NEW QUESTION 1

Assume that the Lambda, Mesa, and Novella health plans are equal in every way except that the health plans have obtained equal amounts of net cash inflows from different sources, as shown below:
HealthPlan Source LambdaFinancing activities MesaInvesting activities NovellaOperating activities
From the following answer choices, select the response which indicates the health plan that would most likely be the most attractive to a potential plan sponsor, to a potential creditor, and to a potential investor.

• A. Potential Plan Sponsor = Lambda Potential Creditor = Mesa Potential Investor = Novella
• B. Potential Plan Sponsor = Lambda Potential Creditor = Novella Potential Investor = Mesa
• C. Potential Plan Sponsor = Novella Potential Creditor = Lambda Potential Investor = Mesa
• D. Potential Plan Sponsor = Novella Potential Creditor = Novella Potential Investor = Novella

Answer: D

NEW QUESTION 2

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

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

Answer: A

NEW QUESTION 3

The following statements are about 501(c)(9) trusts. Select the answer choice containing the correct statement:

• A. In the event a 501(c)(9) trust is terminated, any funds remaining in the trust revert backto the employer.
• B. In order to satisfy Internal Revenue Code (IRC) requirements, membership in a 501(c)(9) trust is mandatory for all employees.
• C. Contributions made by an employer to a 501(c)(9) trust are deductible for federal income tax purposes.
• D. Typically, a 501(c)(9) trust is controlled solely by the employer that established the trust.

Answer: C

NEW QUESTION 4

The following statements are about the Health Insurance Portability and Accountability Act (HIPAA) as it relates to the small group market. Three of these statements are true and one statement is false. Select the answer choice containing the FALSE statement:

• A. A health plan that participates in the small group market is required to issue a contract to any employer that requests healthcare benefits, as long as the employer meets the statutory definition of a small group.
• B. A small group must consist of more than 10 employees in order to be underwritten on a group, rather than an individual, basis.
• C. A health plan is prohibited from canceling a small group’s healthcare coverage because of poor claims experience.
• D. A health plan that participates in the small group market is limited in placing restrictions such as waiting periods and pre-existing conditions exclusions to individuals in high risk categories.

Answer: B

NEW QUESTION 5

The Raven Health Plan is domiciled in a state that requires the health plan to offer small employers and their employees a comprehensive healthcare benefit plan that approximates the healthcare benefits available to large employer-employee groups. This type of uniform benefit plan is known as:

• A. A basic plan
• B. A low-option plan
• C. A standard plan
• D. An essential plan

Answer: C

NEW QUESTION 6

An investor deposited $1,000 in an interest-bearing account today. That sum will accumulate to $1,200 two years from now. One true statement about this transaction is that:

• A. The process by which the original $1,000 deposit grows to $1,200 is known as compounding
• B. $1,200 is the present value of the $1,000 deposit
• C. The $200 increase in the deposit’s value is its incremental cash flow
• D. The $200 difference between the original deposit and the accumulated value of the deposit is known as the deposit’s discount

Answer: A

NEW QUESTION 7

The reimbursement arrangement that Dr. Caroline Monroe has with the Exmoor Health Plan includes a typical withhold arrangement. One true statement about this withhold arrangement is that, for a given financial period,

• A. D
• B. Monroe and Exmoor are equally responsible for making up the difference if cost overruns exceed the amount of money withheld
• C. Exmoor most likely distributes to D
• D. Monroe the entire amount withheld from her if her costs are below the amount budgeted for the period
• E. Exmoor pays D
• F. Monroe 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
• G. Exmoor most likely withholds between 3% and 5% of D
• H. Monroe's total reimbursement

Answer: B

NEW QUESTION 8

With regard to the major risk factors associated with group underwriting, it can correctly be stated that, typically,

• A. The age and gender of group plan members are not predictors of utilization of health services by group members
• B. A health plan's product design or delivery system has an impact on member selection of the health plan, unless the members are in an environment in which employees have at least two benefit options or health plans from which to choose
• C. A health plan should track demographic factors of groups only if the plan specifically adjusts for demographic factors on a group basis
• D. A large group is more likely to exhibit a consistent claims pattern, level of healthcare cost, or utilization of services than is a small group

Answer: D

NEW QUESTION 9

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

• A. both for-profit, publicly owned health plans and not-for-profit health plans are required by law to provide all interested parties with an annual report
• B. a health plan's annual report typically includes an independent auditor's report and notes to the financial statements
• C. any health plan that owns more than 20% of the stock of a subsidiary company must compile the financial statements for the health plan's annual report on a consolidated basis
• D. a health plan typically must prepare the financial statements included in its annual report according to SAP

