, based on information in a health plan's annual financial report, that !ields a tar+et capital re'uirement for the or+ani.ation fails to ta e into account a health plan's underwritin+ ris , which is the ris that the premiums the health plan receives will be insufficient to pa! for the healthcare services it provides to its plan members applies to all health plans in the United 0tates fails to assess the specific level of ris faced b! each health plan ################################################################################ ?% Provider reimbursement methods that transfer some utili.ation ris from a health plan to providers affect the health plan's )4* formula% 3 health plan's use of these reimbursement methods is li el! to result in an increase the health plan's underwritin+ ris a decrease the health plan's credit ris a decrease the health plan's net worth re'uirement all of the above ################################################################################ @% Three +eneral strate+ies that health plans use for controllin+ t!pes of ris are ris avoidance, ris transfer, and ris acceptance% The followin+ statements are about these strate+ies% Three of these statements are true, and one statement is false% 0elect the answer choice containin+ the F3A0& statement% -enerall!, the smaller the li el! benefits of acceptin+ a ris , and the lower the costs of avoidin+ that ris , the +reater the li elihood that a health plan will elect to avoid the ris % 3 health plan is seldom able to transfer an! of the ris that utili.ation rates will be hi+her than e"pected and that its cost of providin+ healthcare will e"ceed the revenues it receives% (f a ris is a pure ris from the point of view of a health plan, then the health plan most li el! will attempt to avoid the ris % 3 health plan would most li el! transfer some or all of its utili.ation ris if it pa!s a provider a rate that is based on the number of plan enrollees that choose the provider as their primar! care provider (P*P)% #############################55 *orrect 3nswers 55################################################### 6% The followin+ statements are about pure ris and speculative ris ;two inds of ris that both businesses and individuals e"perience% 0elect the answer choice containin+ the correct statement% 3% Healthcare covera+e is desi+ned to help plan members avoid pure ris , not speculative ris % 4% Onl! pure ris involves the possibilit! of +ain% *% 3n e"ample of speculative ris is the possibilit! that an individual will contract a serious illness% 1% Onl! speculative ris contains an element of uncertaint!% 7our correct answer: 3

*orrect8 The possibilit! of economic loss without the possibilit! of +ain;pure ris ;is the onl! ind of ris that healthcare covera+e is desi+ned to help plan members avoid% ################################################################################ $% The followin+ para+raph contains an incomplete statement% 0elect the answer choice containin+ the term that correctl! completes the statement% Health plans face four contin+enc! ris s (*#ris s): asset ris (*#6), pricin+ ris (*#$), interest#rate ris (*#,), and +eneral mana+ement ris (*#2)% Of these ris s, <<<<<<<<<<<<<<<< is t!picall! the most important ris that health plans face% This is true because a si.able portion of the total e"penses and liabilities faced b! a health plan come from contractual obli+ations to pa! for future medical costs, and the e"act amount of these costs is not nown when the healthcare covera+e is priced% 3% asset ris (*#6) 4% pricin+ ris (*#$) *% interest#rate ris (*#,) 1% +eneral mana+ement ris (*#2) 7our correct answer: 4 *orrect8 For most health plans, pricin+ ris is the most important ris the or+ani.ation faces% ################################################################################ ,% The Health /aintenance Or+ani.ation (H/O) /odel 3ct, developed b! the =ational 3ssociation of (nsurance *ommissioners (=3(*), represents one approach to developin+ solvenc! standards% One drawbac to this t!pe of solvenc! re+ulation is that it 3% uses estimates of future e"penditures and premium income to estimate future ris 4% fails to ad>ust the solvenc! re'uirement to account for the si.e of an H/O's premiums and e"penditures *% assumes that the amount of premiums an H/O char+es alwa!s directl! corresponds to the level of the ris that the H/O faces 1% fails to mandate a minimum level of capital and surplus that an H/O must maintain 7our correct answer: * *orrect8 The si.e of an H/OBs premiums and e"penditures is assumed to reflect accuratel! the level of ris the H/O faces% ############################################################################### 2% The =3(* has developed a ris #based capital ()4*) formula for all health plans that accept ris % One true statement about the )4* formula for health plans is that it 3% is a set of calculations, based on information in a health plan's annual financial report, that !ields a tar+et capital re'uirement for the or+ani.ation

4% fails to ta e into account a health plan's underwritin+ ris , which is the ris that the premiums the health plan receives will be insufficient to pa! for the healthcare services it provides to its plan members *% applies to all health plans in the United 0tates 1% fails to assess the specific level of ris faced b! each health plan 7our correct answer: 3 *orrect8 7our incorrect answer: * (ncorrect% The financial standards contained in the H/O /odel 3ct and various statesB H/O and insurance statutes ma! not appl! to some provider or+ani.ations or certain other ris #bearin+ entities% Please review pa+es ,6 and ,, of this lesson% 7our incorrect answer: 1 (ncorrect% The )4* formula assesses the specific level of ris faced b! each health plan% Please review pa+es ,$ and ,, of this lesson% ################################################################################ ?% Provider reimbursement methods that transfer some utili.ation ris from a health plan to providers affect the health plan's )4* formula% 3 health plan's use of these reimbursement methods is li el! to result in 3% an increase the health plan's underwritin+ ris 4% a decrease the health plan's credit ris *% a decrease the health plan's net worth re'uirement 1% all of the above 7our correct answer: * *orrect8 4ecause the underwritin+ ris is b! far the lar+est ris in the )4* formula for health plans, the net effect of usin+ provider reimbursement contracts to transfer ris is that the health planBs net worth re'uirement will decrease% ################################################################################ @% Three +eneral strate+ies that health plans use for controllin+ t!pes of ris are ris avoidance, ris transfer, and ris acceptance% The followin+ statements are about these strate+ies% Three of these statements are true, and one statement is false% 0elect the answer choice containin+ the F3A0& statement% 3% -enerall!, the smaller the li el! benefits of acceptin+ a ris , and the lower the costs of avoidin+ that ris , the +reater the li elihood that a health plan will elect to avoid the ris % 4% 3 health plan is seldom able to transfer an! of the ris that utili.ation rates will be hi+her than e"pected and that its cost of providin+ healthcare will e"ceed the revenues it receives%

*% (f a ris is a pure ris from the point of view of a health plan, then the health plan most li el! will attempt to avoid the ris % 1% 3 health plan would most li el! transfer some or all of its utili.ation ris if it pa!s a provider a rate that is based on the number of plan enrollees that choose the provider as their primar! care provider (P*P)% 7our incorrect answer: 3 (ncorrect% Please review pa+e 2C of this lesson% 7our incorrect answer: * (ncorrect% Please review pa+e 26 of this lesson% 7our correct answer: 4 0tatement 4 is F3A0&, Plan can transfer some )is to Providers usin+ D)eimbursement /ethodsE, answer *hoice is # *orrect8

