ahm 530 questions and problems from text

1. The provider contract that the Canyon health plan has with Dr. Nicole Enberg specifies that she cannot sue or file any claims against a Canyon plan member for covered services, even if Canyon becomes insolvent or fails to meet its financial obligations. The contract also specifies that Canyon will compensate her under a typical discounted fee-for-service (DFFS) payment system.

During its recredentialing of Dr. Enberg, Canyon developed a report that helped the health plan determine how well she met Canyon's standards. The report included cumulative performance data for Dr. Enberg and encompassed all measurable aspects of her performance. This report included such information as the number of hospital admissions Dr. Enberg had and the number of referrals she made outside of Canyon's provider network during a specified period. Canyon also used process measures, structural measures, and outcomes measures to evaluate Dr. Enberg's performance.

The report that helped Canyon determine how well Dr. Enberg met the health plan's standards is known as:

an encounter report

an external standards report

a provider profile

an access to care report

A: Incorrect. Capitated providers send a health plan encounter forms in order to supply the health plan with information about members' healthcare visits, diagnoses, treatments, and plans for follow-up care. Capitated providers do not submit claims.

B: Incorrect. In applying performance measures, a health plan determines the provider's actual performance on the particular activity and then compares that performance to the standard or expected level of performance, specified in the measure. Standards can be developed internally or externally. External standards are based on outside information such as published industry-wide averages or the best practices of recognized industry leaders.

C: Correct. A provider profile focuses on patterns of a provider's care rather than on the provider's specific clinical decisions; it expresses those patterns as a rate or measure of resource use during a defined period. A provider profile for a PCP might also include an assessment of the average wait time to schedule routine physical examinations, the percentage compliance with practice guidelines, and the level of member satisfaction with the provider's service.

D: Incorrect. Health plans conduct access to care surveys to measure members' ability to obtain satisfactory medical care on a timely basis.

2. The following statements are about the organization of network management functions of health plans. Select the answer choice containing the correct response:

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Compared to a large health plan, a small health plan typically has more integration among its network management activities and less specialization of roles. It is usually more efficient to have a large health plan's provider relations representatives located in the health plan's corporate headquarters rather than based in regional locations that are close to the provider offices the representatives cover. An health plan's provider relations representatives are usually responsible for conducting an initial orientation of providers and educating providers about health plan developments, rather than recruiting and assisting with the selection of new providers. In general, a health plan that uses a centralized approach for some of its network management activities should not use a decentralized approach for other network management activities.

A : Correct. The organizational structure of the network management function often varies according to the size and the geographic scope of the health plan. The network management directors of small plans are more likely to be involved in day-to-day network management activities, such as recruiting, contracting, and providing performance feedback to providers. Larger health plans may have separate network management staffs for different types of providers.

B : Incorrect. It is usually more efficient to have the field staff based in regional locations that are close to the offices they cover, rather than in the health plan's corporate headquarters. Regional locations make it possible for a representative to call on providers in person and visit many offices in a given day.

C : Incorrect. Provider relations representatives are usually responsible for recruiting and assisting with the selection of new providers, evaluating a provider's medical practice set-up, and rendering provider services. They also conduct initial orientation of the provider and staff, as well as educate providers about health plan developments. In some health plans, provider relations representatives also participate in profiling.

D : Incorrect. A health plan that has multiple offices within its service area may decentralize some or all network management activities. In many cases, the health plan uses a centralized approach for some activities while decentralizing other functions.

3. The following activities are the responsibility of either the Nova Health Plan's risk management department or its medical management department:

A. Protecting Nova's members against harm from medical care

B. Improving the overall health status of Nova members by coordinating care across individual episodes of care and the different providers who treat the member

C. Protecting Nova against financial loss associated with the delivery of healthcare

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D. Establishing outreach programs to encourage the use of preventive health services by Nova's members

Of these activities, the ones that are more likely to be the responsibility of Nova's risk management department rather than its medical management department are activities:

A, B, and C

A, C, and D

A and C

B and D

A: Incorrect. Risk management includes all of the activities that a health plan takes to protect the plan against financial loss associated with the delivery of healthcare services and to protect its members against harm from medical care. Medical management encompasses all of the activities that a health plan and its providers engage in to maintain or improve quality service levels, meet budget projections for medical services, and respond to accreditation and regulatory requirements. Action B is likely to be a responsibility of Nova's medical management department. B: Incorrect. Risk management includes all of the activities that a health plan takes to protect the plan against financial loss associated with the delivery of healthcare services and to protect its members against harm from medical care. Medical management encompasses all of the activities that a health plan and its providers engage in to maintain or improve quality service levels, meet budget projections for medical services, and respond to accreditation and regulatory requirements. Action D is likely to be a responsibility of Nova's medical management department.

C: Correct. Risk management includes all of the activities that a health plan takes to protect the plan against financial loss associated with the delivery of healthcare services and to protect its members against harm from medical care. Medical management encompasses all of the activities that a health plan and its providers engage in to maintain or improve quality service levels, meet budget projections for medical services, and respond to accreditation and regulatory requirements.

D: Incorrect. Risk management includes all of the activities that a health plan takes to protect the plan against financial loss associated with the delivery of healthcare services and to protect its members against harm from medical care. Medical management encompasses all of the activities that a health plan and its providers engage in to maintain or improve quality service levels, meet budget projections for medical services, and respond to accreditation and regulatory requirements. Actions B and D are likely to be responsibilities of Nova's medical management department, while Actions A and C are likely to be responsibilities of Nova's risk management department.

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4. One true statement about the Employee Retirement Income Security Act of 1974 (ERISA) is that:

ERISA applies to all issuers of health insurance products, such as HMOs

pension plans and employee welfare plans are exempt from any regulation under ERISA ERISA requires self-funded plans to comply with all state mandates affecting health insurance companies and health plans the terms of ERISA generally take precedence over any state laws that regulate employee welfare benefit plans

A: Incorrect. While ERISA does not apply to issuers of health insurance products, most nongovernmental employer plans that include healthcare benefits for employees (including those provided through health plans) fall under ERISA and are therefore subject to its provisions.

B: Incorrect. ERISA is a federal statute designed to ensure the proper funding and administrative management of pension and employee welfare plans.

C: Incorrect. State laws continue to regulate the business of insurance, and these laws apply to employee welfare plans if the plans are insured. Self-funded plans are generally exempt from state mandates otherwise affecting health insurance companies and health plans.

D: Correct. From a health plan and network management perspective, the most significant aspect of ERISA is its preemption provision, which means that the terms of ERISA generally take precedence over any state laws that regulate employee welfare benefit plans.

5. Not clear from Page 39

A: Incorrect. HIPAA specifies that a group health plan may not deny coverage or discriminate against individuals based on their health status.

B: Incorrect. One provision of HIPAA is that it limits the exclusion period for pre-existing conditions to a maximum of 12 months after enrollment (18 months for late enrollees).

C: Correct. Creditable coverage includes previous coverage under a group health plan, health insurance policy, or benefit program provided by the federal or state government.

D: Incorrect. Congress amended HIPAA to include federal requirements relating to mental health benefits and the minimum length of stay for maternity cases. However, these provisions do not mandate coverage of mental health or maternity

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services; instead, they specify certain rules that a health plan must follow if it offers such coverage

6. The Adobe Health Plan complies with all of the provisions of the Newborns' and Mothers' Health Protection Act (NMHPA) of 1996. Kristen Netzger, an Adobe enrollee, was hospitalized for a cesarean delivery. Amy Davis, also an Adobe enrollee, was hospitalized for a normal delivery. From the following answer choices, select the response that indicates the minimum length of time for which Adobe, under NMHPA, most likely must provide benefits for the hospitalizations of Ms. Netzger and Ms. Davis.

Ms. Netzger = 48 hoursMs. Davis = 48 hours Ms. Netzger = 72 hoursMs. Davis = 72 hours Ms. Netzger = 96 hoursMs. Davis = 48 hours Ms. Netzger = 96 hoursMs. Davis = 72 hours

A: Incorrect. The NMHPA mandates that coverage for hospital stays for childbirth cannot generally be less than 48 hours for normal deliveries or less than 96 hours for cesarean births.B: Incorrect. The NMHPA mandates that coverage for hospital stays for childbirth cannot generally be less than 48 hours for normal deliveries or less than 96 hours for cesarean births.C: Correct. The NMHPA mandates that coverage for hospital stays for childbirth cannot generally be less than 48 hours for normal deliveries or less than 96 hours for cesarean births. Note that NMHPA does not mandate coverage of maternity services. Instead, it specifies certain rules that a health plan must follow if it offers such coverage.D: Incorrect. The NMHPA mandates that coverage for hospital stays for childbirth cannot generally be less than 48 hours for normal deliveries or less than 96 hours for cesarean births.

7. The following situations illustrate violations of federal antitrust laws:

Situation A Two HMOs split a large employer group by agreeing to let one HMO market to some company employees and to let the second HMO market to different company employees.

Situation B Members of a physician-hospital organization (PHO) that has significant market share jointly agreed to exclude a physician from joining the PHO solely because that physician has admitting privileges at a competing hospital.

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From the following answer choices, select the response that best identifies the types of violations illustrated by these situations:

Situation A: horizontal division of territories; Situation B: group boycott

Situation A: horizontal division of territories; Situation B: exclusive arrangement

Situation A: exclusive arrangement; Situation B: group boycott

Situation A: exclusive arrangement; Situation B: tying arrangement

A: Correct. Horizontal division of territories involves competitors illegally agreeing to divide territories or customers. In group boycotts, competitors with significant market share agree to exclude other existing or potential competitors.B: Incorrect. Horizontal division of territories involves competitors illegally agreeing to divide territories or customers. Situation A is an example of horizontal division of territories. Exclusive arrangements prohibit providers from participating in more than one provider network. Exclusive arrangements, which are common among HMOs, are generally permitted, but they could represent a restraint of trade if the health plan has substantial market share. Situation B is not an example of an exclusive arrangement.C: Incorrect. Exclusive arrangements prohibit providers from participating in more than one provider network. Exclusive arrangements, which are common among HMOs, are generally permitted, but they could represent a restraint of trade if the health plan has substantial market share. Situation A is not an example of an exclusive arrangement. In group boycotts, competitors with significant market share agree to exclude other existing or potential competitors. Situation B is an example of a group boycott.D; Incorrect. Exclusive arrangements prohibit providers from participating in more than one provider network. Exclusive arrangements, which are common among HMOs, are generally permitted, but they could represent a restraint of trade if the health plan has substantial market share. Situation A is not an example of an exclusive arrangement. Under a tying arrangement, the purchase of one product or service is tied to the purchase of another product or service. For example, it is unlawful for an integrated delivery system (IDS) to agree to provide specialty services to a health plan only on condition that the health plan agree to contract with the IDS for other services. Situation B is not an example of a tying arrangement.

8. If a member of the Green Health Plan reasonably believes that a provider in Green's provider network was acting as Green's employee or agent while providing negligent care, then the member may have cause to bring action against the health plan. This legal concept is known as vicarious liability. Steps that Green can take to reduce its exposure to vicarious liability claims include:

placing restrictions on provider-member communication involving treatment decisions.

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implementing risk management and quality assurance programs for its provider network. including in its provider agreements and marketing and membership literature a statement that members of the Green provider network are not independent contractors. all of the above.

A Incorrect. Health plan provider agreements should avoid placing restrictions on provider-member communication involving treatment decisions and should allow for arbitration or other alternative dispute resolution procedures.B Correct. Other steps that help a health plan reduce its exposure to vicarious liability include maintaining adequate malpractice insurance and establishing procedures to assess the qualifications and clinical competence of participating providers.C Incorrect. Health plan provider agreements should specifically state that the practitioner or provider is an independent contractor, and the health plan's marketing and membership literature should reemphasize this point.D Incorrect. Two of the three answer choices above are incorrect.

9. The Tuba Health Plan recently underwent an accreditation process under a program known as Accreditation '99, which includes selected Health Employer Data and Information Set (HEDIS) measures. Under Accreditation '99, Tuba received a rating of Excellent. The following statement(s) can correctly be made about this quality assessment of Tuba's operations:

A. In arriving at its rating of Excellent for Tuba, the Accreditation '99 program most likely focused on Tuba's demonstrated results and evaluated the processes that Tuba used to achieve those results.

