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

Chapter 1 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 likely can correctly be classified as external users with a direct financial interest in Fulcrum are the • • • • independent auditors, the plan members, the providers, and the competitors only independent auditors, the controller, and the providers only controller and the competitors only plan members and the providers only

-------------------------------------------------------------------------------2. The Eclipse Health Plan is a not-for-profit health plan that qualifies under the Internal Revenue Code for tax-exempt status. This information indicates that Eclipse • has only one potential source of funding: borrowing money • does not pay federal, state, or local taxes on its earnings • must distribute its earnings to its owners-investors for their personal gain • is a privately held corporation -------------------------------------------------------------------------------3. The Challenger Group is a type of management services organization (MSO) that purchases the assets of physician practices, provides practice management and administrative support services to participating providers, and offers physicians a long-term contract and an equity position in Challenger. This information indicates that Challenger is a type of health plan known as • an integrated delivery system (IDS) • a medical foundation • a provider-sponsored organization (PSO) • a physician practice management (PPM) company --------------------------------------------------------------------------------

4. A key factor that distinguishes the various types of health plans is the type and amount of risk that a health plan assumes with respect to the delivery and financing of healthcare benefits. An example of a type of health plan that typically assumes the financial risk of delivering and financing healthcare benefits is a • third party administrator (TPA) • utilization review organization (URO) • preferred provider organization (PPO) • pharmacy benefit management (PBM) plan -------------------------------** Correct Answers **------------------------------------------------1. 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 likely can correctly be classified as external users with a direct financial interest in Fulcrum are the A. independent auditors, the plan members, the providers, and the competitors only B. independent auditors, the controller, and the providers only C. controller and the competitors only D. plan members and the providers only Your correct answer: D Correct! Health plan members, providers, outside agents and brokers, creditors, stockholders, and potential investors are examples of external users with a direct financial interest in the financial performance of a health plan. -------------------------------------------------------------------------------2. The Eclipse Health Plan is a not-for-profit health plan that qualifies under the Internal Revenue Code for tax-exempt status. This information indicates that Eclipse A. has only one potential source of funding: borrowing money B. does not pay federal, state, or local taxes on its earnings C. must distribute its earnings to its owners-investors for their personal gain D. is a privately held corporation Your correct answer: B Correct! Tax-exempt organizations do not pay federal, state, or local taxes on earnings. --------------------------------------------------------------------------------

pharmacy benefit management (PBM) plan Your correct answer: C Correct! HMOs. An example of a type of health plan that typically assumes the financial risk of delivering and financing healthcare benefits is a A. a provider-sponsored organization (PSO) D. preferred provider organization (PPO) D. provides practice management and administrative support services to participating providers. a physician practice management (PPM) company Your correct answer: D Correct! A PPM purchases the assets of of physician practices. -------------------------------------------------------------------------------4. provides practice management and administrative support services to participating providers. A key factor that distinguishes the various types of health plans is the type and amount of risk that a health plan assumes with respect to the delivery and financing of healthcare benefits. This information indicates that Challenger is a type of health plan known as A. utilization review organization (URO) C. assume the financial risks of delivering healthcare benefits to plan members. a medical foundation C. PPOs. third party administrator (TPA) B.End of the Test ----------< . >---------. and offers physicians a long-term contract and an equity position in Challenger. The Challenger Group is a type of management services organization (MSO) that purchases the assets of physician practices. and PSOs. an integrated delivery system (IDS) B.3.

Chapter 2 A Test 2: Types of Risk 1. ________________ is typically the most important risk that health plans face. Healthcare coverage is designed to help plan members avoid pure risk. The following statements are about pure risk and speculative risk—two kinds of risk that both businesses and individuals experience. Select the answer choice containing the correct statement. The NAIC has developed a risk-based capital (RBC) formula for all health plans that accept risk. Only pure risk involves the possibility of gain. pricing risk (C-2). The Health Maintenance Organization (HMO) Model Act. Health plans face four contingency risks (C-risks): asset risk (C-1). Only speculative risk contains an element of uncertainty. One true statement about the RBC formula for health plans is that it . represents one approach to developing solvency standards. The following paragraph contains an incomplete statement. not speculative risk. This is true because a sizable portion of the total expenses and liabilities faced by a health plan come from contractual obligations to pay for future medical costs. One drawback to this type of solvency regulation is that it uses estimates of future expenditures and premium income to estimate future risk fails to adjust the solvency requirement to account for the size of an HMO's premiums and expenditures assumes that the amount of premiums an HMO charges always directly corresponds to the level of the risk that the HMO faces fails to mandate a minimum level of capital and surplus that an HMO must maintain -------------------------------------------------------------------------------4. and general management risk (C-4). asset risk (C-1) pricing risk (C-2) interest-rate risk (C-3) general management risk (C-4) -------------------------------------------------------------------------------3. Select the answer choice containing the term that correctly completes the statement. and the exact amount of these costs is not known when the healthcare coverage is priced. -------------------------------------------------------------------------------2. developed by the National Association of Insurance Commissioners (NAIC). An example of speculative risk is the possibility that an individual will contract a serious illness. Of these risks. interest-rate risk (C-3).

Provider reimbursement methods that transfer some utilization risk from a health plan to providers affect the health plan's RBC formula. A. not speculative risk. that yields a target capital requirement for the organization fails to take into account a health plan's underwriting risk. Select the answer choice containing the correct statement. based on information in a health plan's annual financial report. -----------------------------** Correct Answers **--------------------------------------------------1. risk transfer. and one statement is false. A health plan is seldom able to transfer any of the risk that utilization rates will be higher than expected and that its cost of providing healthcare will exceed the revenues it receives. If a risk is a pure risk from the point of view of a health plan. Generally. and risk acceptance. C. Three general strategies that health plans use for controlling types of risk are risk avoidance. D. Only speculative risk contains an element of uncertainty.is a set of calculations. Only pure risk involves the possibility of gain. Three of these statements are true. A health plan would most likely transfer some or all of its utilization risk if it pays a provider a rate that is based on the number of plan enrollees that choose the provider as their primary care provider (PCP). which is the risk that the premiums the health plan receives will be insufficient to pay for the healthcare services it provides to its plan members applies to all health plans in the United States fails to assess the specific level of risk faced by each health plan -------------------------------------------------------------------------------5. B. and the lower the costs of avoiding that risk. The following statements are about these strategies. the smaller the likely benefits of accepting a risk. then the health plan most likely will attempt to avoid the risk. Your correct answer: A . the greater the likelihood that a health plan will elect to avoid the risk. Select the answer choice containing the FALSE statement. An example of speculative risk is the possibility that an individual will contract a serious illness. Healthcare coverage is designed to help plan members avoid pure risk. A health plan's use of these reimbursement methods is likely to result in an increase the health plan's underwriting risk a decrease the health plan's credit risk a decrease the health plan's net worth requirement all of the above -------------------------------------------------------------------------------6. The following statements are about pure risk and speculative risk—two kinds of risk that both businesses and individuals experience.