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Chapte 2 #
Test 3: Risk Management in Health Plans 6% Under the doctrine of corporate ne+li+ence, a health plan and its ph!sician administrators ma! be held directl! liable to patients or providers for failin+ to investi+ate ade'uatel! the competence of healthcare providers whom it emplo!s or with whom it contracts, particularl! where the health plan actuall! provides healthcare services or restricts the patient'sFenrollee's choice of ph!sician% True False ################################################################################ $% The &a+le health plan wants to limit the possibilit! that it will be held vicariousl! liable for the ne+li+ent acts of providers% 1r% /ichael *han is a member of an independent practice association ((P3) that has contracted with &a+le% One step that &a+le could ta e in order to limit its e"posure under the theor! of vicarious liabilit! is to suppl! 1r% *han with office space emplo! nurses, laborator! technicians, and therapists to support 1r% *han be responsible for eepin+ 1r% *han's medical records updated ensure that documents provided to 1r% *han's patients describe him as an independent practitioner ################################################################################ ,% )asheed 3.ari, the ris mana+er for the Tower health plan, is attemptin+ to wor with providers in the or+ani.ation in order to reduce the providers' e"posure related to utili.ation review% /r% 3.ari is considerin+ advisin+ the providers to ta e the followin+ actions: 6#3llow Tower's utili.ation mana+ement decisions to override a ph!sician's independent medical >ud+ment $#0upport the development of a s!stem that can 'uic l! render a second opinion in case of disa+reement surroundin+ clinical >ud+ment ,#(nform a patient of an! issues that are bein+ disputed relative to a ph!sician's recommended treatment plan and Tower's covera+e decision Of these possible actions, the ones that are li el! to reduce ph!sicians' e"posures related to utili.ation review include actions 6, $, and , 6 and $ onl! 6 and , onl! $ and , onl! ################################################################################ 2% The followin+ statements are about ris mana+ement in health plans% 0elect the answer choice containin+ the correct response%

)is mana+ement is especiall! important to health plans because the &mplo!ee )etirement (ncome 0ecurit! 3ct of 6GH2 (&)(03) allows plan members to recover punitive dama+es from healthcare plans% Iith re+ard to the relative ris for health plan structures based upon the de+ree of influence and relationships that health plans maintain with their providers, preferred provider or+ani.ations (PPOs) t!picall! have a hi+her ris than do +roup H/Os and staff H/Os% 3lthou+h there are clear ris s associated with the provision of healthcare services and covera+e decisions surroundin+ that care, the bul of ris in health plans is associated with a health plan's benefit administration and contractin+ activities% 3 health plan +enerall! structures its ris mana+ement process around loss reduction techni'ues and loss transfer techni'ues% ################################################################################ *orrect answers :9 6% Under the doctrine of corporate ne+li+ence, a health plan and its ph!sician administrators ma! be held directl! liable to patients or providers for failin+ to investi+ate ade'uatel! the competence of healthcare providers whom it emplo!s or with whom it contracts, particularl! where the health plan actuall! provides healthcare services or restricts the patient'sFenrollee's choice of ph!sician% 3% True 4% False 7our correct answer: 3 *orrect8 ################################################################################ $% The &a+le health plan wants to limit the possibilit! that it will be held vicariousl! liable for the ne+li+ent acts of providers% 1r% /ichael *han is a member of an independent practice association ((P3) that has contracted with &a+le% One step that &a+le could ta e in order to limit its e"posure under the theor! of vicarious liabilit! is to 3% suppl! 1r% *han with office space 4% emplo! nurses, laborator! technicians, and therapists to support 1r% *han *% be responsible for eepin+ 1r% *han's medical records updated 1% ensure that documents provided to 1r% *han's patients describe him as an independent practitioner 7our correct answer: 1 *orrect8 The ris mana+er ma! wish to review documents provided to patients to ensure that the ph!sician is described as an independent practitioner and that there is a clear distinction between those services provided b! the health plan and those provided b! the ph!sician% ################################################################################

,% )asheed 3.ari, the ris mana+er for the Tower health plan, is attemptin+ to wor with providers in the or+ani.ation in order to reduce the providers' e"posure related to utili.ation review% /r% 3.ari is considerin+ advisin+ the providers to ta e the followin+ actions: 6#3llow Tower's utili.ation mana+ement decisions to override a ph!sician's independent medical >ud+ment $#0upport the development of a s!stem that can 'uic l! render a second opinion in case of disa+reement surroundin+ clinical >ud+ment ,#(nform a patient of an! issues that are bein+ disputed relative to a ph!sician's recommended treatment plan and Tower's covera+e decision Of these possible actions, the ones that are li el! to reduce ph!sicians' e"posures related to utili.ation review include actions 3% 6, $, and , 4% 6 and $ onl! *% 6 and , onl! 1% $ and , onl! 7our correct answer: 1 *orrect8 Ph!sicians must e"ercise independent medical >ud+ment that meets with the standard of care% Utili.ation mana+ement decisions should not influence the ph!sicianBs clinical decisions in an! wa! that the ph!sician would consider trul! harmful to the patient% ################################################################################ 2% The followin+ statements are about ris mana+ement in health plans% 0elect the answer choice containin+ the correct response% 3% )is mana+ement is especiall! important to health plans because the &mplo!ee )etirement (ncome 0ecurit! 3ct of 6GH2 (&)(03) allows plan members to recover punitive dama+es from healthcare plans% 4% Iith re+ard to the relative ris for health plan structures based upon the de+ree of influence and relationships that health plans maintain with their providers, preferred provider or+ani.ations (PPOs) t!picall! have a hi+her ris than do +roup H/Os and staff H/Os% *% 3lthou+h there are clear ris s associated with the provision of healthcare services and covera+e decisions surroundin+ that care, the bul of ris in health plans is associated with a health plan's benefit administration and contractin+ activities% 1% 3 health plan +enerall! structures its ris mana+ement process around loss reduction techni'ues and loss transfer techni'ues% 7our correct answer: 1 *orrect8 The ris mana+ement process is +enerall! structured around loss reduction techni'ues (which include the identification of ris , the elimination of ris whenever possible, and the control or mana+ement of ris when it cannot be entirel! eliminated) and loss transfer (techni'ues which include determinin+ the economic ris associated with various t!pes of loss and selection of the best methods either to finance ris internall! or to transfer those ris s to a third part!, +enerall! throu+h the purchase of insurance)%

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Chapte $ A
Test 4 : Provi er Reim!"rsement an Plan Risk