B. Tuba is required to report all HEDIS results to the NAIC.

Both A and B

A only

B only

Neither A nor B

A: Incorrect. Statement A is a correct statement. Statement B is incorrect because health plans VOLUNTARILY report HEDIS results to the NCQA, not the NAIC.

B: Correct. Statement A is a correct statement. The NCQA has integrated its health plan accreditation process with select HEDIS measures into a new program called Accreditation '99. This new program emphasizes demonstrated results (or performance) and evaluates the process health plans use to achieve those results.

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Statement B is incorrect because health plans VOLUNTARILY report HEDIS results to the NCQA, not the NAIC.C: Incorrect. Statement A is a correct statement. The NCQA has integrated its health plan accreditation process with select HEDIS measures into a new program called Accreditation '99. This new program emphasizes demonstrated results (or performance) and evaluates the process health plans use to achieve those results. Statement B is incorrect because health plans VOLUNTARILY report HEDIS results to the NCQA, not the NAIC

D; Incorrect. Statement A is a correct statement. The NCQA has integrated its health plan accreditation process with select HEDIS measures into a new program called Accreditation '99. This new program emphasizes demonstrated results (or performance) and evaluates the process health plans use to achieve those results. Statement B is an incorrect statement.

10 Following statements are about accreditation of health plans:

The National Committee for Quality Assurance (NCQA) serves as the primary accrediting agency for most health maintenance organizations (HMOs). The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has developed standards that can be used for the accreditation of hospitals, but not for the accreditation of health plan provider networks or health plan plans. States are required to adopt the model standards developed by the National Association of Insurance Commissioners (NAIC), an organization of state insurance regulators that develops standards to promote uniformity in insurance regulations. Accreditation is an evaluative process in which a health plan undergoes an examination of its operating procedures to determine whether the procedures meet designated criteria as defined by the federal government or by the state governments.

A Correct. The NCQA serves as the primary accrediting agency for most HMOs and similar health plans, managed behavioral health organizations (MBHOs), and credentials verification organizations (CVOs).

B Incorrect. Best known for its accreditation of hospitals, JCAHO has also developed standards for accrediting health plan provider networks and health plan plans, psychiatric and long-term care facilities, substance abuse programs, and home care organizations.

C Incorrect. The NAIC develops model standards to encourage uniformity in insurance regulation. Although states are not required to adopt NAIC model standards, the majority of states have enacted the original NAIC 1972 HMO Model Act or have developed their own statutes based on the Model Act.

D Incorrect. Accreditation is an evaluative process in which a healthcare organization undergoes an examination of its operating procedures to determine whether the procedures meet designated criteria as defined by the ACCREDITING BODY and to ensure that the organization meets a specified level of quality.

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11. Factors that are likely to indicate increased health plan market maturity include:

increased consolidation among health plans.

increased rate of growth in health plan premium levels.

a reduction in the market penetration of HMO and point-of-service (POS) products.

a reduction in the frequency of performance-based reimbursement of providers.

A: Correct. Increased health plan market maturity is indicated by a number of factors, including increased consolidation among health plans, increased formation of provider organizations, and increases in the level of outcomes management.

B: Incorrect. Increase health plan market maturity is likely to be indicated by a REDUCTION in the rate of growth in health plan premium levels.

C: Incorrect. Increased health plan market maturity is likely to be indicated by INCREASED market penetration of HMO and POS products.

D: Incorrect. Increased health plan market maturity is likely to be indicated by INCREASES in the frequency of performance-based reimbursement for providers.

12. The following statements describe two types of HMOs:

← The Elm HMO requires its members to select a PCP but allows the members to go to any other provider on its panel without a referral from the PCP.

← The Treble HMO does not require its members to select a PCP. Treble allows its members to go to any doctor, healthcare professional, or facility that is on its panel without a referral from a primary care doctor. However, care outside of Treble's network is not reimbursed unless the provider obtains advance approval from the HMO.

Both HMOs use delegation to transfer certain functions to other organizations. Following the guidelines established by the NCQA, Elm delegated its credentialing activities to the Newnan Group, and the agreement between Elm and Newnan lists the responsibilities of both parties under the agreement. Treble delegated utilization management (UM) to an IPA. The IPA then transferred the authority for case management to the Quest Group, an organization that specializes in case management.

Both HMOs also offer pharmacy benefits. Elm calculates its drug costs according to a pricing system that requires establishing a purchasing profile for each pharmacy and basing reimbursement on the profile. Treble and the Manor Pharmaceutical Group have an arrangement that requires the use of a typical maximum allowable cost (MAC) pricing system to calculate generic drug costs under Treble's pharmacy program. The following statements describe generic drugs prescribed for Treble plan members who are covered by Treble's pharmacy benefits:

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← The MAC list for Drug A specifies a cost of 12 cents per tablet, but Manor pays 14 cents per tablet for this drug.

← The MAC list for Drug B specifies a cost of 7 cents per tablet, but Manor pays 5 cents per tablet for this drug.

From the following answer choices, select the response that best identifies Elm and Treble:

Elm: open access (OA) HMOTreble: direct access HMO Elm: open access (OA) HMOTreble: gatekeeper HMO Elm: direct access HMOTreble: open access (OA) HMO Elm: direct access HMOTreble: gatekeeper HMO

A Incorrect. Open access HMOs do not require the member to select a PCP. Plan members can go to any doctor, healthcare professional, or facility that is on the HMO panel without a referral from a primary care doctor, but care received outside the HMO network is not reimbursed unless the provider obtains advance approval from the HMO. Elm is not best identified as an open access HMO. In a direct access HMO, the member must select a PCP but is allowed to go to any other provider on the HMO panel without a referral from the PCP. Treble is not best identified as a direct access HMO.

B Incorrect. Open access HMOs do not require the member to select a PCP. Plan members can go to any doctor, healthcare professional, or facility that is on the HMO panel without a referral from a primary care doctor but care received outside the HMO network is not reimbursed unless the provider obtains advance approval from the HMO. Elm is not best identified as an open access HMO. A gatekeeper HMO requires each HMO member to select a PCP to be the primary manager of the member's care, as well as to begin each episode of care with the PCP. If the patient self-refers to a specialty physician, another professional, or facility, the HMO usually will not reimburse the provider or the member for the care. Treble is not a gatekeeper HMO.

C Correct. In a direct access HMO, the member must select a PCP but is allowed to go to any other provider on the HMO panel without a referral from the PCP. Open access HMOs do not require the member to select a PCP. This type of plan allows the member to go to any doctor, healthcare professional, or facility that is on the HMO panel without a referral from a primary care doctor, but care received outside the HMO network is not reimbursed unless the provider obtains advance approval from the HMO.

D Incorrect. Elm is a direct access HMO. A gatekeeper HMO requires each HMO member to select a PCP to be the primary manager of the member's care, as well as to begin each episode of care with the PCP. If the patient self-refers to a specialty physician, another professional, or facility, the HMO usually will not

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reimburse the provider or the member for the care. Treble is not a gatekeeper HMO.

13. With regard to the laws and regulations on access and adequacy of provider networks, it can correctly be stated that:

most access and adequacy guidelines relate to preferred provider organizations (PPOs) or managed indemnity products corporate practice of medicine laws require staff model HMOs to hire physicians directly, even if the physicians do not own the HMO any willing provider laws prevent a health plan from making exclusive or semi-exclusive arrangements with a provider or a group of providers the NAIC Managed Care Plan Network Adequacy Model Act requires states to use provider-enrollee ratios as the sole measure of network adequacy

A Incorrect. Most of these access and adequacy guidelines relate to HMO and point-of-service (POS) products, rather than to PPOs or managed indemnity products

B Incorrect. Corporate practice of medicine laws generally restrict business corporations from practicing medicine through licensed employees or prohibit business corporations from obtaining profits from the provision of physician professional services. Where they exist, these laws restrict the ability of staff model HMOs to hire physicians directly, unless physicians own the HMO.

C Correct. Any willing provider laws require health plans to allow any provider who is willing to meet the terms and conditions of the health plan's contract to participate in the plan.

D Incorrect. This model act allows states the option of measuring network adequacy by provider-enrollee ratios, geographic accessibility, appointment waiting times, hours of operation, and the volume of technological and specialty services available in the plan's service area.

14. The actual number of providers included in a provider network can be based on staffing ratios. One true statement about staffing ratios is that, typically:

a small health plan needs fewer physicians per 1,000 than does a large plan.

a closely managed health plan requires fewer providers than does a loosely managed plan. physician-to-enrollee ratios can be used directly only by network-within-a-network model HMOs. Medicare products require fewer providers than do employer-sponsored plans of the same size.

A Incorrect. A small health plan typically needs more physicians per 1,000 enrollees than does a large plan (one with more than 80,000 members) because larger plans typically benefit from economies of scale and scheduling efficiencies.

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B Correct. Staffing ratios relate the number of providers in a plan's network to the number of enrollees in the plan. In general, a closely managed health plan, such as an HMO, requires fewer providers than does a loosely managed plan. The specific ratio the health plan uses depends on the demographics and needs of the patient population and on regulatory requirements.

C Incorrect. A network-within-a-network approach includes the providers from one product's panel in the network of another panel. Physician-to-enrollee ratios can be used directly only by staff or captive group model HMOs where all of the resources of the health plan are dedicated to the service of the health plan's members.

D Incorrect. Because Medicare and Medicaid populations utilize healthcare services to a greater extent than the general population, Medicare and Medicaid products require more providers than do employer-sponsored plans of the same size.

15. Assume that the national average cost per covered employee for PPO rental networks is $3 per member per month (PMPM) and that the average monthly healthcare premium PMPM is $300. This information indicates that, if the number of health plan members is 10,000, then the annual network rental cost to the health plan would be:

$30,000

$360,000

$9,000,000

$12,000,000

A: Incorrect. By multiplying the network rental cost per member by the estimated number of plan members, the health plan can determine the overall cost of renting the network. This answer choice was derived by multiplying $3 x 10,000, without multiplying by 12 to get the ANNUAL network rental cost.

B: Correct. By multiplying the network rental cost per member by the estimated number of plan members, the health plan can determine the overall cost of renting the network. [$3 x 10,000 x 12 = $360,000]

C : Incorrect. By multiplying the network rental cost per member by the estimated number of plan members, the health plan can determine the overall cost of renting the network. This answer choice was derived by multiplying ($3 x 10,000) by $300, the average monthly healthcare premium PMPM, rather than by 12, to get the ANNUAL network rental cost.

D : Incorrect. By multiplying the network rental cost per member by the estimated number of plan members, the health plan can determine the overall cost of renting

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the network. The annual network rental cost can correctly be calculated by multiplying ($3 x 10,000) by 12.

16. The following statements are about the delegation of network management activities from a health plan to another party. Three of the statements are true and one statement is false. Select the answer choice containing the FALSE statement:

The NCQA requires a health plan to conduct all delegation oversight functions rather than delegating the responsibility for oversight to another entity. Credentialing and UM activities are the most frequently delegated functions, whereas delegation is less common for quality management (QM) and preventive health services. One reason that a health plan may choose to delegate a function is because the health plan's staff seeks external expertise for the delegated activity. When the health plan delegates authority for a function, it transfers the power to conduct the function on a day-to-day basis, as well as the ultimate accountability for the function.

A Incorrect. This is a true statement. The NCQA allows health plans to delegate authority for almost all functions. However, one important NCQA limitation on delegation is that the health plan itself must conduct all delegation oversight functions rather than delegating the responsibility for oversight to another entity.

B Incorrect. This is a true statement. Credentialing and utilization management activities are the most frequently delegated functions. Member services and medical records review functions are also commonly delegated. Delegation is less common for quality management and preventive health services, possibly due to the more complex processes required for these activities.

C Incorrect. This is a true statement. Other reasons why a health plan might choose to delegate a function include that the health plan does not want to dedicate internal resources to perform the delegated activity, as well as that the health plan realizes its current information system cannot handle the demands of a particular function.

