NEW QUESTION 1

Reconciliation is the process by which a health plan assesses providers' performance relative to contractual terms and reimbursement.
With regard to this process, it can correctly be stated that

• A. Areconciliation typically includes payment to the providers of any withholds or bonuses due to them
• B. Ahealth plan typically should conduct a reconciliation immediately after the evaluation period has ended
• C. Most agreements between health plans and providers require reconciliations to be performed quarterly
• D. Ahealth plan typically should not conduct reconciliation for a provider until the plan has received all claims or other documentation of services that the physician provided during the evaluation period

Answer: A

NEW QUESTION 2

Geena Falk is eligible for both Medicare and Medicaid coverage. If Ms. Falk incurs a covered expense, then:

• A. Medicaid will be M
• B. Falk’s primary insurer
• C. Medicare will be M
• D. Falk’s primary insurer
• E. Either Medicare or Medicaid will be M
• F. Falk’s primary insurer depending on her election
• G. Medicare and Medicaid will each be responsible for one-half of M
• H. Falk’s covered expense

Answer: B

NEW QUESTION 3

The Column health plan is in the process of developing a strategic plan.
The following statements are about this strategic plan. Three of the statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

• A. Human resources most likely will be a critical component of Column's strategic plan because, in health plan markets, the size and the quality of a health plan's provider network is often more important to customers than are the details of a product's benefit design.
• B. Column's strategic plan should only address how the health plan will differentiate its products, rather than where and how it will sell these products.
• C. Column most likely will need to develop contingency plans to address the need to make adjustments to its original strategic plan.
• D. Column's information technology (IT) strategy most likely will be a critical element in successfully implementing the health plan's strategic plan.

Answer: B

NEW QUESTION 4

The following examples describe situations that expose an individual or a health plan to either pure risk or speculative risk:
Example 1 — A health plan invested in 1,000 shares of stock issued by a technology company.
Example 2 — An individual could contract a terminal illness.
Example 3 — A health plan purchased a new information system.
Example 4 — A health plan could be held liable for the negligent acts of an employee.
The examples that describe pure risk are

• A. Examples 1 and 2
• B. Examples 1 and 4
• C. Examples 2 and 3
• D. Examples 2 and 4

Answer: A

NEW QUESTION 5

The Longview Hospital contracted with the Carlyle Health Plan to provide inpatient services to Carlyle’s enrolled members. Carlyle provides Longview with a type of stop-loss coverage that protects, on a claims incurred and paid basis, against losses arising from significantly higher than anticipated utilization rates among Carlyle’s covered population. The stop-loss coverage specifies an attachment point of 130% of Longview’s projected $2,000,000 costs of treating Carlyle plan members and requires Longview to pay 15% of any costs above the attachment point. In a given plan year, Longview incurred covered costs totaling $3,000,000.
Carlyle most likely is responsible for paying Longview for the claims incurred before Longview has actually paid the medical expenses.

• A. True
• B. False

Answer: B

NEW QUESTION 6

Health plans with risk-based Medicare contracts are required to calculate and submit to CMS a Medicare adjusted community rate (Medicare ACR). Medicare ACR can be defined as the:

• A. Estimated cost of providing services to a beneficiary under Medicare FFS, adjusted for factors such as age and gender
• B. Health plan’s estimate of the premium it would charge Medicare enrollees in the absence of Medicare payments to the health plan
• C. Average amount the health plan expects to receive from CMS per beneficiary covered
• D. Health plan’s actual costs of providing benefits to Medicare enrollees in a given year

Answer: B

NEW QUESTION 7

The following paragraph contains two pair of terms enclosed in parentheses. Determine which term in each pair correctly completes the statements. Then select the answer choice containing the two terms you have chosen.
In a typical health plan, an (actuary / underwriter) is ultimately responsible for the determination of the appropriate rate to charge for a given level of healthcare benefits and administrative services in a particular market. The (actuary / underwriter) assesses and classifies the degree of risk represented by a proposed group or individual.

• A. actuary / actuary
• B. actuary / underwriter
• C. underwriter / actuary
• D. underwriter / underwriter

Answer: B

NEW QUESTION 8

With regard to alternative funding arrangements, the part of a health plan premium that is intended to contribute to the claims reserve that a health plan maintains to pay for unusually high utilization is known as the:

• A. Interest charge
• B. Retention charge
• C. Risk charge
• D. Surplus

Answer: C

NEW QUESTION 9

The following statements are about the financial risks for health plans in Medicare and Medicaid markets. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

• A. One reason that health plans in the Medicare and Medicaid markets experience financial risk is that government regulations determine which services must be provided to Medicare and Medicaid enrollees.
• B. Effective use of hospital utilization is the single most likely factor to contribute to the success of a Medicare-contracting health plan.
• C. If a Medicare-contracting health plan is a provider-sponsored organization (PSO), it is prohibited from sharing financial risk with its providers.
• D. Typically, providers are more reluctant to accept financial risk in connection with providing services to the Medicaid population than with providing services to the Medicare population.