6% 0everal federal a+encies establish rules and re'uirements that affect health plans% One of these a+encies is the 1epartment of Aabor (1OA), which is primaril! responsible for <<<<<<<<<% issuin+ re+ulations pertainin+ to the Health (nsurance Portabilit! and 3ccountabilit! 3ct (H(P33) of 6GG@ administerin+ the /edicare and /edicaid pro+rams administerin+ &)(03, which imposes various documentation, appeals, reportin+, and disclosure re'uirements on emplo!er +roup health plans administerin+ the Federal &mplo!ees Health 4enefits Pro+ram (F&H4P), which provides voluntar! health insurance covera+e to federal emplo!ees, retirees, and dependents ################################################################################ $% The 3toll Health Plan must compl! with a number of laws that directl! affect the plan's contracts% One of these laws allows 3toll's plan members to receive medical services from certain specialists without first bein+ referred to those specialists b! a primar! care provider (P*P)% This law, which reduces the P*P's abilit! to mana+e utili.ation of these specialists, is nown as <<<<<<<<<% a due process law an an! willin+ provider law a direct access law a fair procedure law ################################################################################ ,% /andated benefit laws are state or federal laws that re'uire health plans to arran+e for the financin+ and deliver! of particular benefits% Iithin a mar et, the implementation of mandated benefit laws is li el! to cause <<<<<<<<<<% a reduction in the number of self#funded healthcare plans an increase in the cost to the health plans a reduction in the si.e of the provider panels of health plans a reduction in the uniformit! amon+ the healthcare plans of competin+ health plans

###################################55 *orrect 3nswers 55 ############################################# 6% 0everal federal a+encies establish rules and re'uirements that affect health plans% One of these a+encies is the 1epartment of Aabor (1OA), which is primaril! responsible for <<<<<<<<<% 3% issuin+ re+ulations pertainin+ to the Health (nsurance Portabilit! and 3ccountabilit! 3ct (H(P33) of 6GG@ 4% administerin+ the /edicare and /edicaid pro+rams *% administerin+ &)(03, which imposes various documentation, appeals, reportin+, and disclosure re'uirements on emplo!er +roup health plans 1% administerin+ the Federal &mplo!ees Health 4enefits Pro+ram (F&H4P), which provides voluntar! health insurance covera+e to federal emplo!ees, retirees, and dependents 7our correct answer: * *orrect8 The 1OA is the federal a+enc! with primar! responsibilit! for administerin+ the &mplo!ee )etirement (ncome 0ecurit! 3ct (&)(03) of 6GH2, includin+ recent amendments made b! H(P33% ################################################################################ $% The 3toll Health Plan must compl! with a number of laws that directl! affect the plan's contracts% One of these laws allows 3toll's plan members to receive medical services from certain specialists without first bein+ referred to those specialists b! a primar! care provider (P*P)% This law, which reduces the P*P's abilit! to mana+e utili.ation of these specialists, is nown as <<<<<<<<<% 3% a due process law 4% an an! willin+ provider law *% a direct access law 1% a fair procedure law 7our correct answer: * *orrect8 1irect access laws are laws that allow health plan members to see certain specialists without first bein+ referred to those specialists b! a primar! care provider% ################################################################################ ,% /andated benefit laws are state or federal laws that re'uire health plans to arran+e for the financin+ and deliver! of particular benefits% Iithin a mar et, the implementation of mandated benefit laws is li el! to cause <<<<<<<<<<% 3% a reduction in the number of self#funded healthcare plans 4% an increase in the cost to the health plans *% a reduction in the si.e of the provider panels of health plans 1% a reduction in the uniformit! amon+ the healthcare plans of competin+ health plans

7our correct answer: 4 *orrect8 /andated benefits increase the cost of a health planBs health plan to the e"tent that the plan must cover mandated benefits that would not have been included in the plan in the absence of the law or re+ulation that mandates the benefits% 9########## &nd of the Test ##########:

Chapte $ #
Test # : Provi er Reim!"rsement Metho s 6% The ph!sicians who wor for the 0unrise Health Plan, a staff model H/O, are paid a salar! that is not au+mented with another t!pe of incentive plan% *ompared to the use of a traditional reimbursement method, 0unrise's use of a salar! reimbursement method is more li el! to 3% encoura+e 0unrise's ph!sicians to perform services that are not medicall! necessar! 4% completel! eliminate service ris for 0unrise's ph!sicians *% decrease 0unrise's liabilit! for an! ne+li+ent acts of the ph!sicians in the plan's networ of providers 1% help stabili.e e"penses for 0unrise 7our correct answer: 1 *orrect8 4ecause provider reimbursement is a si.able portion of a health planBs total costs, salaries help to stabili.e e"penses for the health plan or other entit! emplo!in+ the providers, and at the same time stabili.es the income of the providers% ################################################################################ $% The 3corn Health Plan uses a resource#based relative value scale ()4)J0) to help determine the reimbursement amounts that 3corn should ma e to providers who are compensated under an FF0 s!stem% Iith re+ard to the advanta+es and disadvanta+es to 3corn of usin+ )4)J0, it can correctl! be stated that 3% an advanta+e of usin+ )4)J0 is that it can assist 3corn in developin+ reimbursement schedules for various t!pes of providers in a comprehensive healthcare plan 4% an advanta+e of usin+ )4)J0 is that it puts providers who render more medical services than necessar! at financial ris for this overutili.ation *% a disadvanta+e of usin+ )4)J0 is that it will be difficult for 3corn to trac treatment rates for the health plan's 'ualit! and cost mana+ement functions 1% a disadvanta+e of usin+ )4)J0 is that it rewards procedural healthcare services more than co+nitive healthcare services 7our correct answer: 3

*orrect8 )4)J0 can be useful to a health plan that is developin+ reimbursement schedules for various t!pes of providers in a comprehensive health plan% ################################################################################ ,% Health plans sometimes use +lobal fees to reimburse providers% Health plans would use this method of provider reimbursement for all of the followin+ reasons &K*&PT that +lobal fees 3% eliminate an! motivation the provider ma! have to en+a+e in churnin+ 4% transfer some of the ris of overutili.ation of care from the health plan to the providers *% eliminate the practice of upcodin+ within specific treatments 1% reward providers who deliver cost#effective care 7our correct answer: 3 *orrect8 -lobal fee s!stems do not completel! eliminate all motivation a provider ma! have to en+a+e in churnin+% ################################################################################ 2% The reimbursement arran+ement that 1r% *aroline /onroe has with the &"moor Health Plan includes a t!pical withhold arran+ement% One true statement about this withhold arran+ement is that, for a +iven financial period, 3% 1r% /onroe and &"moor are e'uall! responsible for ma in+ up the difference if cost overruns e"ceed the amount of mone! withheld 4% &"moor most li el! distributes to 1r% /onroe the entire amount withheld from her if her costs are below the amount bud+eted for the period *% &"moor pa!s 1r% /onroe at the end of the period an amount over and above her usual reimbursement, and this amount is based on the performance of the plan as a whole 1% &"moor most li el! withholds between ,L and ?L of 1r% /onroe's total reimbursement 7our correct answer: 4 *orrect8 (f providers hold costs below the amount bud+eted for that period, then the entire amount of mone! in the withhold is usuall! distributed to them% ############################################################################### ?% The followin+ statements are about various reimbursement arran+ements that health plans have with hospitals% 0elect the answer choice containin+ the correct statement% 3% 3 slidin+ scale per#diem char+es arran+ement differs from a slidin+ scale discount on char+es arran+ement in that onl! a slidin+ scale per#diem char+es arran+ement is based on total volume of admissions and outpatient procedures% 4% Under a t!pical reimbursement arran+ement that is based on dia+nosis# related +roups (1)-s), if the pa!ment amount is fi"ed on the basis of