D Correct. This is a false statement. Accountability is the process by which one party is required to justify its actions and policies to another party. When a health plan delegates authority for a function, it transfers the power to conduct the function on a day-to-day basis, but not the ultimate accountability for the function.

17. The Enterprise Health Plan has indicated an interest in delegating its medical records review activities to the Teal Group and has forwarded a typical letter of intent to Teal. One true statement about this letter of intent is that it:

is a contract that creates a legally binding relationship between Enterprise and Teal cannot include a confidentiality clause

serves as a delegation agreement between Enterprise and Teal

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outlines the delegation oversight process

A Incorrect. A letter of intent is not a contract and does not create a legally binding relationship

B : Incorrect. One typical component of a letter of intent is a confidentiality clause, which commits the health plan and the delegate to maintain the confidentiality of documents reviewed and exchanged in the process.

C: Incorrect. A delegation agreement, not a letter of intent, is the contractual document that describes the delegated functions and the responsibilities of the health plan and the delegate.

D: Correct. The letter of intent also establishes a mutual agreement about the confidentiality of patient information and the policies and procedures of the health plan and the potential delegate..








One true statement about Treble's delegation of its UM activities is that:

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Treble is the delegate

Quest's performance is subject to the same standards as the IPA

the IPA and Treble share ultimate accountability for the performance of Quest

the IPA is the subdelegate

A Incorrect. The entity that contracts with the health plan to perform the specified function is the delegate. In this situation, the IPA is the delegate.B Correct. In this situation, Quest is a subdelegate. The performance of the subdelegate is subject to the same standards as the original delegate, the IPA.C Incorrect. Treble, not the IPA, is ultimately responsible for the performance of Quest, the subdelegate.D Incorrect. The delegate, the IPA, transferred some authority to Quest, the subdelegate.

19. Dr. Robert Logan, an internist, spends the majority of his time in a hospital setting where he serves as the physician-of-record for health plan patients who have been 'handed off' to him by PCPs. Dr. Logan's primary function is to coordinate diagnostic and treatment activities for these patients in order to ensure that they receive appropriate care while in the hospital. After discharge, a patient returns to the care of the original PCP. In this role, Dr. Logan functions as:

a disease manager Incorrect. Because he only focuses on inpatient care in this role, Dr. Logan's role goes against the concept of disease management. Disease management calls for coordinated intervention at the earliest appropriate stage of the patient's disease or diseases. Dr. Logan typically provides coordinated intervention, but only after the member's hospitalization.an ancillary services providerIncorrect. Health plans include ancillary service providers in the network. Ancillary services is an umbrella term for a variety of healthcare services that are offered in addition to primary, specialty, and inpatient facility care. Ancillary services are typically provided by non-physicians and include both diagnostic and therapeutic services such as laboratory tests, radiology, physical therapy, and home healthcare. a tiered network manager Incorrect. A tiered network is a provider panel that the health plan has subdivided into two or more layers (tiers) based on provider profiles for quality, utilization, and cost-effectiveness. The providers deemed by the health plan to be the highest quality and most cost-effective form the preferred (first) tier of the network.a hospitalist Correct. Hospitalists, also known as inpatient specialists, are physicians who spend at least one quarter of their time in a hospital setting where they serve as the physicians-of-record for patients who have been 'handed off' to them by PCPs. The patient returns to the original PCP after discharge from

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the hospital.

20. The Argyle Health Plan has contracted to obtain the services of the providers in the Column Medical Group, a faculty practice plan (FPP). The following statement(s) can correctly be made about this contract:

A. Column most likely contracted with the legal group representing the FPP rather than with the individual physicians within the FPP.

B. Column most likely will provide only highly specialized care to Argyle's plan members.

Both A and B Incorrect. Statement A is a correct statement. Statement B is incorrect because FPPs generally provide routine care, tertiary care, and highly specialized care.A only Correct. An FPP, also known as an academic health center, is a medical group that is organized around a teaching program, primarily at a university hospital.B only Incorrect. Statement A is a correct statement because health plans generally contract with the legal group representing the FPP. Statement B is incorrect because FPPs generally provide routine care, tertiary care, and highly specialized care.Neither A nor B Incorrect. Statement A is a correct statement because health plans generally contract with the legal group representing the FPP. Statement B is incorrect because FPPs generally provide routine care, tertiary care, and highly specialized care.

21. The Ventnor Health Plan requires the physicians in its provider network to be board certified. Ventnor has received requests to become a part of the network from the following specialists:

Cheryl Stovall, who is currently in the process of completing a residency in her field of specialization. Thomas Kalil, who has completed a residency in his field of specialization and has passed a qualifying examination in that field within two years of completing his residency. Roger Todd, who has completed a residency in his field of specialization but has not passed a qualifying examination in that field.

Ventnor's requirement of board certification is met by:

Cheryl Stovall, Thomas Kalil, and Roger Todd.Incorrect. Board certification is a status attained by physicians who have completed a residency in their field of specialization and have passed a

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qualifying examination in that field. Roger Todd is board ELIGIBLE because he has completed the residency requirement but has not yet completed the certification exam. Cheryl Stovall is neither board certified nor board eligible. Thomas Kalil and Roger Todd only. Incorrect. Board certification is a status attained by physicians who have completed a residency in their field of specialization and have passed a qualifying examination in that field. Roger Todd is board ELIGIBLE because he has completed the residency requirement but has not yet completed the certification exam.Thomas Kalil only. Correct. Board certification is a status attained by physicians who have completed a residency in their field of specialization and have passed a qualifying examination in that field. Roger Todd is board ELIGIBLE because he has completed the residency requirement but has not yet completed the certification exam. Cheryl Stovall is neither board certified nor board eligible. Thomas Kalil meets these requirementsnone of these individuals. Incorrect. Board certification is a status attained by physicians who have completed a residency in their field of specialization and have passed a qualifying examination in that field. Of the individuals named, Thomas Kalil is the only one who meets these requirements.

22. Health plans typically conduct two types of reviews of a provider's medical records: an evaluation of the provider's medical record keeping (MRK) practices and a medical record review (MRR). One true statement about these types of reviews is that:

an MRK covers the content of specific patient records of a provider. Incorrect. MRK refers to the policies, procedures, and documentation standards the provider follows to create and maintain medical records. It does not cover the content of specific patient records.the NCQA requires an examination of MRK with all of a health plan's office evaluations. Correct. MRK refers to the policies, procedures, and documentation standards the provider follows to create and maintain medical records. MRR is a systematic review of the content of individual patient records to ensure that the records are in conformity with accepted, professional medical practice and appropriate health management.an MRR includes a review of the policies, procedures, and documentation standards the provider follows to create and maintain medical records. Incorrect. MRR is a systematic review of the content of individual patient records to ensure that the records are in conformity with accepted, professional medical practice and appropriate health management. MRK refers to the policies, procedures, and documentation standards the provider follows to create and maintain medical records.the NCQA requires MRR for both credentialing and recredentialing of providers in a health plan's network. Incorrect. A health plan that has multiple offices within its service area may

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decentralize some or all network management activities. In many cases, the health plan uses a centralized approach for some activities while decentralizing other functions.

23. As part of the credentialing process, many health plans use the National Practitioner Data Bank (NPDB) to learn information about prospective members of a provider network. One true statement about the NPDB is that:

it is maintained by the individual states Incorrect. The NPDB is maintained by the federal government.it primarily includes information about any censures, reprimands, or admonishments against any physicians who are licensed to practice medicine in the United States Incorrect. The NPDB guidelines specify actions that should NOT be reported to the NPDB. These actions include censures or reprimands against physiciansthe information in the NPDB is available to the general public Incorrect. The NPDB specifies the entities that are eligible to request information from the data bank and the conditions under which requests are allowed. In general, the same entities that report information to the NPDB are eligible to request information. Such information is not available to the general public.it was established to identify and discipline medical practitioners who act unprofessionallyCorrect. The NPDB is a database maintained by the federal government that contains information on physicians and other medical practitioners against whom medical malpractice claims have been settled or other disciplinary actions have been taken. The NPDB is designed to restrict the ability of medical practitioners who act unprofessionally to move from state to state without disclosure or discovery of damaging or incompetent performance.

24. A health plan that delegates designated credentialing activities to an NCQA-centered or a Commission/URAC-centered credentials verification organization (CVO) is exempt from the due-diligence oversight requirements specified in the NCQA credentialing standards for all verification services for which the CVO has been certified:

TrueCorrect. CVOs are commonly used as credentialing delegates. Delegating credentialing functions to a CVO offers a number of advantages to a health plan. CVOs typically know the provider market and have experience in gathering and verifying provider information. This is particularly valuable for a health plan entering a new market. CVOs can also offer fast, cost-effective services. False Incorrect. This is a true statement. The NCQA and the Commission/URAC have certified a number of CVOs that have met their requirements for performing certain activities of the credentialing function.

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25. Question = "The following statements describe two types of HMOs:<ul><li>The Elm HMO requires its members to select a PCP but allows the members to go to any other provider on its panel without a referral from the PCP.</li> <li>The Treble HMO does not require its members to select a PCP. Treble allows its members to go to any doctor, healthcare professional, or facility that is on its panel without a referral from a primary care doctor. However, care outside of Treble's network is not reimbursed unless the provider obtains advance approval from the HMO.</li></ul>

26. The provider contract that Dr. Laura Cartier has with the Sailboat health plan includes a section known as the recitals. Dr. Cartier's contract includes the following statements:

A. A statement that identifies the purpose of the contractB. A statement that defines in legal terms the parties to the contractC. A statement that identifies the Sailboat products to be covered by the contract

Of these statements, the ones that are likely to be included in the recitals section of Dr. Cartier's contract are statements:

A, B, and C Correct. A contract between a health plan and a provider generally includes a section called the recitals, which follows the introductory paragraph. The recitals identify the purpose of the agreement. Typically, the recitals further define the parties to the agreement and may also identify the products to be covered by the agreement. Therefore, Statements A, B, and C are likely to be included in the recitals section.A and B only Incorrect. The recitals section typically is the section in which the contract states that the agreement is limited to a single product line, such as a Medicare HMO product, so Statement C is likely to be included in the recitals section. Statements A and B are also likely to be included in the recitals section.A and C only Incorrect. The recitals section typically is the section that identifies the parties to the contract, so Statement B is likely to be included in the recitals section. Statements A and C are also likely to be included in the recitals section.B and C only Incorrect. Statement A is likely to be included in the recitals section, because this section typically identifies the purpose of the contract. For example, this section could state that Sailboat wishes to secure the services of Dr. Cartier and that she wishes to make those services available to Sailboat's members. Statements B and C are also likely to be included in the recitals section.

27. In 1996, the NAIC adopted a standard for health plan coverage of emergency services. This standard is based on a concept known as the:

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due process standard Incorrect. The due process clause defines a provider's right to appeal the health plan's termination decision and to defend its position. This clause should be included in all contracts that allow termination with cause.subrogation standard Incorrect. Subrogation is a health plan's contractual right to recover from a third party some portion of the benefits paid to a member by the health plan. For example, if a third party is responsible for injuries to a plan member, the health plan can file a claim for the resulting healthcare costs against the third party. Also, if a plan member receives payment for healthcare costs as a result of a legal action against a third party, the health plan may be entitled to recover from the member all or part of the benefits the plan paid to the member for the related illness or injury.corrective action standard Incorrect. A corrective action provision, also known as a cure provision, specifies a time period (usually 30 to 90 days, depending upon the problem) for the party who has breached the contract to remedy the problem and avoid termination of the contract.prudent layperson standard Correct. According to the prudent layperson standard, an emergency is a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual in serious jeopardy.