Of these risks. and general management risk (C-4). that yields a target capital requirement for the organization . Select the answer choice containing the term that correctly completes the statement. -------------------------------------------------------------------------------2. fails to adjust the solvency requirement to account for the size of an HMO's premiums and expenditures C. ------------------------------------------------------------------------------4. assumes that the amount of premiums an HMO charges always directly corresponds to the level of the risk that the HMO faces D. developed by the National Association of Insurance Commissioners (NAIC). The Health Maintenance Organization (HMO) Model Act. A. based on information in a health plan's annual financial report. asset risk (C-1) B. uses estimates of future expenditures and premium income to estimate future risk B. represents one approach to developing solvency standards. Health plans face four contingency risks (C-risks): asset risk (C-1). and the exact amount of these costs is not known when the healthcare coverage is priced. fails to mandate a minimum level of capital and surplus that an HMO must maintain Your correct answer: C Correct! The size of an HMO’s premiums and expenditures is assumed to reflect accurately the level of risk the HMO faces. This is true because a sizable portion of the total expenses and liabilities faced by a health plan come from contractual obligations to pay for future medical costs. One true statement about the RBC formula for health plans is that it A. is a set of calculations. pricing risk (C-2) C. pricing risk (C-2). The following paragraph contains an incomplete statement. ________________ is typically the most important risk that health plans face. One drawback to this type of solvency regulation is that it A. The NAIC has developed a risk-based capital (RBC) formula for all health plans that accept risk. general management risk (C-4) Your correct answer: B Correct! For most health plans.Correct! The possibility of economic loss without the possibility of gain—pure risk—is the only kind of risk that healthcare coverage is designed to help plan members avoid. interest-rate risk (C-3). -------------------------------------------------------------------------------3. interest-rate risk (C-3) D. pricing risk is the most important risk the organization faces.

all of the above Your correct answer: C Correct! Because the underwriting risk is by far the largest risk in the RBC formula for health plans. the net effect of using provider reimbursement contracts to transfer risk is that the health plan’s net worth requirement will decrease. The financial standards contained in the HMO Model Act and various states’ HMO and insurance statutes may not apply to some provider organizations or certain other risk-bearing entities. fails to assess the specific level of risk faced by each health plan Your correct answer: A Correct! Your incorrect answer: C Incorrect.B. The following statements are about these strategies. Provider reimbursement methods that transfer some utilization risk from a health plan to providers affect the health plan's RBC formula. . an increase the health plan's underwriting risk B. applies to all health plans in the United States D. A. Three general strategies that health plans use for controlling types of risk are risk avoidance. Please review pages 32 and 33 of this lesson. Please review pages 31 and 33 of this lesson. Your incorrect answer: D Incorrect. and the lower the costs of avoiding that risk. -------------------------------------------------------------------------------5. and risk acceptance. Select the answer choice containing the FALSE statement. a decrease the health plan's credit risk C. The RBC formula assesses the specific level of risk faced by each health plan. the greater the likelihood that a health plan will elect to avoid the risk. the smaller the likely benefits of accepting a risk. fails to take into account a health plan's underwriting risk. A health plan is seldom able to transfer any of the risk that utilization rates will be higher than expected and that its cost of providing healthcare will exceed the revenues it receives. risk transfer. Generally. a decrease the health plan's net worth requirement D. A health plan's use of these reimbursement methods is likely to result in A. -------------------------------------------------------------------------------6. B. which is the risk that the premiums the health plan receives will be insufficient to pay for the healthcare services it provides to its plan members C. Three of these statements are true. and one statement is false.

A health plan would most likely transfer some or all of its utilization risk if it pays a provider a rate that is based on the number of plan enrollees that choose the provider as their primary care provider (PCP). Your incorrect answer: C Incorrect. Please review page 40 of this lesson. Your correct answer: B Statement B is FALSE. Your incorrect answer: A Incorrect. Plan can transfer some Risk to Providers using “Reimbursement Methods”. answer Choice is .Correct! >---------.End of the Test ----------< . D. then the health plan most likely will attempt to avoid the risk.C. Please review page 41 of this lesson. If a risk is a pure risk from the point of view of a health plan.

is attempting to work with providers in the organization in order to reduce the providers' exposure related to utilization review. laboratory technicians. Mr. and 3 1 and 2 only 1 and 3 only 2 and 3 only -------------------------------------------------------------------------------4. Select the answer choice containing the correct response. and therapists to support Dr. The following statements are about risk management in health plans. One step that Eagle could take in order to limit its exposure under the theory of vicarious liability is to supply Dr.Chapter 2 B Test 3: Risk Management in Health Plans 1. Dr. True False -------------------------------------------------------------------------------2. The Eagle health plan wants to limit the possibility that it will be held vicariously liable for the negligent acts of providers. Azari is considering advising the providers to take the following actions: 1-Allow Tower's utilization management decisions to override a physician's independent medical judgment 2-Support the development of a system that can quickly render a second opinion in case of disagreement surrounding clinical judgment 3-Inform a patient of any issues that are being disputed relative to a physician's recommended treatment plan and Tower's coverage decision Of these possible actions. Chan be responsible for keeping Dr. particularly where the health plan actually provides healthcare services or restricts the patient's/enrollee's choice of physician. the ones that are likely to reduce physicians' exposures related to utilization review include actions 1. Under the doctrine of corporate negligence. Chan's medical records updated ensure that documents provided to Dr. . Michael Chan is a member of an independent practice association (IPA) that has contracted with Eagle. Chan's patients describe him as an independent practitioner -------------------------------------------------------------------------------3. the risk manager for the Tower health plan. Chan with office space employ nurses. 2. a health plan and its physician administrators may be held directly liable to patients or providers for failing to investigate adequately the competence of healthcare providers whom it employs or with whom it contracts. Rasheed Azari.