Answer: C

NEW QUESTION 10

Federal law addresses the relationship between Medicare- or Medicaidcontracting health plans and providers who are at "substantial financial risk."
Under federal law, Medicare- or Medicaid-contracting health plans

• A. Place a provider at "substantial risk" whenever incentive arrangements put the provider at risk for amounts in excess of 10% of his or her total potential reimbursement for providing services to Medicare and Medicaid enrollees
• B. Must provide stop-loss coverage to a provider who is placed at "substantial financial risk" for services that the provider does not directly provide to Medicare or Medicaid enrollees
• C. Both A and B
• D. A only
• E. B only
• F. Neither A nor B

Answer: C

NEW QUESTION 11

The purest form of a self-funded benefit plan is one in which the employer pays benefits from current revenue, administers all aspects of the plan, and bears the risk that actual benefit payments will exceed the expected amount of payments. A decision to use this kind of self-funding is generally considered most desirable when certain conditions are present. These conditions most likely include that the benefit plan

• A. Is a contributory plan
• B. Is subject to collective bargaining
• C. Is unable to secure discounts from the physicians who provide medical services to the plan members
• D. Has a relatively high frequency of low severity claims

Answer: D

NEW QUESTION 12

The accounting department of the Enterprise health plan adheres to the following policies:
✑ Policy A—Report gains only after they actually occur
✑ Policy B—Report losses immediately
✑ Policy C—Record expenses only when they are certain
✑ Policy D—Record revenues only when they are certain
Of these Enterprise policies, the ones that are consistent with the accounting principle of conservatism are Policies

• A. A, B, C, and D
• B. A, B, and D only
• C. A and B only
• D. C and D only

Answer: B

NEW QUESTION 13

In evaluating the claims experience during a given rating period of the Lucky Company, the Calaway Health Plan determined that the claims incurred by Lucky were lower than Calaway anticipated when it established Lucky’s premium rate for the rating period. Calaway, therefore,refunded a portion of Lucky’s premium to reflect the better-than- anticipated claims experience. This rating method is known as:

• A. durational rating
• B. retrospective experience rating
• C. blended rating
• D. prospective experience rating

Answer: B

NEW QUESTION 14

The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
To prepare its cash flow statement, Caribou uses the direct method rather than the indirect method.

• A. True
• B. False

Answer: B

NEW QUESTION 15

Health plans seeking to provide comprehensive healthcare plans must contract with a variety of providers for ancillary services. One characteristic of ancillary services is that

• A. Physician behavior typically does not impact the utilization rates for these services
• B. Package pricing is the preferred reimbursement method for ancillary service providers
• C. These services include physical therapy, behavior therapy, and home healthcare, but not diagnostic services such as laboratory tests
• D. Few plan members seek these services without first being referred to the ancillary provider by a physician

Answer: D

NEW QUESTION 16

The ability of a health plan to effectively perform the rating and underwriting functions has become critical to the plan's success. In developing its pricing strategy, a health plan has to address the marketplace's ongoing trends and factors, which include

• A. a decreased focus on small to mid-size employer groups
• B. an improvement in the financial performance of health plans
• C. a consolidation of the key players in the health plan industry
• D. a decreased complexity of the products being offered.

Answer: C

NEW QUESTION 17

The medical loss ratio (MLR) for the Peacock health plan is 80%. Peacock's expense ratio is 16%.
One characteristic of Peacock's MLR is that it

• A. Includes claims that have been paid but excludes claims that have not yet been reported
• B. Cannot adjust for growth in the health plan's business
• C. Is the percentage of Peacock's end-of-period surplus to its earned premiums
• D. Measures Peacock's overall claims levels

Answer: D

NEW QUESTION 18

The Arista Health Plan is evaluating the following four groups that have applied for group
healthcare coverage:
✑ The Blaise Company, a large private employer
✑ The Colton County Department of Human Services (DHS)
✑ A multiple-employer group comprised of four companies
✑ The Professional Society of Daycare Providers
With respect to the relative degree of risk to Arista represented by these four companies, the company that would most likely expose Arista to the lowest risk is the:

• A. Blaise Company
• B. Colton County DHS
• C. Multiple-employer group
• D. Professional Society of Daycare Providers

Answer: A

NEW QUESTION 19
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