NEW QUESTION 1

Dr. Martin Cassini is an obstetrician who is under contract with the Bellerby Health Plan. Bellerby compensates Dr. Cassini for each obstetrical patient he sees in the form of a single amount that covers the costs of prenatal visits, the delivery itself, and post-delivery care . This information indicates that Dr. Cassini is compensated under the provider reimbursement method known as a:

• A. global fee
• B. relative value scale
• C. unbundling
• D. discounted fee-for-service

Answer: A

NEW QUESTION 2

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 3

One difference between the internal and external analysis of a health plan's financial information is that

• A. Internal analysis of the health plan can be more detailed and more specific than can external analysis
• B. Internal analysts are more likely than external analysts to want comparative financial data about the health plan
• C. Only internal analysts use trend analysis to analyze the health plan's financial statements
• D. Only internal analysts typically conduct the financial analysis of the health planthemselves

Answer: A

NEW QUESTION 4

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 5

In the following paragraph, a sentence 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 selected.
The Igloo health plan recognizes the receipt of its premium income during the accounting
period in which the income is earned, regardless of when cash changes hands. However, Igloo recognizes its expenses when it earns the revenues related to those expenses, regardless of when it receives cash for the revenues earned. This information indicates that the (realization/capitalization) principle governs Igloo's revenue recognition, whereas the (matching/initial-recording) principle governs its expense recognition.

• A. realization / matching
• B. realization / initial-recording
• C. capitalization / matching
• D. capitalization / initial-recording

Answer: A

NEW QUESTION 6

Under the alternative funding method used by the Flair Company, Flair assumes financial responsibility for paying claims up to a specified level and deposits the funds necessary to pay these claims into a bank account that belongs to Flair. However, an insurer, which acts as an agent of Flair, makes the actual payment of claims from this account. When claims exceed the specified level, the insurer pays the balance from its own funds. No state premium tax is levied on the amounts that Flair deposits into this bank account.
From the following answer choices, choose the name of the alternative funding method described.

• A. Retrospective-rating arrangement
• B. Premium-delay arrangement
• C. Reserve-reduction arrangement
• D. Minimum-premium plan

Answer: D

NEW QUESTION 7

A cost for which a benefit is forfeited in choosing one decision alternative over another alternative is known as

• A. A marginal unit cost
• B. An opportunity cost
• C. An incremental cost
• D. A differential cost

Answer: B

NEW QUESTION 8

The following information was presented on one of the financial statements prepared by the Rouge Health Plan as of December 31, 1998:

This type of financial statement is called:

• A. A balance sheet
• B. An income statement
• C. A statement of owners’ equity
• D. A cash flow statement

Answer: C

NEW QUESTION 9

The Montvale Health Plan purchased a piece of real estate 20 years ago for $40,000. It recently sold the real estate for $80,000 and reported a capital gain of $40,000 on this sale. Even though the purchasing power of the dollar declined by half during this period and Montvale realized no actual gain in purchasing power, Montvale recorded in its accounting records the $40,000 gain from this sale. This situation best illustrates the accounting concept known as the:

• A. Measuring-unit concept
• B. Time-period concept
• C. Full-disclosure concept
• D. Concept of periodicity

Answer: A

NEW QUESTION 10

The Newfeld Hospital has contracted with the Azalea Health Plan to provide inpatient services to Azalea's enrolled members. The contract calls for Azalea to provide specific stop-loss coverage to Newfeld once Newfeld's treatment costs reach $20,000 per case and for Newfeld to pay 20% of the next $50,000 of expenses for this case. After Newfeld's treatment costs on a case reach $70,000, Azalea reimburses the hospital for all subsequent treatment costs.
The maximum amount for which Newfeld is at risk for any one Azalea plan member's treatment costs is

• A. $10,000
• B. $14,000
• C. $30,000
• D. $34,000

Answer: C

NEW QUESTION 11

Costs that can be defined by behavior are most commonly classified as fixed costs, variable costs, and semi-variable costs. From the following answer choices, select the response that correctly indicates a fixed cost and a variable cost for a health plan.

• A. Fixed Cost = depreciation on computer equipment Variable Cost = selling expenses
• B. Fixed Cost = premium processing expenses Variable Cost = rent on a regional office
• C. Fixed Cost = the cost for building maintenance Variable Cost = the cost for electricity
• D. Fixed Cost = the cost for electricityVariable Cost = fire insurance on the home office facility

Answer: A

NEW QUESTION 12

A stop-loss contract may provide that claims are settled using a paid claims method or an incurred claims method. The Concord Company provides health coverage to its employees through a self-funded health plan. On March 17, a Concord employee who is enrolled in this plan underwent surgery, and the surgery was sufficiently expensive to trigger Concord's specific stop-loss coverage. On April 10, Concord paid the medical expenses associated with the surgery. The term of the stop-loss contract ended on April 1. This information indicates that the stop-loss carrier is responsible for paying a portion of the cost of the surgery under

• A. both the paid claims method and the incurred claims method
• B. the paid claims method but not the incurred claims method
• C. the incurred claims method but not the paid claims method
• D. neither the paid claims method nor the incurred claims method

Answer: C

NEW QUESTION 13

The Swann Health Plan excludes mental health coverage from its basic health benefit plan. Coverage for mental health is provided by a specialty health plan called a managed behavioral health organization (MBHO). This arrangement recognizes the fact that distinct administrative and clinical expertise is required to effectively manage mental health services. This information indicates that Swann manages mental health services through the use of a:

• A. Formulary
• B. Risk pod
• C. Carve-out
• D. Case rate

Answer: C

NEW QUESTION 14

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 15

One way that the Medicare and Medicaid programs differ is that under Medicare, a smaller proportion of provider reimbursement goes to the primary care providers and a greater proportion of the reimbursement goes to hospitals and specialists.

• A. True
• B. False

Answer: A

NEW QUESTION 16

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 17
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