28. The provider contract that Dr. Ted Dionne has with the Optimal Health Plan includes an arrangement that requires Dr. Dionne to notify Optimal if he contracts with another health plan at a rate that is lower than the rate offered to Optimal. Dr. Dionne must also offer this lower rate to Optimal. This information indicates that the provider contract includes a:

most-favored-nation arrangement Correct. Generally, provider agreements are nonexclusive, which means that the provider can contract with other plans. However, some provider contracts contain an element of exclusivity. Exclusivity clauses may include a most-favored-nation arrangement, which requires a provider to give a health plan the provider's most favorable rate at all times, even if the rate is lower than the price negotiated in the provider's contract.warranty arrangement Incorrect. A warranty is a statement guaranteed to be true in all respects, and if the statement is untrue in any respect, the contract of which the statement is a part can be declared void. Unlike a warranty, a representation is a statement of facts that need be true only in those respects material to the provider contract.locum tenens arrangement Incorrect. Locum tenens refers to a practitioner who is a temporary substitute for another practitioner, that is, providing temporary coverage for

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another practitioner's responsibilities. Temporary coverage typically extends over a specified period of time and is not limited to taking emergency calls.nesting arrangement Incorrect. Nesting refers to the practice of including the providers of one product's panel in the network of another panel.

29. The provider contract that Dr. Nick Mancini has with the Utopia Health Plan includes a clause that requires Utopia to reimburse Dr. Mancini on a fee-for-service (FFS) basis until 100 Utopia members have selected him as their primary care provider (PCP). At that time, Utopia will begin reimbursing him under a capitated arrangement. This clause in Dr. Mancini's provider contract is known as:

an antidisparagement clause Incorrect. Antidisparagement clauses prohibit a provider from making comments that could weaken a patient's confidence in a health plan. This type of provision is meant to protect a health plan's business interests and to require that a dissatisfied provider complain to the health plan rather than to the patient.a low-enrollment guarantee clause Correct. To reduce concerns regarding the number of members assigned to PCPs, health plans often include a low-enrollment guarantee clause in capitated contracts. This clause can help to ease a provider into capitation, although at greater risk to the health plan.a retroactive enrollment changes clause Incorrect. The health plan may include a clause in a purchaser's contract relating to retroactive enrollment changes. Such a clause typically places a time requirement on the purchaser's reporting of changes in a member's eligibility status. Such a clause insulates both the provider and the health plan from financial responsibility.an eligibility guarantee clause Incorrect. Some health plans use an eligibility guarantee clause in the contract to protect providers who receive confirmation of a patient's eligibility for services from the health plan. Providers are not financially responsible for the services rendered if the patient is later found to be ineligible.

30. The provider contract that Dr. Lorena Chau has with the Fiesta Health Plan includes an evergreen clause. The purpose of this clause is to:

allow Fiesta to change or amend the contract without Dr. Chau's approval as long as the modifications are made in order to comply with new legal and regulatory requirements Incorrect. Under a CHANGE IN LAW provision, health plans are allowed to change or amend contracts without the approval of their providers as long as the modifications are made in order to comply with new legal and regulatory requirements that impact all health plans and providers.prohibit Dr. Chau from encouraging her patients to switch from Fiesta to another

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health plan Incorrect. NONSOLICITATION clauses prohibit providers from encouraging patients to switch from one health plan to another.allow the terms of the contract to renew unchanged each year Correct. Many provider contracts are automatically renewed through an evergreen clause. If providers desire changes to the contract, they must be aware of the renewal date and notify the health plan of their intent to renegotiate the contract within the time contractually specified.assure that Dr. Chau provides Fiesta members with healthcare services in a timely manner appropriate to the member's medical condition Incorrect. Access standards are guidelines defined by health plans to assure that every member receives the benefits provided by his or her health plan in a timely manner appropriate to the member's medical condition and consistent with the reason for seeking care.

31. One true statement about the responsibilities of providers under typical provider contracts is that most provider contracts:

include a clause which states that providers must maintain open communications with patients regarding appropriate treatment plans, unless the services are not covered by the member's health plan Incorrect. Most health plans have placed in their contracts a clause which clearly states that providers must maintain open communications with patients regarding appropriate treatment plans, even if the services are not covered by the member's health plan.hold that the responsibility of the provider to deliver services is usually subject to the provider's receipt of information regarding the eligibility of the member Correct. Most provider contracts hold that the responsibility of the provider to deliver services is usually subject to the provider's receipt of information regarding the eligibility of the member identification cards. The provider is also typically required to deliver services to the health plan's members with the same quality, timeliness, duration, and scope as the provider would deliver to other patients. In addition, the provider cannot discriminate against members on the basis of age, sex, religion, or national origin.contain a gag clause or a gag rule Incorrect. The term gag clause or gag rule has been used to refer to any statement in a health plan-provider contract that could be interpreted as preventing a provider from discussing alternative treatment options with patients. Health plans should make sure that nothing in provider contracts can be interpreted as prohibiting providers from discussing all treatment options with their patients.include a clause that explicitly places the responsibility for medical care on the health plan rather than on the provider of medical services Incorrect. Many health plans now include in their contracts statements that explicitly place responsibility for medical care on the providers rather than on the health plan. Usually such statements indicate that the provider must make all final decisions regarding the delivery of care and that the provider is encouraged to discuss with the patient all treatment alternatives, including treatments not covered by the plan.

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32. The provider contracts that the Indigo Health Plan has with its providers include a clause which states that Indigo's denial of payment for a certain medical procedure does not constitute a medical opinion and is not intended to interfere with the provider-patient relationship. This information indicates that Indigo's provider contracts include:

a business confidentiality clause. Incorrect. Business confidentiality clauses require providers to maintain the confidentiality of the health plan's proprietary information, such as financial data, reimbursement structure, and utilization and quality management programs, unless the health plan grants written permission for the provider to release this information.a scope of services clause. Incorrect. A scope of services provision details exactly which services are covered under a capitation payment and which services are reimbursed under another payment method or require prior authorization. Generally, all services included in the scope of services are covered by a PCP's monthly capitation payment and may be provided as medically necessary and without authorization to the health plan's members within the constraints of their benefit plan.an informed refusal clause. Incorrect. Providers may wish to negotiate a provision that addresses a possible situation in which a patient refuses treatment despite the recommendations of the provider and the health plan. If the provider has informed the patient of the consequences of refusing medical treatment, the patient's choice is termed an informed refusal.an exculpation clause. Correct. Health plans now routinely include an exculpation clause, which is intended to place the ultimate responsibility for a patient's medical care on the provider.

33. The provider contract that Dr. Bijay Patel has with the Arbor Health Plan includes a no-balance-billing clause. The purpose of this clause is to:

prohibit Dr. Patel from collecting payments from Arbor plan members for medical services that he provided them, even if the services are explicitly excluded from the benefit plan Incorrect. A health plan usually allows providers to collect payment from the member for services that are explicitly excluded from the benefit plan.allow Dr. Patel to bill patients for services only if the services are considered to be medically necessary Incorrect. Typically, a health plan allows contracting providers to bill patients for services considered not medically necessary if the provider notifies the patient in advance that the service will not be covered by the health plan.establish the guidelines used to determine if Arbor is the primary payor of benefits in a situation in which an Arbor plan member is covered by more than one health plan Incorrect. If an individual is covered by two or more health plans, then coordination of benefits rules determine which health plan is the primary

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payor.require Dr. Patel to accept Arbor's payment as payment in full for medical services that he provides to Arbor plan members Correct. A major goal of health plan contracting is to obtain from providers a commitment that they will accept the health plan's payment as payment in full and will not bill members for anything other than contracted copayments, coinsurance, and deductibles. In return for acceptance of the health plan's payment as payment in full, providers receive a guarantee that the health plan will pay them directly.



The clause which specifies that Dr. Enberg cannot sue or file any claims against a Canyon plan member for covered services is known as:

a termination with cause clause Incorrect. A termination with cause contract provision requires the health plan to give the provider a reason for the termination action. Termination with cause gives each party the right to end the contract if either party breaches the terms of the contract.a hold-harmless clause Correct. Health plans typically require providers to sign agreements that include a hold-harmless clause.an indemnification clause Incorrect. An indemnification clause requires the provider to reimburse a health plan for costs, expenses and liabilities incurred by the health plan as a result of a provider's actions.a corrective action clause Incorrect. A corrective action provision, also called a cure provision, specifies a time period for the party who has breached the contract to remedy the problem and avoid termination of the contract.

35. Dr. Leona Koenig removed the appendix of a plan member of the Helium health plan. In order to increase the level of reimbursement that she would receive from Helium, Dr. Koenig submitted to the health plan separate charges for the preoperative physical

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examination, the surgical procedure, and postoperative care. All of these charges should have been included in the code for the surgical procedure itself. Dr. Koenig's submission is a misuse of the coding system used by health plans and is an example of:

upcoding Incorrect. Upcoding is a type of false billing in which a provider submits a code for a procedure with a higher level of reimbursement than the procedure actually performed. For example, a provider might submit the code for a comprehensive office visit, when the services provided actually represent an intermediate level of service.

a wrap-around Incorrect. Silent PPOs are sometimes called wrap-around PPOs. A silent PPO is an arrangement in which an entity that negotiates discounts with providers sells access to those discounts to other unrelated health plans to use when paying for services provided to the unrelated health plan's members.churning Incorrect. Churning occurs when a provider sees a plan member more often than necessary or provides more diagnostic or therapeutic services than necessary in order to increase revenue. For example, a provider might direct a member to schedule monthly visits for cholesterol check-ups when quarterly visits would suffice.unbundling Correct. Unbundling is a type of false billing in which a provider submits separate charges for the different components of a service rather than one charge for the service as a whole in order to increase the level of reimbursement



The following information applies to two procedures that Dr. Enberg provided to Canyon plan members:

Dr. Enberg's Charge FFS for This Procedure

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Procedure A $150 $160Procedure B $120 $110

Under the DFFS system, the amount that Dr. Enberg is entitled to receive from Canyon is

$150 for Procedure A and $110 for Procedure B Correct. Under a DFFS payment system, the health plan calculates the payment based on whichever amount is lower, the billed charge or the DFFS. The billed charge of $150 is less for Procedure A and the DFFS of $110 is lower for Procedure B.

$150 for Procedure A and $120 for Procedure B Incorrect. Under a DFFS payment system, the health plan calculates the payment based on whichever amount is lower, the billed charge or the DFFS. Therefore, this answer choice is correct for Procedure A, but incorrect for Procedure B.$160 for Procedure A and $110 for Procedure B Incorrect. Under a DFFS payment system, the health plan calculates the payment based on whichever amount is lower, the billed charge or the DFFS. Therefore, this answer choice is incorrect for Procedure A, but correct for Procedure B.$160 for Procedure A and $120 for Procedure B Incorrect. Under a DFFS payment system, the health plan calculates the payment based on whichever amount is lower, the billed charge or the DFFS. Therefore, this answer choice is incorrect for both Procedure A and Procedure B.

37. The following statements are about fee-for-service (FFS) payment systems. Select the answer choice containing the correct statement:

A discounted fee-for-service (DFFS) system is usually easier for a health plan to administer than is a fee schedule system. Incorrect. A fee schedule system is simpler for a health plan to administer than a DFFS system because, under a fee schedule system, the payment for each service is the same for all providers in the network.A case rate payment system offers providers an incentive to take an active role in managing cost and utilization. Correct. A case rate is a single fee that the health plan pays the provider for all services associated with an entire course of treatment. A case rate system transfers risk to the provider for the intensity of services delivered. Providers can increase their net income from a case rate by improving the efficiency of treatment and maintaining quality of care.One reason that health plans use a relative value scale (RVS) payment system is that RVS values for cognitive services have traditionally been higher than the values for procedural services. Incorrect. The RVS system has an important drawback. In practice, RVS unit values for procedural services, such as surgeries or diagnostic tests, have generally been higher than the unit values for cognitive services, such as office visits or research on medical conditions. Because many of the

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services provided by PCPs are cognitive, PCPs typically have not fared well financially under a straight RVS system.One reason that health plans use a resource-based relative value scale (RBRVS) is that this system includes weighted unit values for all types of procedures. Incorrect. The RBRVS was originally developed by the Centers for Medicaid and Medicare Services (CMS) for Medicare use. Because RBRVS was developed around the needs of the senior population, this system does not include weighted unit values for all types of procedures, such as childhood immunizations. Further, RBRVS does not include any codes for anesthesia.