A. employ nurses. A health plan generally structures its risk management process around loss reduction techniques and loss transfer techniques. be responsible for keeping Dr. Michael Chan is a member of an independent practice association (IPA) that has contracted with Eagle. preferred provider organizations (PPOs) typically have a higher risk than do group HMOs and staff HMOs. and therapists to support Dr. One step that Eagle could take in order to limit its exposure under the theory of vicarious liability is to A. -------------------------------------------------------------------------------Correct answers :> 1. Chan C. laboratory technicians. particularly where the health plan actually provides healthcare services or restricts the patient's/enrollee's choice of physician. Dr. 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.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. False Your correct answer: A Correct! -------------------------------------------------------------------------------2. The Eagle health plan wants to limit the possibility that it will be held vicariously liable for the negligent acts of providers. the bulk of risk in health plans is associated with a health plan's benefit administration and contracting activities. -------------------------------------------------------------------------------- . Chan's patients describe him as an independent practitioner Your correct answer: D Correct! The risk manager may wish to review documents provided to patients to ensure that the physician is described as an independent practitioner and that there is a clear distinction between those services provided by the health plan and those provided by the physician. Under the doctrine of corporate negligence. Chan's medical records updated D. True B. Although there are clear risks associated with the provision of healthcare services and coverage decisions surrounding that care. ensure that documents provided to Dr. supply Dr. Chan with office space B. a health plan and its physician administrators may be held directly liable to patients or providers for failing to investigate adequately the competence of healthcare providers whom it employs or with whom it contracts.

2. generally through the purchase of insurance). C. . Select the answer choice containing the correct response. the bulk of risk in health plans is associated with a health plan's benefit administration and contracting activities. preferred provider organizations (PPOs) typically have a higher risk than do group HMOs and staff HMOs. 1. is attempting to work with providers in the organization in order to reduce the providers' exposure related to utilization review. -------------------------------------------------------------------------------4. Although there are clear risks associated with the provision of healthcare services and coverage decisions surrounding that care.3. Azari is considering advising the providers to take the following actions: 1-Allow Tower's utilization management decisions to override a physician's independent medical judgment 2-Support the development of a system that can quickly render a second opinion in case of disagreement surrounding clinical judgment 3-Inform a patient of any issues that are being disputed relative to a physician's recommended treatment plan and Tower's coverage decision Of these possible actions. 1 and 3 only D. Your correct answer: D Correct! The risk management process is generally structured around loss reduction techniques (which include the identification of risk. 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. and the control or management of risk when it cannot be entirely eliminated) and loss transfer (techniques which include determining the economic risk associated with various types of loss and selection of the best methods either to finance risk internally or to transfer those risks to a third party. and 3 B. A health plan generally structures its risk management process around loss reduction techniques and loss transfer techniques. 2 and 3 only Your correct answer: D Correct! Physicians must exercise independent medical judgment that meets with the standard of care. 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. the risk manager for the Tower health plan. Rasheed Azari. A. the ones that are likely to reduce physicians' exposures related to utilization review include actions A. B. the elimination of risk whenever possible. Mr. Utilization management decisions should not influence the physician’s clinical decisions in any way that the physician would consider truly harmful to the patient. D. The following statements are about risk management in health plans. 1 and 2 only C.

End of the Test ----------< .>---------.

Within a market.Chapter 3 A Test 4 : Provider Reimbursement and Plan Risk 1. which imposes various documentation. which provides voluntary health insurance coverage to federal employees. One of these laws allows Atoll's plan members to receive medical services from certain specialists without first being referred to those specialists by a primary care provider (PCP). which is primarily responsible for _________. appeals. reporting. the implementation of mandated benefit laws is likely to cause __________. The Atoll Health Plan must comply with a number of laws that directly affect the plan's contracts. and dependents -------------------------------------------------------------------------------2. issuing regulations pertaining to the Health Insurance Portability and Accountability Act (HIPAA) of 1996 administering the Medicare and Medicaid programs administering ERISA. and disclosure requirements on employer group health plans administering the Federal Employees Health Benefits Program (FEHBP). is known as _________. retirees. One of these agencies is the Department of Labor (DOL). a due process law an any willing provider law a direct access law a fair procedure law -------------------------------------------------------------------------------3. Several federal agencies establish rules and requirements that affect health plans. Mandated benefit laws are state or federal laws that require health plans to arrange for the financing and delivery of particular benefits. This law. which reduces the PCP's ability to manage utilization of these specialists. a reduction in the number of self-funded healthcare plans an increase in the cost to the health plans a reduction in the size of the provider panels of health plans a reduction in the uniformity among the healthcare plans of competing health plans .

Mandated benefit laws are state or federal laws that require health plans to arrange for the financing and delivery of particular benefits. a reduction in the number of self-funded healthcare plans B. Within a market. is known as _________. A. Several federal agencies establish rules and requirements that affect health plans. an increase in the cost to the health plans C. a due process law B. -------------------------------------------------------------------------------2. A. which is primarily responsible for _________. which reduces the PCP's ability to manage utilization of these specialists. One of these agencies is the Department of Labor (DOL). administering the Federal Employees Health Benefits Program (FEHBP). This law. a direct access law D. administering the Medicare and Medicaid programs C. which provides voluntary health insurance coverage to federal employees. A. retirees. including recent amendments made by HIPAA. a fair procedure law Your correct answer: C Correct! Direct access laws are laws that allow health plan members to see certain specialists without first being referred to those specialists by a primary care provider. The Atoll Health Plan must comply with a number of laws that directly affect the plan's contracts. an any willing provider law C. administering ERISA. the implementation of mandated benefit laws is likely to cause __________. One of these laws allows Atoll's plan members to receive medical services from certain specialists without first being referred to those specialists by a primary care provider (PCP).-----------------------------------** Correct Answers ** --------------------------------------------1. reporting. a reduction in the uniformity among the healthcare plans of competing health plans . which imposes various documentation. appeals. a reduction in the size of the provider panels of health plans D. -------------------------------------------------------------------------------3. and disclosure requirements on employer group health plans D. issuing regulations pertaining to the Health Insurance Portability and Accountability Act (HIPAA) of 1996 B. and dependents Your correct answer: C Correct! The DOL is the federal agency with primary responsibility for administering the Employee Retirement Income Security Act (ERISA) of 1974.