dia+nosis, then an! reduction in costs resultin+ from a reduction in da!s will +o to the health plan rather than to the hospital% *% 3 ne+otiated strai+ht per#diem char+e re'uires pa!ment of a sin+le char+e for a da! in the hospital, re+ardless of an! actual char+es or costs incurred durin+ the hospital sta!% 1% 3 strai+ht discount on char+es arran+ement is the most common reimbursement method in mar ets with hi+h levels of health plans% 7our correct answer: * *orrect8 3 ne+otiated strai+ht per#diem char+e is a sin+le char+e for a da! in the hospital, re+ardless of an! actual char+es or costs incurred% ################################################################################ @% Health plans see in+ to provide comprehensive healthcare plans must contract with a variet! of providers for ancillar! services% One characteristic of ancillar! services is that 3% ph!sician behavior t!picall! does not impact the utili.ation rates for these services 4% pac a+e pricin+ is the preferred reimbursement method for ancillar! service providers *% these services include ph!sical therap!, behavior therap!, and home healthcare, but not dia+nostic services such as laborator! tests 1% few plan members see these services without first bein+ referred to the ancillar! provider b! a ph!sician 7our correct answer: 1 *orrect8 One characteristic of most ancillar! services that has important contractual and financial implications for a health plan is that few plan members see these services without first bein+ referred to the ancillar! provider b! a ph!sician% ####################################CC#CC####################################################

Chapte % A
Test $ : %apitation in Provi er Reim!"rsement 6% (n order to calculate a simple monthl! capitation pa!ment, the 3r+!le Health Plan used the followin+ information: The avera+e number of office visits each member ma es in a !ear is two The FF0 rate per office visit is M?? The member copa!ment is M? per office visit The reimbursement period is one month -iven this information, 3r+!le would correctl! calculate that the per member per month (P/P/) capitation rate should be M2%6H MN%,, MG%6H M6C%CC ################################################################################

$% The provider contract that 1r% Timoth! /e!er, a pediatrician, has with the *ardi+an health plan states that *ardi+an will compensate him under a capitation arran+ement% However, the contract also includes a t!pical low enrollment +uarantee provision% 0tatements that can correctl! be made about this arran+ement include that the low enrollment +uarantee provision most li el! *auses 1r% /e!er's capitation contract with *ardi+an to transfer more ris to him than the contract otherwise would transfer 0pecifies that *ardi+an will pa! 1r% /e!er under an arran+ement other than capitation until a specified number of children covered b! the plan use him as their P*P 4oth 3 and 4 3 onl! 4 onl! =either 3 nor 4 ################################################################################ ,% One true statement about a t!pe of capitation nown as a percent#of# premium arran+ement is that this arran+ement is the most common t!pe of capitation is less attractive to providers when the arran+ement sets provisions to limit ris sets provider reimbursement at a specific dollar amount per plan member transfers some of the ris associated with underwritin+ and ratin+ from a health plan to a provider ################################################################################

2% The provider contract that 1r% Oacher! *o+an, an internist, has with the =eptune Health Plan calls for =eptune to reimburse him under a t!pical P*P capitation arran+ement% 1r% *o+an serves as the P*P for &vel!n Pfeiffer, a =eptune plan member% 3fter hospitali.in+ /s% Pfeiffer and orderin+ several e"pensive dia+nostic tests to determine her condition, 1r% *o+an referred her to a specialist for further treatment% (n this situation, the compensation that 1r% *o+an receives under the P*P capitation arran+ement most li el! includes =eptune's pa!ment for all of the dia+nostic tests that he ordered on /s% Pfeiffer his visits to /s% Pfeiffer while she was hospitali.ed the cost of the services that the specialist performed for /s% Pfeiffer all of the above ################################################################################ ?% The followin+ statements illustrate common forms of capitation: The 3ntler Health Plan pa!s the &psilon -roup, an inte+rated deliver! s!stem ((10), a capitated amount to provide substantiall! all of the inpatient and outpatient services that 3ntler offers% Under this arran+ement, &psilon accepts much of the ris that utili.ation rates will be hi+her than e"pected% 3ntler retains responsibilit! for the plan's mar etin+, enrollment, premium billin+, actuarial, underwritin+, and member services functions% The 4en+al Health Plan pa!s an independent ph!sician association ((P3) a capitated amount to provide both primar! and specialt! care to 4en+al's plan members% The pa!ments cover all ph!sician services and associated dia+nostic tests and laborator! wor % The ph!sicians in the (P3 determine as a +roup how the individual ph!sicians will be paid for their services% From the followin+ answer choices, select the response that best indicates the form of capitation used b! 3ntler and 4en+al% 3ntler P subcapitation 4en+al P full#ris capitation 3ntler P subcapitation 4en+al P full professional capitation 3ntler P +lobal capitation 4en+al P subcapitation 3ntler P +lobal capitation 4en+al P full professional capitation ################################################################################ @% The followin+ statements are about carve#out pro+rams% Three of these statements are true, and one statement is false% 0elect the answer choice containin+ the F3A0& statement% (n the t!pe of carve#out in which entire cate+ories of care are administered b! independent or+ani.ations, a health plan t!picall! reimburses these or+ani.ations under an FF0 contract% T!picall!, a health plan will offer carved#out services to its enrollees, but will mana+e these services separatel!%

*arve#outs are services that are e"cluded from a capitation pa!ment, a ris pool, or a health benefit plan% The most rapidl! +rowin+ area relaed to carve#outs is disease mana+ement (1/)% ################################################################################ H% The /arble Health Plan sets aside a P/P/ amount for each specialt!% Ihen a P*P in /arble's provider networ refers a /arble plan member to a specialist and the specialist provides medical services to the member, the specialist be+ins to receive a share of those funds on a monthl! basis% /arble determines the monthl! pa!ment for each specialist b! dividin+ the number of active patients for that specialt! b! the total specialt! pool for that month% This form of pa!ment, which is similar to a case rate, is nown as referral circle capitation ris pod capitation contact capitation retrospective reimbursement capitation ################################################################################ N% 3 reconciliation is the process b! which a health plan assesses providers' performance relative to contractual terms and reimbursement% Iith re+ard to this process, it can correctl! be stated that a reconciliation t!picall! includes pa!ment to the providers of an! withholds or bonuses due to them a health plan t!picall! should conduct a reconciliation immediatel! after the evaluation period has ended most a+reements between health plans and providers re'uire reconciliations to be performed 'uarterl! a health plan t!picall! should not conduct reconciliation for a provider until the plan has received all claims or other documentation of services that the ph!sician provided durin+ the evaluation period ################################################################################ G% Iith re+ard to capitation arran+ements for hospitals, it can correctl! be stated that the most common reimbursement method for hospitals is professional services capitation most >urisdictions prohibit hospitals and ph!sicians from >oinin+ to+ether to receive +lobal capitations that cover institutional services provided b! the hospitals a health plan t!picall! can capitate a hospital for outpatient laborator! and K#ra! services onl! if the health plan also capitates the hospital for inpatient care man! hospitals have formed ph!sician hospital or+ani.ations (PHOs), hospital s!stems, or inte+rated deliver! s!stems ((10s) that can accept +lobal capitation pa!ments from health plans 999 Partiall! *orrect 3nswers :::::::: 6% (n order to calculate a simple monthl! capitation pa!ment, the 3r+!le Health Plan used the followin+ information: The avera+e number of office visits each member ma es in a !ear is two The FF0 rate per office visit is M??