38. One difference between a fee-for-service (FFS) reimbursement arrangement and capitation is that the FFS arrangement:

is a prospective payment system, whereas capitation is a retrospective payment system Incorrect. An FFS system is a retrospective payment system, or one that pays after the service has been provided. Capitation is a prospective payment system.has a potential to induce providers to underutilize medical resources, whereas capitation does not have this potential disadvantage Incorrect. Under capitation, the level of payment per patient remains the same regardless of the actual services delivered. Because the level of payment remains the same, capitation has the potential to induce providers to underutilize medical resources.bases the amount of reimbursement on the actual medical services delivered, whereas reimbursement under capitation is independent of the actual volume and cost of services provided Correct. Unlike an FFS system, capitation eliminates a provider's incentive to provide unnecessary services. Capitation also encourages providers to practice preventive medicine in order to improve plan members' health status and decrease the need for more intensive medical services in the future. In addition, the use of capitation allows the health plan to transfer a greater proportion of risk to providers than does the use of FFS or salary systems.is most often used by health plans to reimburse healthcare facilities, whereas capitation is most often used by health plans to reimburse specialty care providers Incorrect. Specialty care providers most often receive deferred FFS payments, although the use of capitation is growing in some specialty fields. Health plans sometimes reimburse healthcare facilities on a DFFS, diagnosis related group (DRG), or capitation basis, but per diem rates are most common.

39. Partial capitation is one common approach to capitation. One typical characteristic of partial capitation is that it:

includes only primary care services Correct. Partial capitation is the most common type of capitation. This arrangement generally covers office visits, minor procedures performed in the office, provider visits to hospitalized members, supplies, and case

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management. It usually excludes laboratory testing of blood, immunizations, and drugs.covers such services as immunizations and laboratory tests Incorrect. This arrangement generally covers office visits, minor procedures performed in the office, provider visits to hospitalized members, supplies, and case management. It usually excludes laboratory testing of blood, immunizations, and drugs.can be used only if the provider's panel size is less than 50 providers Incorrect. Generally, capitation is a suitable arrangement for PCPs when a provider's panel size approaches 100 memberscovers such services as cardiology and orthopedics Incorrect. Partial capitation includes only primary care services. Cardiology, orthopedics, and eye care the most commonly capitated specialties are outside the realm of primary care.

40. Under the compensation arrangement that the Falcon Health Plan has with some of its providers, Falcon holds back 10% of the negotiated payments to these providers in order to offset or pay for any claims that exceed the budgeted costs for referral or hospital services. If the providers keep costs within the budgeted amount, Falcon distributes to them the entire amount of money held back. This way of motivating providers to control costs while providing high-quality, appropriate care is known as a:

risk pool arrangement Incorrect. A risk pool is a fund that is established at the beginning of a contract period to cover claims for specified services, such as specialty care. Any claims approved for payment are paid out of the appropriate risk pool. At the end of the period, the health plan may use remaining funds in one pool to cover overruns in another pool. After all pools are reconciled, the health plan distributes any remainder to the providers who funded the pools.withhold arrangement Correct. Under this arrangement, Falcon retains part of the financial risk because it is responsible for making up any deficit if cost overruns exceed the amount of money held back.cost-shifting arrangement Incorrect. One practice that has potential for fraud and abuse of the workers' compensation program is cost-shifting. Because workers' compensation provides reimbursement for lost wages, employees may be tempted to represent illnesses or injuries that are not work-related or that are not covered by group health plans as work-related in order to receive medical benefits and reimbursement of lost wages through workers' comp.bonus pool arrangement Incorrect. A bonus pool, a type of risk pool, pays providers over and above their usual reimbursement at the end of a financial period based on the performance of the plan as a whole, a group of providers within the plan, or the individual provider. A bonus pool is essentially the opposite of a withhold because a bonus pool contains no risk of loss for the provider. A bonus pool is funded by savings generated from actual costs for a specified set of services.

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41. A provider group purchased from an insurer individual stop-loss coverage for primary and specialty care services with an $8,000 attachment point and 10% coinsurance. If the group's accrued cost for the primary and specialty care treatment of one patient is $10,000, then the amount that the insurer would be responsible for reimbursing the provider group for these costs is:

$200 Incorrect. Under individual stop-loss coverage, the provider group assumes sole responsibility for all medical costs up to a specific dollar amount, known as the attachment point. The portion of costs that the provider group pays in excess of the attachment point is the coinsurance. In this situation, the provider group pays the first $8,000 of treatment for this patient. The provider group pays 10% of the amount over $8,000 and the insurer pays 90% of the amount over $8,000. This answer choice was derived by multiplying the amount over $8,000 by the provider group's coinsurance percentage (10%) rather than the insurer's coinsurance percentage (90%).$1,000 Incorrect. Under individual stop-loss coverage, the provider group assumes sole responsibility for all medical costs up to a specific dollar amount, known as the attachment point. The portion of costs that the provider group pays in excess of the attachment point is the coinsurance. In this situation, the provider group pays the first $8,000 of treatment for this patient. The provider group pays 10% of the amount over $8,000 and the insurer pays 90% of the amount over $8,000.$1,800 Correct. Individual stop-loss coverage protects providers from losses associated with healthcare for an individual member during a given time period, usually one year. The provider group assumes sole responsibility for all medical costs up to a specific dollar amount, known as the attachment point. The portion of costs that the provider group pays in excess of the attachment point is the coinsurance. In this situation, the provider group pays the first $8,000 of treatment for this patient. The provider group pays 10% of the amount over $8,000 and the insurer pays 90% of the amount over $8,000. [$10,000 - $8,000 = $2,000 $2,000 x .9 = $1,800]$9,000 Incorrect. Under individual stop-loss coverage, the provider group assumes sole responsibility for all medical costs up to a specific dollar amount, known as the attachment point. The portion of costs that the provider group pays in excess of the attachment point is the coinsurance. In this situation, the provider group pays the first $8,000 of treatment for this patient. The provider group pays 10% of the amount over $8,000 and the insurer pays 90% of the amount over $8,000.

42. The Foxfire Health Plan, which has 20,000 members, contracts with dermatologists on a contact capitation basis. The contact capitation arrangement has the following features:

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← Foxfire distributes the money in the contact capitation fund once each quarter and the distribution is based on the point totals accumulated by each dermatologist.

← Foxfire's per member per month (PMPM) capitation for dermatology services is $1.

← The dermatologist receives 1 point for each new referral that is not classified as a complicated referral and 1.5 points for each new referral that is classified as complicated.

During the first quarter, Foxfire's PCPs made 450 referrals to dermatologists and 100 of these referrals were classified as complicated. One dermatologist, Dr. Shareef Rashad, received 42 of these referrals; 6 of his referrals were classified as complicated. Statements that can correctly be made about Foxfire's contact capitation arrangement include:

that the value of each referral point for the first quarter was $120 Correct. The value of each referral point equals the fund value divided by the total number of referral points. The fund value is 20,000 x $1 x 3 months = $60,000. The total number of points is [(350 x 1) + (100 x 1.5)] = 500. Therefore, the value of each referral point is $60,000 500, or $120.

that the value of Foxfire's contact capitation fund for dermatologists for the first quarter was $20,000 Incorrect. The value of Foxfire's contact capitation fund for dermatologists for the first quarter is equal to the number of members (20,000) times the PMPM fee ($1) times the number of months in the period (3). The value therefore is equal to 20,000 x $1 x 3 = $60,000.that the payment that Foxfire owed Dr. Rashad for the first quarter was $6,120 Incorrect. The payment owed to Dr. Rashad for the first quarter equals the provider's total number of points times the value of each referral point. Dr. Rashad's total number of points equals (36 x 1) + (6 x 1.5), or 45 points. The value of each referral point is determined by dividing the fund value of $60,000 for the first quarter (20,000 x $1 x 3 = $60,000) by the total number of points. The total number of points is [(350 x 1) + (100 x 1.5)] = 500. Therefore, the payment owed to Dr. Rashad for the first quarter is [45 x ($60,000 500)], or $5,400.all of the above Incorrect. Two of the three statements above are incorrect.

43. The following statement(s) can correctly be made about contracting and reimbursement of specialty care physicians (SCPs):

A. Typically, a health plan should attempt to control utilization of SCPs before attempting to place these providers under a capitation arrangement.

B. Forms of specialty physician reimbursement used by health plans include a retainer and a bundled case rate.

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Both A and B Correct. Statement A is a correct statement. If a health plan attempts to place SCPs under a capitation arrangement without first attempting to control their utilization rates, the health plan risks being locked into the higher rates that the SCPs have been paid. Statement B is also a correct statement. Under a retainer, a health plan pays a set amount monthly to an SCP and then reconciles the payments at periodic intervals. Under bundled case rates, a health plan's reimbursement combines both the institutional charges and the professional charges for care into a single payment. For example, a health plan may negotiate for cardiac bypass surgery a bundled case rate that covers the charges from the hospital, the surgeon, and the anesthesiologist, as well as all preoperative and postoperative care.A only Incorrect. Statement A is correct. Statement B is also a correct statement. Under a retainer, a health plan pays a set amount monthly to an SCP and then reconciles the payments at periodic intervals. Under bundled case rates, a health plan's reimbursement combines both the institutional charges and the professional charges for care into a single payment.B only Incorrect. Statement A is a correct statement. If a health plan attempts to place SCPs under a capitation arrangement without first attempting to control their utilization rates, the health plan risks being locked into the higher rates that the SCPs have been paid. Statement B is also a correct statement.Neither A nor B Incorrect. Statement A is a correct statement. If a health plan attempts to place SCPs under a capitation arrangement without first attempting to control their utilization rates, the health plans risk being locked into the higher rates that the SCPs have been paid. Statement B is also a correct statement. Under a retainer, a health plan pays a set amount monthly to an SCP and then reconciles the payments at periodic intervals. Under bundled case rates, a health plan's reimbursement combines both the institutional charges and the professional charges for care into a single payment.

44. The Zephyr Health Plan identifies members for whom subacute care might be an appropriate treatment option. The following individuals are members of Zephyr:

← Selena Tovar, an oncology patient who requires radiation oncology services, chemotherapy, and rehabilitation.

← Dwight Borg, who is in excellent health except that he currently has sinusitis. ← Timothy O'Shea, who is beginning his recovery from brain injuries caused by a

stroke.

Subacute care most likely could be an appropriate option for:

Ms. Tovar, Mr. Borg, and Mr. O'SheaIncorrect. Subacute care is comprehensive inpatient care designed for an individual who has had an acute illness, injury, or exacerbation of a disease

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process. It requires the coordinated services of an interdisciplinary team. Subacute care would not be appropriate for Mr. Borg's medical condition. Ms. Tovar and Mr. O'Shea only Correct. Subacute care is comprehensive inpatient care designed for an individual who has had an acute illness, injury, or exacerbation of a disease process. It requires the coordinated services of an interdisciplinary team. Ms. Tovar and Mr. O'Shea's conditions could warrant the use of subacute care.Mr. O'Shea only Incorrect. Subacute care is comprehensive inpatient care designed for an individual who has had an acute illness, injury, or exacerbation of a disease process. It requires the coordinated services of an interdisciplinary team. Mr. O'Shea's condition could warrant the use of subacute care. However, Ms. Tovar's condition also could warrant the use of subacute care.Mr. Borg only Incorrect. Subacute care is comprehensive inpatient care designed for an individual who has had an acute illness, injury, or exacerbation of a disease process. It requires the coordinated services of an interdisciplinary team. Mr. Borg's condition would not warrant the use of subacute care, but the conditions of Ms. Tovar and Mr. O'Shea could warrant subacute care.