completely eliminate service risk for Sunrise's physicians C.End of the Test ----------< Chapter 3 B Test 5 : Provider Reimbursement Methods 1. Sunrise's use of a salary reimbursement method is more likely to A.Your correct answer: B Correct! Mandated benefits increase the cost of a health plan’s health plan to the extent that the plan must cover mandated benefits that would not have been included in the plan in the absence of the law or regulation that mandates the benefits. an advantage of using RBRVS is that it puts providers who render more medical services than necessary at financial risk for this overutilization C. decrease Sunrise's liability for any negligent acts of the physicians in the plan's network of providers D. With regard to the advantages and disadvantages to Acorn of using RBRVS. The physicians who work for the Sunrise Health Plan. 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. help stabilize expenses for Sunrise Your correct answer: D Correct! Because provider reimbursement is a sizable portion of a health plan’s total costs. and at the same time stabilizes the income of the providers. are paid a salary that is not augmented with another type of incentive plan. it can correctly be stated that A. encourage Sunrise's physicians to perform services that are not medically necessary B. Compared to the use of a traditional reimbursement method. 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. -------------------------------------------------------------------------------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. salaries help to stabilize expenses for the health plan or other entity employing the providers. a staff model HMO. >---------. a disadvantage of using RBRVS is that it rewards procedural healthcare services more than cognitive healthcare services Your correct answer: A .

then the entire amount of money in the withhold is usually distributed to them. Monroe and Exmoor are equally responsible for making up the difference if cost overruns exceed the amount of money withheld B. Monroe the entire amount withheld from her if her costs are below the amount budgeted for the period C. eliminate any motivation the provider may have to engage in churning B. Caroline Monroe has with the Exmoor Health Plan includes a typical withhold arrangement. Dr. Exmoor most likely distributes to Dr. The following statements are about various reimbursement arrangements that health plans have with hospitals. Monroe at the end of the period an amount over and above her usual reimbursement. for a given financial period. and this amount is based on the performance of the plan as a whole D. Health plans sometimes use global fees to reimburse providers. Health plans would use this method of provider reimbursement for all of the following reasons EXCEPT that global fees A. The reimbursement arrangement that Dr. -------------------------------------------------------------------------------4. One true statement about this withhold arrangement is that. reward providers who deliver cost-effective care Your correct answer: A Correct! Global fee systems do not completely eliminate all motivation a provider may have to engage in churning. if the payment amount is fixed on the basis of . transfer some of the risk of overutilization of care from the health plan to the providers C. Exmoor most likely withholds between 3% and 5% of Dr. A sliding scale per-diem charges arrangement differs from a sliding scale discount on charges arrangement in that only a sliding scale per-diem charges arrangement is based on total volume of admissions and outpatient procedures. Exmoor pays Dr. Under a typical reimbursement arrangement that is based on diagnosisrelated groups (DRGs). A. eliminate the practice of upcoding within specific treatments D. Monroe's total reimbursement Your correct answer: B Correct! If providers hold costs below the amount budgeted for that period.Correct! RBRVS can be useful to a health plan that is developing reimbursement schedules for various types of providers in a comprehensive health plan. ------------------------------------------------------------------------------5. B. Select the answer choice containing the correct statement. -------------------------------------------------------------------------------3. A.

33 $9. but not diagnostic services such as laboratory tests D. physician behavior typically does not impact the utilization rates for these services B. behavior therapy. Health plans seeking to provide comprehensive healthcare plans must contract with a variety of providers for ancillary services.17 $10. A straight discount on charges arrangement is the most common reimbursement method in markets with high levels of health plans.17 $8. A negotiated straight per-diem charge requires payment of a single charge for a day in the hospital. these services include physical therapy. In order to calculate a simple monthly capitation payment. One characteristic of ancillary services is that A. package pricing is the preferred reimbursement method for ancillary service providers C. Your correct answer: C Correct! A negotiated straight per-diem charge is a single charge for a day in the hospital. Argyle would correctly calculate that the per member per month (PMPM) capitation rate should be $4. D. regardless of any actual charges or costs incurred. 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. regardless of any actual charges or costs incurred during the hospital stay.00 -------------------------------------------------------------------------------- . few plan members seek these services without first being referred to the ancillary provider by a physician Your correct answer: D Correct! One characteristic of most ancillary services that has important contractual and financial implications for a health plan is that few plan members seek these services without first being referred to the ancillary provider by a physician.diagnosis. ------------------------------------00-00---------------------------------------------------- Chapter 4 A Test 6 : Capitation in Provider Reimbursement 1. C. -------------------------------------------------------------------------------6. and home healthcare. then any reduction in costs resulting from a reduction in days will go to the health plan rather than to the hospital.

has with the Cardigan health plan states that Cardigan will compensate him under a capitation arrangement. The provider contract that Dr. Meyer under an arrangement other than capitation until a specified number of children covered by the plan use him as their PCP Both A and B A only B only Neither A nor B -------------------------------------------------------------------------------3.2. Timothy Meyer. Meyer's capitation contract with Cardigan to transfer more risk to him than the contract otherwise would transfer Specifies that Cardigan will pay Dr. Statements that can correctly be made about this arrangement include that the low enrollment guarantee provision most likely Causes Dr. the contract also includes a typical low enrollment guarantee provision. a pediatrician. One true statement about a type of capitation known as a percent-ofpremium arrangement is that this arrangement is the most common type of capitation is less attractive to providers when the arrangement sets provisions to limit risk sets provider reimbursement at a specific dollar amount per plan member transfers some of the risk associated with underwriting and rating from a health plan to a provider -------------------------------------------------------------------------------- . However.