The member copa!ment is M? per office visit The reimbursement period is one month -iven this information, 3r+!le would correctl! calculate that the per member per month (P/P/) capitation rate should be 3% M2%6H 4% MN%,, *% MG%6H 1% M6C%CC 7our incorrect answer: * (ncorrect% *alculate a simple monthl! capitation pa!ment (or P/P/ amount) b! multipl!in+ the avera+e number of services used b! a member in one !ear b! the avera+e fee#for#service e'uivalent pa!ment per service (subtractin+ the copa!ment), and then dividin+ b! the number of reimbursement periods per specified time period% (n this e"ample, $ K ?C (subtractin+ the M? copa!) divided b! 6CC% Please review pa+e @ of this lesson% 555 7our correct answer: 4 555 *orrect8 *alculate a simple monthl! capitation pa!ment (or P/P/ amount) b! multipl!in+ the avera+e number of services used b! a member in one !ear b! the avera+e fee#for#service e'uivalent pa!ment per service, and then dividin+ b! the number of reimbursement periods per specified time period ################################################################################ $% The provider contract that 1r% Timoth! /e!er, a pediatrician, has with the *ardi+an health plan states that *ardi+an will compensate him under a capitation arran+ement% However, the contract also includes a t!pical low enrollment +uarantee provision% 0tatements that can correctl! be made about this arran+ement include that the low enrollment +uarantee provision most li el! *auses 1r% /e!er's capitation contract with *ardi+an to transfer more ris to him than the contract otherwise would transfer 0pecifies that *ardi+an will pa! 1r% /e!er under an arran+ement other than capitation until a specified number of children covered b! the plan use him as their P*P 3% 4oth 3 and 4 4% 3 onl! *% 4 onl! 1% =either 3 nor 4 7our correct answer: * *orrect8 Health plans ma! reimburse providers on a discounted FF0 basis until a threshold number of plan members desi+nate that provider as their care+iver% *ontractual provisions that allow capitated providers to be paid on a discounted FF0 basis until the providerBs enrollment meets or e"ceeds a threshold number are called low#enrollment +uarantees% ################################################################################

,% One true statement about a t!pe of capitation nown as a percent#of# premium arran+ement is that this arran+ement 3% is the most common t!pe of capitation 4% is less attractive to providers when the arran+ement sets provisions to limit ris *% sets provider reimbursement at a specific dollar amount per plan member 1% transfers some of the ris associated with underwritin+ and ratin+ from a health plan to a provider 7our correct answer: 1 *orrect8 Percent#of#premium arran+ements transfer some of the ris associated with underwritin+ and ratin+ from the health plan to the provider% Please review pa+es 66 and 6$ of this lesson% ################################################################################ 2% The provider contract that 1r% Oacher! *o+an, an internist, has with the =eptune Health Plan calls for =eptune to reimburse him under a t!pical P*P capitation arran+ement% 1r% *o+an serves as the P*P for &vel!n Pfeiffer, a =eptune plan member% 3fter hospitali.in+ /s% Pfeiffer and orderin+ several e"pensive dia+nostic tests to determine her condition, 1r% *o+an referred her to a specialist for further treatment% (n this situation, the compensation that 1r% *o+an receives under the P*P capitation arran+ement most li el! includes =eptune's pa!ment for 3% all of the dia+nostic tests that he ordered on /s% Pfeiffer 4% his visits to /s% Pfeiffer while she was hospitali.ed *% the cost of the services that the specialist performed for /s% Pfeiffer 1% all of the above 7our incorrect answer: * (ncorrectQ P*P capitation, also called partial capitation, is a capitation pa!ment that reimburses the provider for primar! care services onl!% Please review pa+es 62 and 6? of this lesson% 7our incorrect answer: 1 (ncorrectQ Please review pa+e 6? of this lesson% 55555 7our correct answer: 4 5555 *orrect8 Primar! care services usuall! include a ran+e of office#based services as well as ph!sician visits to hospitali.ed plan members% ################################################################################ ?% The followin+ statements illustrate common forms of capitation: The 3ntler Health Plan pa!s the &psilon -roup, an inte+rated deliver! s!stem ((10), a capitated amount to provide substantiall! all of the inpatient and outpatient services that 3ntler offers% Under this arran+ement, &psilon accepts much of the ris that utili.ation rates will be hi+her than e"pected% 3ntler retains responsibilit! for the plan's mar etin+, enrollment, premium billin+, actuarial, underwritin+, and member services functions% The 4en+al Health Plan pa!s an independent ph!sician association ((P3) a capitated amount to provide both primar! and specialt! care to 4en+al's plan members% The pa!ments cover all ph!sician services and associated

dia+nostic tests and laborator! wor % The ph!sicians in the (P3 determine as a +roup how the individual ph!sicians will be paid for their services% From the followin+ answer choices, select the response that best indicates the form of capitation used b! 3ntler and 4en+al% 3% 3ntler P subcapitation 4en+al P full#ris capitation 4% 3ntler P subcapitation 4en+al P full professional capitation *% 3ntler P +lobal capitation 4en+al P subcapitation 1% 3ntler P +lobal capitation 4en+al P full professional capitation 7our correct answer: 1 *orrect8 -lobal capitation, also called full#ris capitation, is a capitation s!stem that pa!s a provider or+ani.ation to provide substantiall! all of the inpatient and outpatient services;includin+ clinical, primar!, specialt!, and ancillar! services ;that the health plan offers% ################################################################################ @% The followin+ statements are about carve#out pro+rams% Three of these statements are true, and one statement is false% 0elect the answer choice containin+ the F3A0& statement% 3% (n the t!pe of carve#out in which entire cate+ories of care are administered b! independent or+ani.ations, a health plan t!picall! reimburses these or+ani.ations under an FF0 contract% 4% T!picall!, a health plan will offer carved#out services to its enrollees, but will mana+e these services separatel!% *% *arve#outs are services that are e"cluded from a capitation pa!ment, a ris pool, or a health benefit plan% 1% The most rapidl! +rowin+ area relaed to carve#outs is disease mana+ement (1/)% 7our correct answer: 3 *orrect8 ################################################################################ H% The /arble Health Plan sets aside a P/P/ amount for each specialt!% Ihen a P*P in /arble's provider networ refers a /arble plan member to a specialist and the specialist provides medical services to the member, the specialist be+ins to receive a share of those funds on a monthl! basis% /arble determines the monthl! pa!ment for each specialist b! dividin+ the number of active patients for that specialt! b! the total specialt! pool for that month% This form of pa!ment, which is similar to a case rate, is nown as 3% referral circle capitation