45. Although ambulatory payment classifications (APCs) bear some resemblance to diagnosis-related groups (DRGs), there are significant differences between APCs and DRGs. One of these differences is that APCs:

typically allow for the assignment of multiple classifications for an outpatient visit Correct. APCs are designed to explain to the payor the amount and type of medical resources used during an outpatient visit to a healthcare facility. DRGs are used to determine payment for inpatient hospital services based on a patient's principal diagnosis, secondary diagnosis, surgical procedures, age, gender, and presence of complications.always apply to a patient's entire hospital stay Incorrect. The primary variable for DRG classification is the patient's diagnosis, and the DRG classification applies to an entire hospital stay for the patient. For APCs, the critical variable is the procedure or other treatment that is performed during a single visit.typically serve as a payment system for inpatient services Incorrect. DRGs were designed as a payment system for inpatient services, while APCs are used for care delivered in outpatient settingstypically include reimbursements for professional fees Incorrect. Both APCs and DRGs provide a method to calculate the appropriate reimbursement for a facility and neither system includes reimbursement for professional fees.

46. The following statement(s) can correctly be made about financial arrangements between health plans and emergency departments of hospitals:

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A. These arrangements typically include payments for services rendered in the emergency department by a health plan's primary or specialty care providers.

B. Most of these arrangements are structured through the health plan's contract with the hospital.

Both A and B Incorrect. Statement A is incorrect because payments for services rendered in the emergency department by a health plan's participating primary or specialty care providers are typically covered in the applicable contracts between the health plan and these providers. Statement B is a correct statement.A only Incorrect. Statement A is incorrect because payments for services rendered in the emergency department by a health plan's participating primary or specialty care providers are typically covered in the applicable contracts between the health plan and these providers. Statement B is correct. Most financial arrangements between health plans and emergency departments are structured through the health plan's contract with the hospital.B only Correct. Statement A is incorrect because payments for services rendered in the emergency department by a health plan's participating primary or specialty care providers are typically covered in the applicable contracts between the health plan and these providers. Statement B is correct. Most financial arrangements between health plans and emergency departments are structured through the health plan's contract with the hospital.Neither A nor B Incorrect. Statement A is incorrect because payments for services rendered in the emergency department by a health plan's participating primary or specialty care providers are typically covered in the applicable contracts between the health plan and these providers. Statement B is correct. Most financial arrangements between health plans and emergency departments are structured through the health plan's contract with the hospital.

47. The Pine Health Plan has incorporated pharmacy benefits management into its operations to form a unified benefit. Potential advantages that Pine can receive from this action include:

the fact that unified benefits improve the quality of patient care and the value of pharmacy services to Pine's plan members Incorrect. This is a potential advantage of uniform pharmacy benefits. However, this is not the only correct answer choice.the fact that control over the formulary and network contracting can give Pine control over patient access to prescription drugs and to pharmacies Incorrect. This is a potential advantage of uniform pharmacy benefits. However, this is not the only correct answer choice.

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the fact that managing pharmacy benefits in-house gives Pine a better chance to meet customer needs by integrating pharmacy services into the plan's total benefits package Incorrect. This is a potential advantage of uniform pharmacy benefits. However, this is not the only correct answer choice.all of the above Correct. Pharmacy benefits management (PBM) can be integrated into a health plan's total healthcare package to form a unified pharmacy benefit, or it can be carved out through a separate contract with an independent PBM company. When PBM is incorporated into a health plan's operations as a unified benefit, the health plan assumes responsibility for establishing networks and managing their operations.

48. Reimbursement for prescription drugs and services in a third-party prescription drug plan typically follows one of two approaches: a reimbursement approach or a service approach. One true statement about these approaches is that:

payments under the reimbursement method typically are not subject to any copayment or deductible requirements Incorrect. Typically, payments under a reimbursement approach is subject to any copayment, deductible, and coinsurance requirements.payments under the reimbursement approach are typically based on a structured reimbursement schedule rather than on usual, customary, and reasonable (UCR) charges Incorrect. Payments under a reimbursement approach is most often based on UCR charges.most major medical plans follow a service approach Incorrect. Most major medical plans still follow a reimbursement approach.most current health plan prescription drug plans are service plans Correct. Early pharmacy networks followed a reimbursement approach, under which a covered individual purchased prescription drugs directly from a pharmacy and then was reimbursed by the plan. Under a service approach, plan members obtain prescription drugs from participating network pharmacies by presenting proper identification and paying a specified copayment. The pharmacy then bills the plan directly for the remaining cost of the prescription. The majority of current health plan prescription drug plans are service plans.




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To calculate its drug costs, Elm uses a pricing system known as:

estimated acquisition cost (EAC)Correct. EAC-based reimbursement to small pharmacies that lack enough leverage to secure volume discounts or rebates is typically close to the average wholesale price (AWP). For large pharmacies whose volume and purchasing power allows them to secure manufacturer discounts, the EAC results in lower drug costs than does the AWP. package rate cost (PRC) Incorrect. A package rate, also called a case rate, is the single fee that a health plan pays a medical provider for all services associated with the entire course of treatment.actual acquisition cost (AAC) Incorrect. AAC is equal to the initial price of a prescription drug minus any and all discounts, including volume discounts, free goods, and any other mechanisms used to reduce price. It is the most accurate method of calculating drug costs and provides the lowest level of cost, but it is also the most complicated method.wholesale acquisition cost (WAC) Incorrect. WAC is based on published prices charged by wholesalers and therefore represents what pharmacies are actually charged for prescription drugs.

50. In health plan pharmacy networks, service costs consist of two components: costs for services associated with dispensing prescription drugs and costs for cognitive services. Cognitive services typically include:

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making generic substitutions of drugs Incorrect. Making generic substitutions of drugs is an example of a dispensing service. Dispensing services are typically specified by the health plan.counseling patients about prescriptions Correct. Cognitive services, also known as professional services, are identified by the pharmacist as being medically necessary for the patient. These services also include reviewing drug profiles to prevent or monitor adverse drug interactions, implementing quality improvement programs, documenting pharmaceutical care in patient records, and monitoring program compliance.providing patient monitoring Incorrect. Providing patient monitoring is an example of a dispensing service. Dispensing services are typically specified by the health plan.

switching prescription drugs to preferred drugs Incorrect. Switching prescription drugs to preferred drugs is an example of a dispensing service. Dispensing services are typically specified by the health plan.

51. A health plan has several options for delivering pharmacy services to its subscribers. Each option has potential advantages to a health plan. An advantage to a health plan of using:

performance-based open networks is that they tend to increase participation in the pharmacy network. Incorrect. Performance-based networks are similar to other open networks in terms of requirements for participation and patient access. Reimbursement, however, is based on a pharmacy's performance on specified criteria such as generic substitutions, formulary compliance, and average cost of prescriptions. Performance-based systems give health plans greater control over costs, but they tend to reduce participation.closed networks is that they improve the health plan's ability to set standards and implement cost-control programs for pharmacy services. Correct. In closed networks, selected pharmacies agree to supply services to plan members at discounted rates in exchange for guaranteed sales volume. For health plans, the advantages of using closed panels instead of open panels include that closed panels reduce costs by directing members to specified providers and that closed panels make it easier for health plans to set standards, monitor performance, and implement cost-control programs. For many plan members, restricted access is a major disadvantage of closed panels.

customized networks is that they typically are inexpensive to operate. Incorrect. Customized networks are networks designed to meet the needs of a specific population. Usually, these networks take the form of company pharmacies that are owned by large employers and operated at workplace sites. Typically, customized networks are expensive to operate.open networks is that they tend to improve the health plan's ability to control

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pharmaceutical costs. Incorrect. Open networks allow any pharmacy willing to accept the terms of a provider contract to participate. The main advantage of open networks is that they provide convenient patient access to pharmacies. The major disadvantage for health plans is that their control over costs is limited to setting reimbursement levels.








The following statements can correctly be made about the reimbursement for Drugs A and B under the MAC pricing system:

Treble most likely is obligated to reimburse Manor 14 cents per tablet for Drug A. Incorrect. Most MAC formulas specify that, if the cost to the pharmacy is higher than the MAC for a particular drug, the health plan will reimburse only the cost specified by the MAC. For Drug A, the cost specified by the MAC is 2 cents lower per tablet than the cost to the pharmacy.Manor most likely is allowed to bill the subscriber 2 cents per tablet for Drug A. Incorrect. Most MAC formulas specify that, if the cost to the pharmacy is higher than the MAC, then the pharmacy cannot bill the subscriber for the extra amount. For Drug A, the cost to the pharmacy is 2 cents higher per

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tablet than the MAC for Drug A, and Manor most likely cannot bill the subscriber for the difference.Treble most likely is obligated to reimburse Manor 5 cents per tablet for Drug B. Correct. Most MAC formulas specify that, if the cost to the pharmacy is lower than the MAC, then the pharmacy cannot charge the health plan the higher price. Because the pharmacy pays only 5 cents per tablet for Drug B, it most likely cannot charge the 7 cents per tablet allowed by the MAC.All of the above statements are correct. Incorrect. Two of the three statements above are incorrect.

53. The Walnut Health Plan provides a number of specialty services for its members. Walnut offers coverage of alternative healthcare, including coverage of treatment methods such as homeopathy and naturopathy. Walnut also offers home healthcare services, and it contracts with home healthcare providers on a non-risk basis to the health plan. The following statements are about the specialty services offered by Walnut. Select the answer choice containing the correct statement:

Homeopathy treats diseases by using small doses of substances which, in healthy people, are capable of producing symptoms like those of the disease being treated. Correct. An increasing number of health plans offer coverage of alternative healthcare, that is, healthcare services not offered by traditional medical providers. An alternative therapy such as homeopathy is usually an additional benefit available to members through a PCP referral to an alternative healthcare provider.Naturopathy is an approach to healthcare that uses electronic monitoring devices to teach a patient to develop conscious control of involuntary bodily functions, such as heart rate. Incorrect. Naturopathy incorporates a variety of therapies to support and maintain the body's ability to heal itself. Naturopathy emphasizes prevention and natural treatments, such as herbal medicine. Biofeedback is an alternative healthcare treatment method that uses electronic monitoring devices to teach a patient to develop conscious control of involuntary functions such as heart rate.Under a non-risk contract, Walnut most likely transfers the responsibility for arranging home healthcare to the home healthcare provider organizations. Incorrect. In non-risk contracts, home healthcare services are generally coordinated and approved through the health services department of the health plan. When health plans contract with provider organizations on a risk basis, they may transfer the responsibility for arranging home care and related services to the provider organization.Federal law allows Walnut to contract with a home healthcare provider organization only if the provider organization has received accreditation by the Utilization Review Accreditation Commission (URAC). Incorrect. URAC promotes consistent standards in the application of utilization procedures. When evaluating a home healthcare agency, a health plan considers the provider's standing with state and federal regulatory bodies and checks for accreditation by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). If the agency is not

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accredited, the health plan must establish its own standards for home healthcare and evaluate the agency according to those standards.

54. The following statements are about network management for behavioral healthcare (BH). Three of these statements are true and one statement is false. Select the answer choice containing the FALSE statement.

Two measures of BH quality are patient satisfaction and clinical outcomes assessments. Incorrect. This is a true statement. Two important measures of BH quality are patient satisfaction and clinical outcomes assessments, including the rate of relapse and the incidence of adverse events, such as self-destructive behaviors or criminal acts. Other quality indicators that may prove useful in the selection of BH providers are quality assessments performed by accrediting agencies and the provider's reputation among local healthcare professionals and consumers.For a health plan, one argument in favor of contracting with a managed behavioral healthcare organization (MBHO) is that the health plan's members can gain faster access to BH care. Incorrect. This is a true statement. There are varying opinions on carving out BH benefits. Proponents of carving out BH believe that a contract with an MBHO results in faster access to care and more specialized services for members. However, a BH carve-out potentially can decrease continuity of care due to lack of care coordination between the BH provider and the member's PCP.In their contracts with health plans, managed behavioral healthcare organizations (MBHOs) usually receive delegated authority for network development and management. Incorrect. This is a true statement. MBHOs usually receive delegated authority for network development and management, utilization management functions, and quality management functions. By receiving this delegated authority, MBHOs accept a great deal of financial risk for BH services.Health plans generally compensate managed behavioral healthcare organizations (MBHOs) on an FFS basis. Correct. This is a false statement. Health plans generally compensate MBHOs on a capitation basis, paying either a flat rate per member per month (PMPM) or a percent of total monthly premiums.