Pfeiffer while she was hospitalized the cost of the services that the specialist performed for Ms. but will manage these services separately. the compensation that Dr. Pfeiffer and ordering several expensive diagnostic tests to determine her condition. and member services functions. a capitated amount to provide substantially all of the inpatient and outpatient services that Antler offers. Cogan referred her to a specialist for further treatment. a health plan will offer carved-out services to its enrollees. The payments cover all physician services and associated diagnostic tests and laboratory work. The following statements illustrate common forms of capitation: The Antler Health Plan pays the Epsilon Group. Zachery Cogan. Under this arrangement. Antler retains responsibility for the plan's marketing. Antler = subcapitation Bengal = full-risk capitation Antler = subcapitation Bengal = full professional capitation Antler = global capitation Bengal = subcapitation Antler = global capitation Bengal = full professional capitation -------------------------------------------------------------------------------6. Three of these statements are true. . Cogan serves as the PCP for Evelyn Pfeiffer. and one statement is false.4. Pfeiffer his visits to Ms. Typically. In this situation. In the type of carve-out in which entire categories of care are administered by independent organizations. actuarial. Dr. The provider contract that Dr. an integrated delivery system (IDS). a health plan typically reimburses these organizations under an FFS contract. After hospitalizing Ms. enrollment. Cogan receives under the PCP capitation arrangement most likely includes Neptune's payment for all of the diagnostic tests that he ordered on Ms. a Neptune plan member. Epsilon accepts much of the risk that utilization rates will be higher than expected. The physicians in the IPA determine as a group how the individual physicians will be paid for their services. Dr. select the response that best indicates the form of capitation used by Antler and Bengal. Pfeiffer all of the above -------------------------------------------------------------------------------5. Select the answer choice containing the FALSE statement. The Bengal Health Plan pays an independent physician association (IPA) a capitated amount to provide both primary and specialty care to Bengal's plan members. The following statements are about carve-out programs. From the following answer choices. premium billing. an internist. underwriting. has with the Neptune Health Plan calls for Neptune to reimburse him under a typical PCP capitation arrangement.

hospital systems. or integrated delivery systems (IDSs) that can accept global capitation payments from health plans >>> Partially Correct Answers <<<<<<<< 1. A reconciliation is the process by which a health plan assesses providers' performance relative to contractual terms and reimbursement. Marble determines the monthly payment for each specialist by dividing the number of active patients for that specialty by the total specialty pool for that month. it can correctly be stated that a reconciliation typically includes payment to the providers of any withholds or bonuses due to them a health plan typically should conduct a reconciliation immediately after the evaluation period has ended most agreements between health plans and providers require reconciliations to be performed quarterly a health 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 -------------------------------------------------------------------------------9. This form of payment. With regard to this process. -------------------------------------------------------------------------------7. or a health benefit plan. is known as referral circle capitation risk pod capitation contact capitation retrospective reimbursement capitation -------------------------------------------------------------------------------8. 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 .Carve-outs are services that are excluded from a capitation payment. In order to calculate a simple monthly capitation payment. a risk pool. the specialist begins to receive a share of those funds on a monthly basis. With regard to capitation arrangements for hospitals. which is similar to a case rate. The most rapidly growing area relaed to carve-outs is disease management (DM). When a PCP in Marble's provider network refers a Marble plan member to a specialist and the specialist provides medical services to the member. it can correctly be stated that the most common reimbursement method for hospitals is professional services capitation most jurisdictions prohibit hospitals and physicians from joining together to receive global capitations that cover institutional services provided by the hospitals a health plan typically can capitate a hospital for outpatient laboratory and X-ray services only if the health plan also capitates the hospital for inpatient care many hospitals have formed physician hospital organizations (PHOs). The Marble Health Plan sets aside a PMPM amount for each specialty.

2 X 50 (subtracting the $5 copay) divided by 100. The provider contract that Dr. and then dividing by the number of reimbursement periods per specified time period. In this example. A only C.17 B.00 Your incorrect answer: C Incorrect. Meyer's capitation contract with Cardigan to transfer more risk to him than the contract otherwise would transfer Specifies that Cardigan will pay Dr. $4. a pediatrician. However.The member copayment is $5 per office visit The reimbursement period is one month Given this information. Please review page 6 of this lesson. Argyle would correctly calculate that the per member per month (PMPM) capitation rate should be A. $10. Contractual provisions that allow capitated providers to be paid on a discounted FFS basis until the provider’s enrollment meets or exceeds a threshold number are called low-enrollment guarantees. Neither A nor B Your correct answer: C Correct! Health plans may reimburse providers on a discounted FFS basis until a threshold number of plan members designate that provider as their caregiver. Statements that can correctly be made about this arrangement include that the low enrollment guarantee provision most likely Causes Dr. B only D. -------------------------------------------------------------------------------- . $9.33 C. has with the Cardigan health plan states that Cardigan will compensate him under a capitation arrangement. *** Your correct answer: B *** Correct! Calculate a simple monthly capitation payment (or PMPM amount) by multiplying the average number of services used by a member in one year by the average fee-for-service equivalent payment per service. Timothy Meyer. the contract also includes a typical low enrollment guarantee provision. Calculate a simple monthly capitation payment (or PMPM amount) by multiplying the average number of services used by a member in one year by the average fee-for-service equivalent payment per service (subtracting the copayment). Meyer under an arrangement other than capitation until a specified number of children covered by the plan use him as their PCP A.17 D. Both A and B B. and then dividing by the number of reimbursement periods per specified time period -------------------------------------------------------------------------------2. $8.

***** Your correct answer: B **** Correct! Primary care services usually include a range of office-based services as well as physician visits to hospitalized plan members. his visits to Ms. all of the above Your incorrect answer: C Incorrect. Dr. has with the Neptune Health Plan calls for Neptune to reimburse him under a typical PCP capitation arrangement. actuarial. Your incorrect answer: D Incorrect. Please review pages 14 and 15 of this lesson. also called partial capitation. Epsilon accepts much of the risk that utilization rates will be higher than expected. a Neptune plan member. -------------------------------------------------------------------------------5. underwriting. enrollment. Cogan referred her to a specialist for further treatment. Cogan receives under the PCP capitation arrangement most likely includes Neptune's payment for A. The following statements illustrate common forms of capitation: The Antler Health Plan pays the Epsilon Group. transfers some of the risk associated with underwriting and rating from a health plan to a provider Your correct answer: D Correct! Percent-of-premium arrangements transfer some of the risk associated with underwriting and rating from the health plan to the provider. PCP capitation. Pfeiffer and ordering several expensive diagnostic tests to determine her condition. Dr. Please review page 15 of this lesson. Pfeiffer D. premium billing. In this situation. a capitated amount to provide substantially all of the inpatient and outpatient services that Antler offers. the cost of the services that the specialist performed for Ms. Pfeiffer B. is the most common type of capitation B. is a capitation payment that reimburses the provider for primary care services only. Zachery Cogan. Pfeiffer while she was hospitalized C.3. sets provider reimbursement at a specific dollar amount per plan member D. an internist. Antler retains responsibility for the plan's marketing. Please review pages 11 and 12 of this lesson. The Bengal Health Plan pays an independent physician association (IPA) a capitated amount to provide both primary and specialty care to Bengal's plan members. all of the diagnostic tests that he ordered on Ms. and member services functions. Under this arrangement. Cogan serves as the PCP for Evelyn Pfeiffer. -------------------------------------------------------------------------------4. One true statement about a type of capitation known as a percent-ofpremium arrangement is that this arrangement A. The payments cover all physician services and associated . an integrated delivery system (IDS). The provider contract that Dr. After hospitalizing Ms. the compensation that Dr. is less attractive to providers when the arrangement sets provisions to limit risk C.