4% ris pod capitation *% contact capitation 1% retrospective reimbursement capitation 7our correct answer: * *orrect8 *ontact capitation is a form of pa!ment in which specialists receive a flat, predetermined fee once a referred patient be+ins to receive treatment from them for a +iven condition% This is similar to a case rate;a flat fee paid to the provider in order to care for a patient with a +iven condition% ################################################################################ N% 3 reconciliation is the process b! which a health plan assesses providers' performance relative to contractual terms and reimbursement% Iith re+ard to this process, it can correctl! be stated that 3% a reconciliation t!picall! includes pa!ment to the providers of an! withholds or bonuses due to them 4% a health plan t!picall! should conduct a reconciliation immediatel! after the evaluation period has ended *% most a+reements between health plans and providers re'uire reconciliations to be performed 'uarterl! 1% a health plan t!picall! should not conduct reconciliation for a provider until the plan has received all claims or other documentation of services that the ph!sician provided durin+ the evaluation period RRR *orrect 3nswer : 3 RRR 7our incorrect answer: 4 (ncorrectQ utili.ation calculations +enerall! re'uire that at least three months and possibl! as much as si" months have passed from the closin+ of the evaluation period% Please review pa+es ?C and ?6 of this lesson% 7our incorrect answer: * (ncorrectQ /ost a+reements call for reconciliations, or settlements, to be performed at !ear#end% Please review pa+e ?C of this lesson 7our incorrect answer: 1 (ncorrectQ utili.ation calculations +enerall! re'uire that at least three months and possibl! as much as si" months have passed from the closin+ of the evaluation period% Please review pa+es ?C and ?6 of this lesson% ################################################################################ G% Iith re+ard to capitation arran+ements for hospitals, it can correctl! be stated that 3% the most common reimbursement method for hospitals is professional services capitation 4% most >urisdictions prohibit hospitals and ph!sicians from >oinin+ to+ether to receive +lobal capitations that cover institutional services provided b! the hospitals

*% a health plan t!picall! can capitate a hospital for outpatient laborator! and K#ra! services onl! if the health plan also capitates the hospital for inpatient care 1% man! hospitals have formed ph!sician hospital or+ani.ations (PHOs), hospital s!stems, or inte+rated deliver! s!stems ((10s) that can accept +lobal capitation pa!ments from health plans 7our correct answer: 1 *orrect8 (n the interest of maintainin+ their autonom!, man! hospitals form PHOs, hospital s!stems and inte+rated deliver! s!stems that can accept +lobal capitation pa!ments%

99999 *orrect 3nswers ::::::::::::: 6% (n order to calculate a simple monthl! capitation pa!ment, the 3r+!le Health Plan used the followin+ information: The avera+e number of office visits each member ma es in a !ear is two The FF0 rate per office visit is M?? The member copa!ment is M? per office visit The reimbursement period is one month -iven this information, 3r+!le would correctl! calculate that the per member per month (P/P/) capitation rate should be 3% M2%6H 4% MN%,, *% MG%6H 1% M6C%CC 7our correct answer: 4 *orrect8 *alculate a simple monthl! capitation pa!ment (or P/P/ amount) b! multipl!in+ the avera+e number of services used b! a member in one !ear b! the avera+e fee#for#service e'uivalent pa!ment per service, and then dividin+ b! the number of reimbursement periods per specified time period% ################################################################################ $% The provider contract that 1r% Timoth! /e!er, a pediatrician, has with the *ardi+an health plan states that *ardi+an will compensate him under a capitation arran+ement% However, the contract also includes a t!pical low enrollment +uarantee provision% 0tatements that can correctl! be made about this arran+ement include that the low enrollment +uarantee provision most li el! *auses 1r% /e!er's capitation contract with *ardi+an to transfer more ris to him than the contract otherwise would transfer 0pecifies that *ardi+an will pa! 1r% /e!er under an arran+ement other than capitation until a specified number of children covered b! the plan use him as their P*P 3% 4oth 3 and 4 4% 3 onl! *% 4 onl! 1% =either 3 nor 4 7our correct answer: * *orrect8 Health plans ma! reimburse providers on a discounted FF0 basis until a threshold number of plan members desi+nate that provider as their care+iver% *ontractual provisions that allow capitated providers to be paid on a discounted FF0 basis until the providerBs enrollment meets or e"ceeds a threshold number are called low#enrollment +uarantees% ################################################################################

,% One true statement about a t!pe of capitation nown as a percent#of# premium arran+ement is that this arran+ement 3% is the most common t!pe of capitation 4% is less attractive to providers when the arran+ement sets provisions to limit ris *% sets provider reimbursement at a specific dollar amount per plan member 1% transfers some of the ris associated with underwritin+ and ratin+ from a health plan to a provider 7our correct answer: 1 *orrect8 Percent#of#premium arran+ements transfer some of the ris associated with underwritin+ and ratin+ from the health plan to the provider% Please review pa+es 66 and 6$ of this lesson% ################################################################################ 2% The provider contract that 1r% Oacher! *o+an, an internist, has with the =eptune Health Plan calls for =eptune to reimburse him under a t!pical P*P capitation arran+ement% 1r% *o+an serves as the P*P for &vel!n Pfeiffer, a =eptune plan member% 3fter hospitali.in+ /s% Pfeiffer and orderin+ several e"pensive dia+nostic tests to determine her condition, 1r% *o+an referred her to a specialist for further treatment% (n this situation, the compensation that 1r% *o+an receives under the P*P capitation arran+ement most li el! includes =eptune's pa!ment for 3% all of the dia+nostic tests that he ordered on /s% Pfeiffer 4% his visits to /s% Pfeiffer while she was hospitali.ed *% the cost of the services that the specialist performed for /s% Pfeiffer 1% all of the above 7our correct answer: 4 *orrect8 Primar! care services usuall! include a ran+e of office#based services as well as ph!sician visits to hospitali.ed plan members% ################################################################################ ?% The followin+ statements illustrate common forms of capitation: The 3ntler Health Plan pa!s the &psilon -roup, an inte+rated deliver! s!stem ((10), a capitated amount to provide substantiall! all of the inpatient and outpatient services that 3ntler offers% Under this arran+ement, &psilon accepts much of the ris that utili.ation rates will be hi+her than e"pected% 3ntler retains responsibilit! for the plan's mar etin+, enrollment, premium billin+, actuarial, underwritin+, and member services functions% The 4en+al Health Plan pa!s an independent ph!sician association ((P3) a capitated amount to provide both primar! and specialt! care to 4en+al's plan members% The pa!ments cover all ph!sician services and associated dia+nostic tests and laborator! wor % The ph!sicians in the (P3 determine as a +roup how the individual ph!sicians will be paid for their services%