55. With regard to the compensation of dental care providers in a managed dental care system, it is correct to state that, typically:

dental PPOs compensate dentists on a capitated basis Incorrect. Dental PPOs usually pay dentists on a discounted fee-for-services (DFFS) or fee schedule basis. On average, a provider in a dental PPO receives from 75% to 85% of the full FFS rategroup model dental HMOs (DHMOs) compensate general dental practitioners on a salaried basis Incorrect. Group model DHMOs usually capitate general dental practitioners

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independent practice association (IPA)-model dental HMOs (DHMOs) capitate general dental practitioners Correct. The capitation rate for general dental practitioners is usually between 60% and 70% of the FFS equivalent for generalists in the local area. staff model dental HMOs (DHMOs) compensate dentists on an FFS basis Incorrect. Staff model DHMO dentists are usually salaried.

56. The vision benefits offered by the Omni Health Plan include clinical eye care only. The following statements describe vision care received by Omni plan members:

← Brian Pollard received treatment for a torn retina he suffered as a result of an accident

← Angelica Herrera received a general eye examination to test her vision ← Megan Holtz received medical services for glaucoma

Of these medical services, the ones that most likely would be covered by Omni's vision coverage would be the services received by:

Mr. Pollard, Ms. Herrera, and Ms. Holtz Incorrect. Clinical eye care encompasses medical and surgical services for eye diseases, such as glaucoma and eye injuries. The services received by Mr. Pollard and Ms. Holtz are considered to be clinical eye care. However, the services received by Ms. Herrera would be considered routine eye care and would not be covered.Mr. Pollard and Ms. Herrera only Incorrect. Clinical eye care encompasses medical and surgical services for eye diseases, such as glaucoma and eye injuries. The services received by Mr. Pollard are considered to be clinical eye care. The same is true of the services received by Ms. Holtz. However, the services received by Ms. Herrera would be considered routine eye care and would not be covered.Mr. Pollard and Ms. Holtz only Correct. Clinical eye care encompasses medical and surgical services for eye diseases, such as glaucoma and eye injuries. In other cases, vision benefits also offer partial or full coverage of routine eye care, which includes general eye examinations to test vision, prescribe corrective lenses, and screen for eye disease. Ms. Herrera's general eye examination would most likely be covered by a vision benefits package that includes routine eye care.Ms. Herrera and Ms. Holtz only Incorrect. Clinical eye care encompasses medical and surgical services for eye diseases, such as glaucoma and eye injuries. The services received by Ms. Holtz are considered to be clinical eye care. The same is true of the services received by Mr. Pollard. However, the services received by Ms. Herrera would be considered routine eye care and would not be covered.

57. The Crimson Health Plan, a competitive medical plan (CMP), has entered into a Medicare risk contract. One true statement about Crimson is that, as a:

CMP, Crimson is regulated by the federal government under the terms of the Tax Equity and Fiscal Responsibility Act (TEFRA)

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Incorrect. A CMP is a STATE-regulated prepaid health plan that meets TEFRA requirements for Medicare contracting.CMP, Crimson is not allowed to charge a Medicare enrollee a premium for any additional benefits it provides over and above Medicare benefits Incorrect. A CMP cannot charge the enrollee a fee greater than the actuarial value of the Medicare deductible and coinsurance for the basic Medicare-covered benefits. However, the CMP can charge the enrollee a premium for any additional benefits over and above Medicare benefits.provider under a Medicare risk contract, Crimson receives for its services a capitated payment equivalent to 85% of the AAPCC Incorrect. TEFRA risk HMOs and CMPs enroll Medicare beneficiaries and provide for their Medicare-covered primary and acute care services in return for a capitated payment equivalent to 95% of the AAPCC. AAPCC is the FFS amount that CMS would expect to pay for a Medicare beneficiary who lives in a particular county, adjusted for age, sex, institutional status, and other factors.provider under a Medicare risk contract, Crimson is required to deliver to members all Medicare-covered services, without regard to the cost of those services Correct. A Medicare risk contract, a contract payment methodology between CMS and a health plan (HMO or CMP), requires the delivery of at least all Medicare-covered services to members as medically necessary in return for a monthly capitation payment from CMS and sometimes an additional fee paid by the enrollee for supplemental services. The health plan is then liable for those contractually offered services without regard to cost.

58. The Bruin Health Plan is a Social Health Maintenance Organization (SHMO). As an SHMO, Bruin:

must provide Medicare participants with standard HMO benefits, as well as with limited long-term care benefits Correct. SHMOs provide Medicare participants with standard HMO benefits, such as hospital, physician, skilled nursing facility, and home health services, together with limited long-term care benefits, such as social benefits for frail elderly who reside at home.does not need as great a variety of provider types or as complex a reimbursement method as does a traditional HMO Incorrect. The breadth of services provided by SHMOs requires a greater variety of provider types, as well as more complex reimbursement mechanisms, than do standard HMOs. health plans that offer SHMOs must be able to establish and maintain a network of providers, such as social workers and home healthcare providers, that can support the requirements and intent of an SHMO.receives a payment that is based on reasonable costs and reasonable charges Incorrect. SHMOs receive a capitated payment that is comparable to 100% of the Adjusted Average Per Capita Cost (AAPCC).most likely provides fewer supportive services than does a traditional HMO, because one of Bruin's goals is to minimize the use of community-based care Incorrect. SHMOs provide a greater number and variety of supportive services than do traditional HMOs because one of the goals of SHMOs is to

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avoid institutionalization of participants through the use of community-based care.

59. The Omnibus Budget Reconciliation Act of 1986 (OBRA 1986) established the Programs of All-Inclusive Care for the Elderly (PACE). One characteristic of the PACE programs is that:

they are available to United States citizens only after they reach age 65. Incorrect. PACE provides an alternative to intensive institutional care for persons aged 55 and over who live in a PACE service area, are certified as eligible for a nursing-facility level of care, and meet the eligibility requirements for the program within their state of residence.they have an upper dollar limit. Incorrect. Although benefits under social health maintenance organizations (SHMOs) have an upper dollar limit, benefits under PACE programs do not have an upper limit.they receive a monthly capitation that is set at 100% of the Adjusted Average Per Capita Cost (AAPCC). Incorrect. The monthly capitation payment for a PACE program is set at 239% of the AAPCC in order to account for the frailty of the PACE population and their accompanying need for more intensive services than healthier Medicare recipients.PACE providers receive capitated payments only through the PACE agreement. Correct. PACE providers receive capitated payments only through the PACE agreement and must make available all items and services covered under both Title XVIII (Medicare) and Title XIX (Medicaid) without limitations on amount, duration, or scope of service, and without requiring any deductibles, copayments, or other cost-sharing.

60. Edward Patillo has established a Medicare+Choice medical savings account (MSA). This MSA will allow Mr. Patillo to:

carry over any money remaining in his MSA at the end of the benefit year to the next benefit yearCorrect. MSAs are designed to be health insurance arrangements that give consumers a financial incentive to control their own healthcare costs by combining a high-deductible health insurance policy with an individual savings account. Any money remaining in an MSA at the end of the benefit year is carried over to the next benefit year. make withdrawals at any time from the MSA, but only for medical expenses Incorrect. Mr. Patillo can make tax-free withdrawals from the MSA to meet qualified medical expenses that are not paid by the high-deductible health insurance policy. He may also make withdrawals from the MSA for non-medical expenses, but those amounts are taxed as income.obtain payment at 100% of the Medicare allowable payment for all Medicare-covered services he receives, without having to pay any deductibles or out-of-pocket expenses Incorrect. After Mr. Patillo pays the deductible and out-of-pocket expenses

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up to the established annual maximum, Medicare-covered services are paid at 100% of the Medicare allowable payment.make withdrawals from the MSA to meet qualified medical expenses that are not paid by his high-deductible health insurance policy, but these withdrawals are taxed as income to Mr. Patillo Incorrect. Mr. Patillo may make tax-free withdrawals from the MSA to meet qualified medical expenses that are not paid by the high-deductible health insurance policy. He may also make withdrawals from the MSA for non-medical expenses, but those amounts are taxed as income.

61. The following statement(s) can correctly be made about the Balanced Budget Act (BBA) of 1997:

A. The BBA requires Medicare+Choice organizations to be licensed as non-risk-bearing entities under federal law.

B. The Centers for Medicaid and Medicare Services (CMS) is responsible for implementing the BBA.

Both A and B Incorrect. Statement A is incorrect because the BBA requires Medicare+Choice organizations to be licensed as risk-bearing entities under state law. Statement B is a correct statementA only Incorrect. Statement A is incorrect because the BBA requires Medicare+Choice organizations to be licensed as risk-bearing entities under state law. Statement B is correct. CMS is responsible for implementing the various laws, such as the BBA, that have an impact on Medicare.B only Correct. Statement A is incorrect because the BBA requires Medicare+Choice organizations to be licensed as risk-bearing entities under state law. Statement B is correct. CMS is responsible for implementing the various laws, such as the BBA, that have an impact on Medicare.Neither A nor B Incorrect. Statement A is an incorrect statement. Statement B is a correct statement. CMS is responsible for implementing the various laws, such as the BBA, that have an impact on Medicare.

62. Dr. Michelle Kubiak has contracted with the Gem Health Plan, a Medicare+Choice health plan, to provide medical services to Gem's enrollees. Gem pays Dr. Kubiak $40 per enrollee per month for providing primary care. Gem also pays her an additional $10 per enrollee per month if the cost of referral services falls below a targeted level. This information indicates that, according to the substantial financial risk formula, Dr. Kubiak's referral risk under this contract is equal to:

20%, and therefore this arrangement puts her at substantial financial risk Incorrect. According to CMS regulations, substantial financial risk exists when the amount for which a physician is at risk for referral services is more than 25% of the maximum potential total compensation that the physician

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could receive. Referral risk is calculated by dividing the amount at risk for referral services by the maximum potential payments. For Dr. Kubiak, the calculation is [$10 ($40 + $10) = .20 or 20%] Because her referral risk does not exceed 25%, this compensation arrangement does not put her at substantial financial risk.20%, and therefore this arrangement does not put her at substantial financial risk Correct. According to CMS regulations, substantial financial risk exists when the amount for which a physician is at risk for referral services is more than 25% of the maximum potential total compensation that the physician could receive. Referral risk is calculated by dividing the amount at risk for referral services by the maximum potential payments. For Dr. Kubiak, the calculation is [$10 ($40 + $10) = .20 or 20%]. Because her referral risk does not exceed 25%, this compensation arrangement does not put her at substantial financial risk.25%, and therefore this arrangement puts her at substantial financial risk Incorrect. According to CMS regulations, substantial financial risk exists when the amount for which a physician is at risk for referral services is more than 25% of the maximum potential total compensation that the physician could receive. Referral risk is calculated by dividing the amount at risk for referral services by the maximum potential payments. For Dr. Kubiak, the calculation is [$10 ($40 + $10) = .20 or 20%] The 25% referral risk in this answer choice was calculated by dividing the $10 per employee per month by the $40 per enrollee per month. However, the $10 should be divided by $50 (or $10 + $40), the maximum potential payment Dr. Kubiak could receive per enrollee per month.25%, and therefore this arrangement does not put her at substantial financial risk Incorrect. According to CMS regulations, substantial financial risk exists when the amount for which a physician is at risk for referral services is more than 25% of the maximum potential total compensation that the physician could receive. Referral risk is calculated by dividing the amount at risk for referral services by the maximum potential payments. For Dr. Kubiak, the calculation is [$10 ($40 + $10) = .20 or 20%] The 25% referral risk in this answer choice was calculated by dividing the $10 per employee per month by the $40 per enrollee per month. However, the $10 should be divided by $50 (or $10 + $40), the maximum potential payment Dr. Kubiak could receive per enrollee per month.