diagnostic tests and laboratory work. a risk pool. B. Select the answer choice containing the FALSE statement. Antler = subcapitation Bengal = full-risk capitation B. A. select the response that best indicates the form of capitation used by Antler and Bengal. specialty. Carve-outs are services that are excluded from a capitation payment. a health plan will offer carved-out services to its enrollees. Antler = global capitation Bengal = full professional capitation Your correct answer: D Correct! Global capitation. referral circle capitation . a health plan typically reimburses these organizations under an FFS contract. The physicians in the IPA determine as a group how the individual physicians will be paid for their services. In the type of carve-out in which entire categories of care are administered by independent organizations. and one statement is false. Marble determines the monthly payment for each specialist by dividing the number of active patients for that specialty by the total specialty pool for that month. The following statements are about carve-out programs. D. Typically. -------------------------------------------------------------------------------6. or a health benefit plan. also called full-risk capitation. C. the specialist begins to receive a share of those funds on a monthly basis. Your correct answer: A Correct! -------------------------------------------------------------------------------7. is known as A. When a PCP in Marble's provider network refers a Marble plan member to a specialist and the specialist provides medical services to the member. but will manage these services separately. The Marble Health Plan sets aside a PMPM amount for each specialty. which is similar to a case rate. primary. Three of these statements are true. and ancillary services —that the health plan offers. A. Antler = subcapitation Bengal = full professional capitation C. The most rapidly growing area relaed to carve-outs is disease management (DM). is a capitation system that pays a provider organization to provide substantially all of the inpatient and outpatient services—including clinical. From the following answer choices. This form of payment. Antler = global capitation Bengal = subcapitation D.

-------------------------------------------------------------------------------9. A reconciliation is the process by which a health plan assesses providers' performance relative to contractual terms and reimbursement. to be performed at year-end. utilization calculations generally require that at least three months and possibly as much as six months have passed from the closing of the evaluation period. With regard to this process. predetermined fee once a referred patient begins to receive treatment from them for a given condition. a health 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 """ Correct Answer : A """ Your incorrect answer: B Incorrect. it can correctly be stated that A. risk pod capitation C. Please review pages 50 and 51 of this lesson. This is similar to a case rate—a flat fee paid to the provider in order to care for a patient with a given condition. a health plan typically should conduct a reconciliation immediately after the evaluation period has ended C. Your incorrect answer: C Incorrect. the most common reimbursement method for hospitals is professional services capitation B. With regard to capitation arrangements for hospitals. retrospective reimbursement capitation Your correct answer: C Correct! Contact capitation is a form of payment in which specialists receive a flat. utilization calculations generally require that at least three months and possibly as much as six months have passed from the closing of the evaluation period. contact capitation D. Please review pages 50 and 51 of this lesson. Please review page 50 of this lesson Your incorrect answer: D Incorrect. most jurisdictions prohibit hospitals and physicians from joining together to receive global capitations that cover institutional services provided by the hospitals . a reconciliation typically includes payment to the providers of any withholds or bonuses due to them B. it can correctly be stated that A.B. Most agreements call for reconciliations. or settlements. -------------------------------------------------------------------------------8. most agreements between health plans and providers require reconciliations to be performed quarterly D.

. many hospitals have formed physician hospital organizations (PHOs). a health plan typically can capitate a hospital for outpatient laboratory and X-ray services only if the health plan also capitates the hospital for inpatient care D.C. hospital systems. many hospitals form PHOs. or integrated delivery systems (IDSs) that can accept global capitation payments from health plans Your correct answer: D Correct! In the interest of maintaining their autonomy. hospital systems and integrated delivery systems that can accept global capitation payments.

$10. $4.00 Your correct answer: B Correct! Calculate a simple monthly capitation payment (or PMPM amount) by multiplying the average number of services used by a member in one year by the average fee-for-service equivalent payment per service. However. In order to calculate a simple monthly capitation payment. Argyle would correctly calculate that the per member per month (PMPM) capitation rate should be A. Contractual provisions that allow capitated providers to be paid on a discounted FFS basis until the provider’s enrollment meets or exceeds a threshold number are called low-enrollment guarantees. $8. $9. a pediatrician. Meyer's capitation contract with Cardigan to transfer more risk to him than the contract otherwise would transfer Specifies that Cardigan will pay Dr. the contract also includes a typical low enrollment guarantee provision. 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.17 D. Neither A nor B Your correct answer: C Correct! Health plans may reimburse providers on a discounted FFS basis until a threshold number of plan members designate that provider as their caregiver. B only D. Statements that can correctly be made about this arrangement include that the low enrollment guarantee provision most likely Causes Dr. has with the Cardigan health plan states that Cardigan will compensate him under a capitation arrangement.17 B.>>>>> Correct Answers <<<<<<<<<<<<< 1. and then dividing by the number of reimbursement periods per specified time period. Both A and B B. The provider contract that Dr. A only C. Timothy Meyer. -------------------------------------------------------------------------------2.33 C. -------------------------------------------------------------------------------- . Meyer under an arrangement other than capitation until a specified number of children covered by the plan use him as their PCP A.