From the followin+ answer choices, select the response that best indicates the form of capitation used b! 3ntler and 4en+al% 3% 3ntler P subcapitation 4en+al P full#ris capitation 4% 3ntler P subcapitation 4en+al P full professional capitation *% 3ntler P +lobal capitation 4en+al P subcapitation 1% 3ntler P +lobal capitation 4en+al P full professional capitation 7our correct answer: 1 *orrect8 -lobal capitation, also called full#ris capitation, is a capitation s!stem that pa!s a provider or+ani.ation to provide substantiall! all of the inpatient and outpatient services;includin+ clinical, primar!, specialt!, and ancillar! services ;that the health plan offers% ################################################################################ @% The followin+ statements are about carve#out pro+rams% Three of these statements are true, and one statement is false% 0elect the answer choice containin+ the F3A0& statement% 3% (n the t!pe of carve#out in which entire cate+ories of care are administered b! independent or+ani.ations, a health plan t!picall! reimburses these or+ani.ations under an FF0 contract% 4% T!picall!, a health plan will offer carved#out services to its enrollees, but will mana+e these services separatel!% *% *arve#outs are services that are e"cluded from a capitation pa!ment, a ris pool, or a health benefit plan% 1% The most rapidl! +rowin+ area relaed to carve#outs is disease mana+ement (1/)% 7our correct answer: 3 *orrect8 ################################################################################ H% The /arble Health Plan sets aside a P/P/ amount for each specialt!% Ihen a P*P in /arble's provider networ refers a /arble plan member to a specialist and the specialist provides medical services to the member, the specialist be+ins to receive a share of those funds on a monthl! basis% /arble determines the monthl! pa!ment for each specialist b! dividin+ the number of active patients for that specialt! b! the total specialt! pool for that month% This form of pa!ment, which is similar to a case rate, is nown as 3% referral circle capitation 4% ris pod capitation *% contact capitation 1% retrospective reimbursement capitation

7our correct answer: * *orrect8 *ontact capitation is a form of pa!ment in which specialists receive a flat, predetermined fee once a referred patient be+ins to receive treatment from them for a +iven condition% This is similar to a case rate;a flat fee paid to the provider in order to care for a patient with a +iven condition% ################################################################################ N% 3 reconciliation is the process b! which a health plan assesses providers' performance relative to contractual terms and reimbursement% Iith re+ard to this process, it can correctl! be stated that 3% a reconciliation t!picall! includes pa!ment to the providers of an! withholds or bonuses due to them 4% a health plan t!picall! should conduct a reconciliation immediatel! after the evaluation period has ended *% most a+reements between health plans and providers re'uire reconciliations to be performed 'uarterl! 1% a health plan t!picall! should not conduct reconciliation for a provider until the plan has received all claims or other documentation of services that the ph!sician provided durin+ the evaluation period 7our correct answer: 3 *orrect8 T!picall!, reconciliation includes a reconciliation of an! surpluses or losses a+ainst monies withheld% ################################################################################ G% Iith re+ard to capitation arran+ements for hospitals, it can correctl! be stated that 3% the most common reimbursement method for hospitals is professional services capitation 4% most >urisdictions prohibit hospitals and ph!sicians from >oinin+ to+ether to receive +lobal capitations that cover institutional services provided b! the hospitals *% a health plan t!picall! can capitate a hospital for outpatient laborator! and K#ra! services onl! if the health plan also capitates the hospital for inpatient care 1% man! hospitals have formed ph!sician hospital or+ani.ations (PHOs), hospital s!stems, or inte+rated deliver! s!stems ((10s) that can accept +lobal capitation pa!ments from health plans 7our correct answer: 1 *orrect8 (n the interest of maintainin+ their autonom!, man! hospitals form PHOs, hospital s!stems and inte+rated deliver! s!stems that can accept +lobal capitation pa!ments%

Chapte % # Test & " Risk T ans'e in Health Plans


6% The =ewfeld Hospital has contracted with the 3.alea Health Plan to provide inpatient services to 3.alea's enrolled members% The contract calls for 3.alea to provide specific stop#loss covera+e to =ewfeld once =ewfeld's treatment costs reach M$C,CCC per case and for =ewfeld to pa! $CL of the ne"t M?C,CCC of e"penses for this case% 3fter =ewfeld's treatment costs on a case reach MHC,CCC, 3.alea reimburses the hospital for all subse'uent treatment costs% One true statement about this specific stop#loss covera+e is that 3% the carrier is =ewfeld 4% the attachment point is M$C,CCC *% the shared#ris corridor is between MC and MHC,CCC 1% this covera+e can also be activated when the total covered medical e"penses +enerated b! the hospitali.ations of 3.alea plan members reach a specified level 7our correct answer: 4 *orrect8 The attachment point is the loss amount that must occur before the stop#loss covera+e be+ins to cover an! e"penses% ################################################################################ $% The =ewfeld Hospital has contracted with the 3.alea Health Plan to provide inpatient services to 3.alea's enrolled members% The contract calls for 3.alea to provide specific stop#loss covera+e to =ewfeld once =ewfeld's treatment costs reach M$C,CCC per case and for =ewfeld to pa! $CL of the ne"t M?C,CCC of e"penses for this case% 3fter =ewfeld's treatment costs on a case reach MHC,CCC, 3.alea reimburses the hospital for all subse'uent treatment costs% The ma"imum amount for which =ewfeld is at ris for an! one 3.alea plan member's treatment costs is 3% M6C,CCC 4% M62,CCC *% M,C,CCC 1% M,2,CCC 7our correct answer: * *orrect8 Q M$C,CCC, plus $CL of M?C,CCCP M,C,CCC ################################################################################ ,% The 0anford -roup, a provider +roup, entered into a ris contract with a health plan% 0anford has purchased a++re+ate stop#loss covera+e with an

attachment point of 66?L of the +roup's predicted healthcare costs of M$,CCC,CCC for the !ear% 0anford has a copa!ment of 6CL for an! costs above the attachment point% (f 0anford's actual costs for the !ear are M$,NCC,CCC, then, accordin+ to the terms of the a++re+ate stop#loss a+reement, the amount that 0anford is responsible for is 3% M$,CNC,CCC 4% M$,,CC,CCC *% M$,,?C,CCC 1% M$,,NC,CCC 7our incorrect answer: 4 (ncorrectQ $,,CC,CCC plus 6CL of M?C,CCC (6CL over the attachment point of $,,CC,CCC%) Please review pa+es H#N of this lesson% *orrect 3nswer * 66?L of $,CCC,CCC P $,,CC,CCC 1ifference $,NCC,CCC S $,,CC,CCC P ?C,CCC 6CL of ?C,CCC P ?,CCC Total P$,,?C,CCC ################################################################################ 2% 3 stop#loss contract ma! provide that claims are settled usin+ a paid claims method or an incurred claims method% The *oncord *ompan! provides health covera+e to its emplo!ees throu+h a self#funded health plan% On /arch 6H, a *oncord emplo!ee who is enrolled in this plan underwent sur+er!, and the sur+er! was sufficientl! e"pensive to tri++er *oncord's specific stop#loss covera+e% On 3pril 6C, *oncord paid the medical e"penses associated with the sur+er!% The term of the stop#loss contract ended on 3pril#C6 This information indicates that the stop#loss carrier is responsible for pa!in+ a portion of the cost of the sur+er! under 3% both the paid claims method and the incurred claims method 4% the paid claims method but not the incurred claims method *% the incurred claims method but not the paid claims method 1% neither the paid claims method nor the incurred claims method 7our incorrect answer: 3 (ncorrectQ Until the polic!holder pa!s the claim, the stop#loss carrier is not liable to the polic!holder for that claim% Please review pa+e 6, of this lesson% :*orrect 3nswer * : Paid *laim 9 1ate when *laim was Paid (ncurred *laim 9 1ate when *laim was incurred P 0ervice 1ate% ################################################################################