Answer: B

NEW QUESTION 10

The Essential Health Plan markets a product for which it assumed total expenses to equal 92% of premiums. Actual data relating to this product indicate that expenses equal 89% of premiums. This information indicates that the expense margin for this product has:

• A. a 3% favorable deviation
• B. a 3% adverse deviation
• C. an 11% favorable deviation
• D. an 11% adverse deviation

Answer: A

NEW QUESTION 11

One law prohibits Dr. Laura Cole from making a referral to another provider entity for designated health services if Dr. Cole or one of her immediate family members has a financial relationship with the entity. This law is known as the

• A. safe harbor law
• B. upper payment limit law
• C. anti-kickback law
• D. physician self-referral law

Answer: D

NEW QUESTION 12

The Zane health plan uses a base of accounting known as accrual-basis accounting. With regard to this base of accounting, it can correctly be stated that accrual-basis accounting

• A. Enables an interested party to view the consequences of obligations incurred by Zane, but only if the health plan ultimately completes the business transaction
• B. Is not suitable for measuring Zane's profitability
• C. Requires Zane to record revenues when they are earned and expenses when they are incurred, even if cash has not actually changed hands
• D. Prohibits Zane from making adjusting entries to its accounting records at the end of each accounting year

Answer: C

NEW QUESTION 13

The following statements are about risk management in health plans. Select the answer choice containing the correct response.

• A. Risk management is especially important to health plans because the Employee Retirement Income Security Act of 1974 (ERISA) allows plan members to recover punitive damages from healthcare plans.
• B. With regard to the relative risk for health plan structures based upon the degree of influence and relationships that health plans maintain with their providers, preferred provider organizations (PPOs) typically have a higher risk than do group HMOs and staff HMOs.
• C. Although there are clear risks associated with the provision of healthcare services and coverage decisions surrounding that care, the bulk of risk in health plans is associated with a health plan's benefit administration and contracting activities.
• D. A health plan generally structures its risk management process around loss reduction techniques and loss transfer techniques.

Answer: D

NEW QUESTION 14

The following statements are about the option for health plan funding known as a self- funded plan. Select the answer choice containing the correct response:

• A. In a self-funded plan, an employer is relieved of all risk associated with paying for the healthcare costs of its employees.
• B. Self-funded plans are subject to the same state laws and regulations that apply to health insurance policies.
• C. Employers electing to self-fund a health plan are required to pay claims from a separate trust established for that purpose.
• D. An employer electing to self-fund a health plan has the option of purchasing stop-loss insurance to transfer part of the financial risk to an insurer.

Answer: D

NEW QUESTION 15

The following statements are about rate ratios used by health plans. Select the answer choice containing the correct statement:

• A. While rate ratios consider family size, they are most often based on competitive factors, such as the ratios being used by competitors and the ratios that plan sponsors are requesting.
• B. If the rate ratio for a couple rate category is 2.0, then the single premium is divided by 2.0 to derive the couple rate category premium.
• C. A rate ratio can only be increased if the health plan has obtained regulatory approval.
• D. The effect of a typical family rate ratio is that a family rate is somewhat higher than it otherwise should be, and the single rate is somewhat lower that it otherwise should be.

Answer: A

NEW QUESTION 16

Health plans have access to a variety of funding sources depending on whether they are operated as for-profit or not-for-profit organizations. The Verde Health Plan is a for-profit health plan and the Noir Health Plan is a not-for-profit health plan. From the answer choices below, select the response that correctly identifies whether funds from debt markets and equity markets are available to Verde and Noir:

• A. Funds from Debt Markets: available to Verde and Noir Funds from Equity Markets: available to Verde and Noir
• B. Funds from Debt Markets: available to Verde and Noir Funds from Equity Markets: available to Verde only
• C. Funds from Debt Markets: available to Verde only Funds from Equity Markets: available to Noir only
• D. Funds from Debt Markets: available to Noir only Funds from Equity Markets: available to Verde only

Answer: B

NEW QUESTION 17

In order to calculate a simple monthly capitation payment, the Argyle Health Plan used the following information:
✑ The average number of office visits each member makes in a year is two
✑ The FFS rate per office visit is $55
✑ The member copayment is $5 per office visit
✑ The reimbursement period is one month
Given this information, Argyle would correctly calculate that the per member per month (PMPM) capitation rate should be

• A. $4.17
• B. $8.33
• C. $9.17
• D. $10.00

Answer: B

NEW QUESTION 18

The sentence below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have chosen. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan’s affiliate risk.

• A. increases / increases
• B. increases / reduces
• C. reduces / increases
• D. reduces / reduces

Answer: C

NEW QUESTION 19
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