the cost of the services that the specialist performed for Ms. his visits to Ms. Cogan receives under the PCP capitation arrangement most likely includes Neptune's payment for A. is the most common type of capitation B. a Neptune plan member. has with the Neptune Health Plan calls for Neptune to reimburse him under a typical PCP capitation arrangement. Pfeiffer while she was hospitalized C. Cogan referred her to a specialist for further treatment. -------------------------------------------------------------------------------4. is less attractive to providers when the arrangement sets provisions to limit risk C. Cogan serves as the PCP for Evelyn Pfeiffer. transfers some of the risk associated with underwriting and rating from a health plan to a provider Your correct answer: D Correct! Percent-of-premium arrangements transfer some of the risk associated with underwriting and rating from the health plan to the provider. all of the diagnostic tests that he ordered on Ms. actuarial. The following statements illustrate common forms of capitation: The Antler Health Plan pays the Epsilon Group. One true statement about a type of capitation known as a percent-ofpremium arrangement is that this arrangement A. a capitated amount to provide substantially all of the inpatient and outpatient services that Antler offers. The provider contract that Dr. Antler retains responsibility for the plan's marketing. all of the above Your correct answer: B Correct! Primary care services usually include a range of office-based services as well as physician visits to hospitalized plan members. an internist. The physicians in the IPA determine as a group how the individual physicians will be paid for their services. underwriting. Pfeiffer B. In this situation. Pfeiffer D. The Bengal Health Plan pays an independent physician association (IPA) a capitated amount to provide both primary and specialty care to Bengal's plan members. . premium billing. Dr. The payments cover all physician services and associated diagnostic tests and laboratory work. -------------------------------------------------------------------------------5. After hospitalizing Ms. Zachery Cogan. and member services functions. an integrated delivery system (IDS).3. Dr. the compensation that Dr. sets provider reimbursement at a specific dollar amount per plan member D. enrollment. Pfeiffer and ordering several expensive diagnostic tests to determine her condition. Under this arrangement. Epsilon accepts much of the risk that utilization rates will be higher than expected. Please review pages 11 and 12 of this lesson.

C. a risk pool. risk pod capitation C. Three of these statements are true. In the type of carve-out in which entire categories of care are administered by independent organizations. A. is known as A. which is similar to a case rate. This form of payment. a health plan typically reimburses these organizations under an FFS contract.From the following answer choices. Antler = subcapitation Bengal = full professional capitation C. When a PCP in Marble's provider network refers a Marble plan member to a specialist and the specialist provides medical services to the member. Antler = subcapitation Bengal = full-risk capitation B. Your correct answer: A Correct! -------------------------------------------------------------------------------7. The following statements are about carve-out programs. -------------------------------------------------------------------------------6. retrospective reimbursement capitation . Select the answer choice containing the FALSE statement. is a capitation system that pays a provider organization to provide substantially all of the inpatient and outpatient services—including clinical. Antler = global capitation Bengal = subcapitation D. A. but will manage these services separately. The most rapidly growing area relaed to carve-outs is disease management (DM). a health plan will offer carved-out services to its enrollees. Typically. and ancillary services —that the health plan offers. The Marble Health Plan sets aside a PMPM amount for each specialty. D. Carve-outs are services that are excluded from a capitation payment. select the response that best indicates the form of capitation used by Antler and Bengal. B. or a health benefit plan. Marble determines the monthly payment for each specialist by dividing the number of active patients for that specialty by the total specialty pool for that month. specialty. and one statement is false. primary. Antler = global capitation Bengal = full professional capitation Your correct answer: D Correct! Global capitation. the specialist begins to receive a share of those funds on a monthly basis. also called full-risk capitation. referral circle capitation B. contact capitation D.

Your correct answer: C Correct! Contact capitation is a form of payment in which specialists receive a flat. it can correctly be stated that A. predetermined fee once a referred patient begins to receive treatment from them for a given condition. -------------------------------------------------------------------------------8. With regard to capitation arrangements for hospitals. or integrated delivery systems (IDSs) that can accept global capitation payments from health plans Your correct answer: D Correct! In the interest of maintaining their autonomy. . many hospitals have formed physician hospital organizations (PHOs). reconciliation includes a reconciliation of any surpluses or losses against monies withheld. many hospitals form PHOs. a health plan typically can capitate a hospital for outpatient laboratory and X-ray services only if the health plan also capitates the hospital for inpatient care D. a reconciliation typically includes payment to the providers of any withholds or bonuses due to them B. With regard to this process. most agreements between health plans and providers require reconciliations to be performed quarterly D. This is similar to a case rate—a flat fee paid to the provider in order to care for a patient with a given condition. it can correctly be stated that A. most jurisdictions prohibit hospitals and physicians from joining together to receive global capitations that cover institutional services provided by the hospitals C. hospital systems and integrated delivery systems that can accept global capitation payments. hospital systems. a health plan typically should conduct a reconciliation immediately after the evaluation period has ended C. A reconciliation is the process by which a health plan assesses providers' performance relative to contractual terms and reimbursement. a health 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 Your correct answer: A Correct! Typically. -------------------------------------------------------------------------------9. the most common reimbursement method for hospitals is professional services capitation B.

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The Newfeld Hospital has contracted with the Azalea Health Plan to provide inpatient services to Azalea's enrolled members. the attachment point is $20.000 C. The Newfeld Hospital has contracted with the Azalea Health Plan to provide inpatient services to Azalea's enrolled members. The Sanford Group. The contract calls for Azalea to provide specific stop-loss coverage to Newfeld once Newfeld's treatment costs reach $20. $34. the shared-risk corridor is between $0 and $70.000. Azalea reimburses the hospital for all subsequent treatment costs. $20. After Newfeld's treatment costs on a case reach $70. One true statement about this specific stop-loss coverage is that A. -------------------------------------------------------------------------------2. The maximum amount for which Newfeld is at risk for any one Azalea plan member's treatment costs is A.Chapter 4 B Test 7 : Risk Transfer in Health Plans 1.000 of expenses for this case. this coverage can also be activated when the total covered medical expenses generated by the hospitalizations of Azalea plan members reach a specified level Your correct answer: B Correct! The attachment point is the loss amount that must occur before the stop-loss coverage begins to cover any expenses. a provider group.000 D. the carrier is Newfeld B.000 -------------------------------------------------------------------------------3. entered into a risk contract with a health plan. $10.000 B.000 Your correct answer: C Correct! . The contract calls for Azalea to provide specific stop-loss coverage to Newfeld once Newfeld's treatment costs reach $20.000 D.000. $30. plus 20% of $50. After Newfeld's treatment costs on a case reach $70. $14.000.000 of expenses for this case.000 per case and for Newfeld to pay 20% of the next $50. Azalea reimburses the hospital for all subsequent treatment costs.000= $30.000 per case and for Newfeld to pay 20% of the next $50.000 C. Sanford has purchased aggregate stop-loss coverage with an .