?% 3 health plan that capitates a provider +roup t!picall! provides or offers to provide stop#loss covera+e to that provider +roup% 3% True 4% False 7our correct answer: 3 *orrect8 ################################################################################ @% The sentence below contains two pairs of words enclosed in parentheses% 1etermine which word in each pair correctl! completes the statement% Then select the answer choice containin+ the two words that !ou have chosen% Purchasin+ stop#loss covera+e most li el! (increases F reduces) a health plan's underwritin+ ris and (increases F reduces) the health planBs affiliate ris % 3% increases F increases 4% increases F reduces *% reduces F increases 1% reduces F reduces 7our incorrect answer: 1 (ncorrectQ 3lthou+h purchasin+ stop#loss covera+e reduces a health planBs underwritin+ ris , the same stop#loss covera+e will increase the health planBs affiliate ris % Please review pa+e $H of this lesson% *orrect 3nswer *: Although purchasing stop-loss coverage reduces a health plans underwriting risk, the same stop-loss coverage will increase the health plans affiliate risk. Recall that affiliate risk is the risk that the financial condition of an affiliated entity (in this case, the stop-loss carrier) will cause an adverse change in capital (in this case, the health plan1s capital). Although the decrease in underwriting risk is always greater than the increase in affiliate risk, the increasing affiliate risk is part of the cost of securing stop-loss coverage. he greater the financial strength of the stop-loss carrier, the lower the health plans affiliate risk.

>> C( ect Ans)e s <<


*hapter 2 4 Test H : )is Transfer in Health Plans 6% The =ewfeld Hospital has contracted with the 3.alea Health Plan to provide inpatient services to 3.alea's enrolled members% The contract calls for 3.alea to provide specific stop#loss covera+e to =ewfeld once =ewfeld's treatment costs reach M$C,CCC per case and for =ewfeld to pa! $CL of the ne"t M?C,CCC of e"penses for this case% 3fter =ewfeld's treatment costs on a case reach MHC,CCC, 3.alea reimburses the hospital for all subse'uent treatment costs% One true statement about this specific stop#loss covera+e is that 3% the carrier is =ewfeld 4% the attachment point is M$C,CCC *% the shared#ris corridor is between MC and MHC,CCC 1% this covera+e can also be activated when the total covered medical e"penses +enerated b! the hospitali.ations of 3.alea plan members reach a specified level 7our correct answer: 4 *orrect8 The attachment point is the loss amount that must occur before the stop#loss covera+e be+ins to cover an! e"penses% ################################################################################ $% The =ewfeld Hospital has contracted with the 3.alea Health Plan to provide inpatient services to 3.alea's enrolled members% The contract calls for 3.alea to provide specific stop#loss covera+e to =ewfeld once =ewfeld's treatment costs reach M$C,CCC per case and for =ewfeld to pa! $CL of the ne"t M?C,CCC of e"penses for this case% 3fter =ewfeld's treatment costs on a case reach MHC,CCC, 3.alea reimburses the hospital for all subse'uent treatment costs% The ma"imum amount for which =ewfeld is at ris for an! one 3.alea plan member's treatment costs is 3% M6C,CCC 4% M62,CCC *% M,C,CCC 1% M,2,CCC 7our correct answer: * *orrect8 Q M$C,CCC, plus $CL of M?C,CCCP M,C,CCC ################################################################################

,% The 0anford -roup, a provider +roup, entered into a ris contract with a health plan% 0anford has purchased a++re+ate stop#loss covera+e with an attachment point of 66?L of the +roup's predicted healthcare costs of M$,CCC,CCC for the !ear% 0anford has a copa!ment of 6CL for an! costs above the attachment point% (f 0anford's actual costs for the !ear are M$,NCC,CCC, then, accordin+ to the terms of the a++re+ate stop#loss a+reement, the amount that 0anford is responsible for is 3% M$,CNC,CCC 4% M$,,CC,CCC *% M$,,?C,CCC 1% M$,,NC,CCC 7our correct answer: * *orrect8 $,,CC,CCC plus 6CL of M?C,CCC (6CL over the attachment point of $,,CC,CCC%) ################################################################################ 2% 3 stop#loss contract ma! provide that claims are settled usin+ a paid claims method or an incurred claims method% The *oncord *ompan! provides health covera+e to its emplo!ees throu+h a self#funded health plan% On /arch 6H, a *oncord emplo!ee who is enrolled in this plan underwent sur+er!, and the sur+er! was sufficientl! e"pensive to tri++er *oncord's specific stop#loss covera+e% On 3pril 6C, *oncord paid the medical e"penses associated with the sur+er!% The term of the stop#loss contract ended on 3pril 6% This information indicates that the stop#loss carrier is responsible for pa!in+ a portion of the cost of the sur+er! under 3% both the paid claims method and the incurred claims method 4% the paid claims method but not the incurred claims method *% the incurred claims method but not the paid claims method 1% neither the paid claims method nor the incurred claims method 7our correct answer: * *orrect8 Under the incurred claims method, the stop#loss carrier is obli+ated to ma e pa!ments on the applicable claims as of the date the medical e"pense was incurred% ################################################################################ ?% 3 health plan that capitates a provider +roup t!picall! provides or offers to provide stop#loss covera+e to that provider +roup% 3% True 4% False 7our correct answer: 3 *orrect8 ################################################################################

@% The sentence below contains two pairs of words enclosed in parentheses% 1etermine which word in each pair correctl! completes the statement% Then select the answer choice containin+ the two words that !ou have chosen% Purchasin+ stop#loss covera+e most li el! (increases F reduces) a health plan's underwritin+ ris and (increases F reduces) the health planBs affiliate ris % 3% increases F increases 4% increases F reduces *% reduces F increases 1% reduces F reduces 7our correct answer: * *orrect8 3lthou+h purchasin+ stop#loss covera+e reduces a health planBs underwritin+ ris , the same stop#loss covera+e will increase the health planBs affiliate ris % ################################################################################

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