Sanford has a copayment of 10% for any costs above the attachment point.000 – 2.000 (10% over the attachment point of 2. A stop-loss contract may provide that claims are settled using a paid claims method or an incurred claims method.000 10% of 50.000 -------------------------------------------------------------------------------4. both the paid claims method and the incurred claims method B. according to the terms of the aggregate stop-loss agreement.000 = 2. $2.000. the paid claims method but not the incurred claims method C.000. then.000 = 5. $2. 2. The term of the stop-loss contract ended on April-01 This information indicates that the stop-loss carrier is responsible for paying a portion of the cost of the surgery under A.300. Please review page 13 of this lesson. The Concord Company provides health coverage to its employees through a self-funded health plan. Concord paid the medical expenses associated with the surgery. and the surgery was sufficiently expensive to trigger Concord's specific stop-loss coverage.000 = 50.300. On March 17.080.350.000 for the year.000.800.000 Difference 2.000.300. the stop-loss carrier is not liable to the policyholder for that claim. $2. Until the policyholder pays the claim.000 Your incorrect answer: B Incorrect. $2.) Please review pages 7-8 of this lesson.000 plus 10% of $50.800.000 D.attachment point of 115% of the group's predicted healthcare costs of $2. If Sanford's actual costs for the year are $2.000 C. the incurred claims method but not the paid claims method D.000 B.380. :Correct Answer C : Paid Claim > Date when Claim was Paid Incurred Claim > Date when Claim was incurred = Service Date. neither the paid claims method nor the incurred claims method Your incorrect answer: A Incorrect.300. On April 10.350. a Concord employee who is enrolled in this plan underwent surgery. Correct Answer C 115% of 2. the amount that Sanford is responsible for is A. -------------------------------------------------------------------------------- .300.000 Total =2.

Please review page 27 of this lesson. Although the decrease in underwriting risk is always greater than the increase in affiliate risk. A. Determine which word in each pair correctly completes the statement. the same stop-loss coverage will increase the health plan’s affiliate risk. the same stop-loss coverage will increase the health plan’s affiliate risk. Recall that affiliate risk is the risk that the financial condition of an affiliated entity (in this case. the lower the health plan’s affiliate risk. The sentence below contains two pairs of words enclosed in parentheses. increases / increases B. True B. Although purchasing stop-loss coverage reduces a health plan’s underwriting risk. the health plan1’s capital). Correct Answer C: Although purchasing stop-loss coverage reduces a health plan’s underwriting risk. False Your correct answer: A Correct! -------------------------------------------------------------------------------6.5. The greater the financial strength of the stop-loss carrier. . increases / reduces C. Then select the answer choice containing the two words that you have chosen. A. reduces / increases D. reduces / reduces Your incorrect answer: D Incorrect. the increasing affiliate risk is part of the cost of securing stop-loss coverage. the stop-loss carrier) will cause an adverse change in capital (in this case. A health plan that capitates a provider group typically provides or offers to provide stop-loss coverage to that provider group. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan’s affiliate risk.

000 of expenses for this case.000 of expenses for this case. this coverage can also be activated when the total covered medical expenses generated by the hospitalizations of Azalea plan members reach a specified level Your correct answer: B Correct! The attachment point is the loss amount that must occur before the stop-loss coverage begins to cover any expenses. Azalea reimburses the hospital for all subsequent treatment costs. $10. the attachment point is $20. After Newfeld's treatment costs on a case reach $70. $30. $20.000 D. After Newfeld's treatment costs on a case reach $70. Azalea reimburses the hospital for all subsequent treatment costs.>> Correct Answers << Chapter 4 B Test 7 : Risk Transfer in Health Plans 1.000 per case and for Newfeld to pay 20% of the next $50. the shared-risk corridor is between $0 and $70. One true statement about this specific stop-loss coverage is that A. the carrier is Newfeld B. 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. The maximum amount for which Newfeld is at risk for any one Azalea plan member's treatment costs is A.000 D.000 B.000 Your correct answer: C Correct! .000 C.000.000. The contract calls for Azalea to provide specific stop-loss coverage to Newfeld once Newfeld's treatment costs reach $20.000= $30. The Newfeld Hospital has contracted with the Azalea Health Plan to provide inpatient services to Azalea's enrolled members.000 -------------------------------------------------------------------------------- . plus 20% of $50. $14. $34. -------------------------------------------------------------------------------2.000 C.000.

$2. If Sanford's actual costs for the year are $2. both the paid claims method and the incurred claims method B.000 (10% over the attachment point of 2. True B. A stop-loss contract may provide that claims are settled using a paid claims method or an incurred claims method.000 Your correct answer: C Correct! 2. False Your correct answer: A Correct! -------------------------------------------------------------------------------- .380.000 D. On March 17.800. A. On April 10. Concord paid the medical expenses associated with the surgery.000 B. a Concord employee who is enrolled in this plan underwent surgery. The Sanford Group. Sanford has a copayment of 10% for any costs above the attachment point.350. a provider group. entered into a risk contract with a health plan. the amount that Sanford is responsible for is A.000 for the year.000.3. $2. then. Sanford has purchased aggregate stop-loss coverage with an attachment point of 115% of the group's predicted healthcare costs of $2. This information indicates that the stop-loss carrier is responsible for paying a portion of the cost of the surgery under A. The Concord Company provides health coverage to its employees through a self-funded health plan. The term of the stop-loss contract ended on April 1.000 C. the incurred claims method but not the paid claims method D. $2.000 plus 10% of $50.) -------------------------------------------------------------------------------4. $2. A health plan that capitates a provider group typically provides or offers to provide stop-loss coverage to that provider group. the stop-loss carrier is obligated to make payments on the applicable claims as of the date the medical expense was incurred. according to the terms of the aggregate stop-loss agreement. neither the paid claims method nor the incurred claims method Your correct answer: C Correct! Under the incurred claims method. the paid claims method but not the incurred claims method C. -------------------------------------------------------------------------------5.000.300.300. and the surgery was sufficiently expensive to trigger Concord's specific stop-loss coverage.300.080.000.

A. The sentence below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. the same stop-loss coverage will increase the health plan’s affiliate risk. Then select the answer choice containing the two words that you have chosen. reduces / reduces Your correct answer: C Correct! Although purchasing stop-loss coverage reduces a health plan’s underwriting risk. increases / increases B. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan’s affiliate risk. reduces / increases D. -------------------------------------------------------------------------------- .6. increases / reduces C.

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