63. One true statement about the Medicaid program in the United States is that:

the federal financial participation (FFP) in a state's Medicaid program ranges from 20% to 40% of the state's total Medicaid costs Incorrect. The FFP in a state's Medicaid program ranges from 50% to 80% of the state's total costs, with poorer states (based on per capita income) receiving a higher percentage of reimbursement.Medicaid regulations mandate specific minimum benefits, under the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program, for all Medicaid recipients younger than age 30 Incorrect. Federal Medicaid regulations mandate specific minimum benefits for Medicaid recipients younger than 21 under the EPSDT program. EPSDT provides for health screening, vision, hearing, and dental services at

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intervals that meet recognized standards of medical and dental practices and at other intervals as necessary to determine the existence of physical or mental illnesses or conditions.the individual states have responsibility for administering the Medicaid program Correct. The individual states administer the Medicaid program and make claim payments, using state funds and some matching funds from the federal government.non-disabled adults and children in low-income families account for the majority of direct Medicaid spending Incorrect. Although nearly 75% of Medicaid beneficiaries are non-disabled adults and children in low-income families, this group accounts for only about one-third of direct Medicaid spending. The elderly and disabled individuals who make up the other 25% of Medicaid beneficiaries are responsible for the other two-thirds of total direct spending.

64. The following statements are about waivers and the Medicaid program. Select the answer choice containing the correct statement:

The Balanced Budget Act (BBA) of 1997 eliminated the need for states to make formal applications for waivers. Correct. Prior to the passage of the BBA, states were required to apply for special waivers to make health plan enrollment mandatory for Medicaid recipients or to offer more comprehensive services to certain categories of the recipients. The BBA eliminated the need for formal application for waivers.Section 1115 waivers allow states to bypass the Medicaid program's usual requirement of giving recipients complete freedom of choice in selecting providers. Incorrect. The 1915(b) waiver is called the 'freedom of choice' waiver because it allows states to bypass (or waive) the Medicaid program's usual requirement of giving recipients complete freedom of choice in selecting providers.Title XVIII waivers allow states to mandate certain categories of Medicaid recipients to enroll in health plan plans. Incorrect. Section 1915(b) waivers allow states to mandate certain categories of Medicaid recipients to enroll in health plan plans. Title XVIII of the Social Security Act enacted the Medicare program.Section 1915(b) waivers allow states to establish demonstration projects in order to test new approaches to benefits and services provided by Medicaid. Incorrect. Section 1115 waivers allow states to establish demonstration projects in order to test new approaches to benefits, services, eligibility, program payments, and service delivery.

65. The following statements are about Medicaid health plan entities. Select the answer choice containing the correct statement:

To keep Medicaid enrollment costs as low as possible, states typically prohibit the use of third-party entities known as enrollment brokers to handle the recruitment and enrollment of Medicaid recipients in health plan plans Incorrect. Many states use enrollment brokers to handle the recruitment and

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enrollment of Medicaid recipients in health plan programs. The enrollment brokers must present the various options available to the Medicaid enrollee, but these brokers add an extra layer of communication between the enrollee and the health plan and provider.Primary care case managers (PCCMs) are individuals who contract with a state's Medicaid agency to provide primary care services mainly to urban areas. Incorrect. While PCCMs have been particularly popular in rural areas with low health plan penetrations, they tend to be a transitional type of health plan entity, with minimal health plan controls, and are decreasing in numbers as health plan and health plans become more common.Typically, Medicaid beneficiaries must be given a choice between at least two health plan entities. Correct. If a state mandates Medicaid health plan enrollment, federal regulations require that Medicaid beneficiaries be given a choice between at least two health plan entities. However, for Medicaid beneficiaries living in rural areas that have minimal health plan development, the state is allowed to offer only one option for health plan.Medicaid health plan entities are responsible for providing primary coverage for all dually-eligible beneficiaries. Incorrect. Individuals who are covered by both Medicare and Medicaid are referred to as being dually-eligible. Medicare is the primary coverage for dually-eligible individuals.

66. The two basic approaches that Medicaid uses to contract with health plans are open contracting and selective contracting. One true statement about these approaches to contracting is that:

open contracting requires health plans to meet minimum performance standards outlined in a state's request for proposal (RFP) Incorrect. SELECTIVE contracting requires health plans to meet minimum performance standards outlined in a state's request for proposal (RFP) and to bid competitively for Medicaid contracts.open contracting makes it possible for the Medicaid agency to offer enrollment volume guarantees Incorrect. Under open contracting, the Medicaid agency cannot offer enrollment volume guarantees because enrollment is spread among a large number of plans. An health plan needs to have a certain number of enrollees in order to operate efficiently and profitably; therefore, the Medicaid agency can attract more interest from health plans if it is able to offer enrollment guarantees.selective contracting requires any health plan that meets the state's performance standards and the federal Medicaid requirements to enter into a Medicaid contract Incorrect. OPEN contracting allows, but does not require, any health plan that meets the state's performance standards and the federal Medicaid requirements, and is willing to accept Medicaid's reimbursement levels, to enter into a Medicaid contract.selective contracting requires health plans to bid competitively for Medicaid contracts Correct. Selective contracting requires health plans to meet minimum

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performance standards outlined in a state's request for proposal (RFP) and to bid competitively for Medicaid contracts.

67. The Medicaid program subsidizes indigent care through payments to disproportionate share hospitals (DSHs). The Preamble Hospital is a DSH. As a DSH, Preamble most likely:

receives financial assistance from the federal government but not a state government. Incorrect. Medicaid payments to DSHs provide supplemental assistance to these hospitals that serve the uninsured. The federal government matches state funds designated for DSH payments.is at a higher risk of operating at a loss than are most other hospitals. Correct. DSHs are qualified hospitals that provide inpatient services to a disproportionately large share of Medicaid patients and uninsured patients and, therefore, are at higher risk of operating at a loss.receives no payments directly from Medicaid for services rendered but rather receives a portion of the capitation payment that Medicaid makes to the health plans with which Preamble contracts. Incorrect. DSH payments are usually made directly to the hospital, rather than being included in the capitation payment made to the health plan. In this way, the Medicaid agency continues to subsidize DSHs so that they can afford to serve the Medicaid and uninsured populationsis eligible for capitation rates that are significantly higher than the FFS average for all covered Medicaid services. Incorrect. Federal regulations require that Medicaid capitation rates be no higher than the Medicaid FFS average for all covered services and that the rates be actuarially sound.

68. One characteristic of the workers' compensation program is that:

workers' compensation coverage is available to all employees, regardless of their eligibility for health insurance coverage Correct. Workers' compensation, which is available to all employees, is a state-mandated insurance program which provides benefits for medical expenses that are incurred and wages that are lost by workers who suffer a work-related injury or illness.indemnity benefits currently account for less than 10% of all workers' compensation benefits Incorrect. Workers' compensation includes an indemnity component, which replaces any wages an employee loses as a result of a work-related illness or injury. Indemnity benefits currently account for almost half of all workers' comp expenses. In the future, these benefits are likely to account for an even greater percentage of total costs.workers' compensation programs in most states require eligible employees to obtain medical treatment only from members of a provider network Incorrect. Most states place limits on an employer's or workers'

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compensation program's ability to require employees to obtain medical treatment only from members of a provider network.workers' compensation programs include deductibles and coinsurance requirements Incorrect. Workers' compensation is first-dollar coverage, which means that employees cannot be required to contribute to the costs of their own care through deductibles, coinsurance, copayments, or disability waiting periods.

69. The employees of the Trilogy Company are covered by a typical workers' compensation program. Under this coverage, Trilogy employees are bound by the exclusive remedy doctrine, which most likely:

allows Trilogy to deny benefits for an employee's on-the-job injury or illness, but only if Trilogy is not at fault for the injury or illness. Incorrect. When an employee seeks treatment for a work-related illness or injury, an employer cannot deny liability under the workers' compensation program, even if the employer is not at fault.allows Trilogy to place limits on the amount of coverage payable for a given claim under the workers' compensation program. Incorrect. Workers' compensation is last dollar coverage in that health plans cannot place limits on the benefits they will pay for a given claim.requires the employees to accept workers' compensation as their only compensation in cases of work-related injury or illness. Correct. When an employee seeks treatment for a work-related illness or injury, an employer cannot deny liability under the workers' compensation program, even if the employer is not at fault. In return for this coverage, employees are bound by the exclusive remedy doctrine.provides the employees with 24-hour coverage. Incorrect. Twenty-four-hour coverage is the integration of workers' compensation coverage, both the medical and the disability components, with non-workers' compensation healthcare and disability coverage.

70. The following statements are about workers' compensation provider networks. Select the answer choice containing the correct statement:

In order to supply a provider network to furnish healthcare to workers' compensation beneficiaries, a health plan typically uses the network that has already been created for the group health plan. Incorrect. For a health plan, supplying a network of providers to furnish healthcare to workers' compensation beneficiaries is not simply a matter of reapplying a network that has already been created for a group health plan. Some providers who are suitable for the health plan's other networks may not offer the specialized services required to treat workers' compensation patients. Other providers may not understand the clinical practice guidelines for occupational illnesses or injuries. Also, the providers in a workers' compensation network need a different set of experiences and skills and a different approach to practicing medicine than do providers in other networks.

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Typically, case managers for workers' compensation programs are physical therapists. Incorrect. Case managers for workers' compensation are generally registered nurses or physicians with experience in occupational medicine or in disability management. A case manager coordinates the care furnished to the employee by various types of providers.Most states prohibit the use of fee schedules in order to curb the rising workers' compensation healthcare costs. Incorrect. Many states try to curb rising workers' compensation healthcare costs by instituting fee schedules, which list the maximum amounts that providers can charge for specific healthcare services rendered under the state's workers' compensation program. Fee schedules allow health plans to regulate increases in medical care by limiting how much medical fees can increase each year. They also ensure that the fees paid to various providers for workers' compensation benefits are consistent.Networks serving workers' compensation patients typically include higher concentrations of specialists than do other provider networks. Correct. In workers' compensation, musculoskeletal injuries account for almost two-thirds of medical expenses. In addition, minor injuries account for about 20% of workers' compensation claims but only 1% of other groups' medical expenses. In order to meet these patient needs, a network serving workers' compensation patients typically includes a higher concentration of specialists than other networks include.

71. The Aztec Health Plan has a variety of organizational committees related to quality and utilization management. These committees include the medical advisory committee, the credentialing committee, the utilization management committee, and the quality management committee. Of these committees, the one that most likely is responsible for providing oversight of Aztec's inpatient concurrent review process is the:

medical advisory committee Incorrect. The medical advisory committee typically formulates clinical monitoring activities and develops clinical and preventive health practice guidelines and medical care standards for members of the health plan's provider network.credentialing committee Incorrect. The credentialing committee typically establishes and updates the health plan's credentialing processes and criteria, subject to the board of director's approval, and reviews the credentials of new applicants and contracted providers during the credentialing and recredentialing processes.utilization management committeeCorrect. The utilization management (UM) committee typically reviews and updates the health plan's UM program description and develops utilization review protocols. The committee usually is also responsible for reviewing utilization patterns of the plan's providers and reviewing medical appropriateness for utilization decisions that are under appeal. quality management committee Incorrect. The quality management (QM) committee typically has the

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responsibility for overseeing the health plan's quality improvement activities in both the clinical and service areas. This committee also reviews and updates the health plan's QM program for approval by the board of directors and recommends policy decisions to the board.

72. In order to evaluate and manage the performance of individual providers in its provider network, the Quorum Health Plan implemented a program that focuses on identifying the best and worst outcomes and utilization patterns of its providers. This program is also designed to develop and implement strategies such as treatment protocols and practice guidelines to improve the performance of Quorum's providers. This information indicates that Quorum implemented a program known as:

an integrated delivery system (IDS) Incorrect. An IDS is a type of health plan which is a combination of two or more health plans, group practices, clinics, and hospitals that links the delivery, financing, and administration functions of medical care.a coordinated care program Incorrect. A coordinated care program is one type of organization that can contract with CMS to provide covered services to Medicare beneficiaries under Medicare+Choice. A coordinated care program is offered by a health plan such as an HMO with or without a point-of-service (POS) option, a preferred provider organization (PPO), a provider-sponsored organization (PSO), or a managed healthcare plan offered by a religious fraternal organization.ostensible agency Incorrect. Under the theory of ostensible agency, also known as apparent agency, if a plan member reasonably believes that a provider is acting as the health plan's employee or agent while providing negligent care, the member may have cause to bring action against the health plan.continuous quality improvement (CQI) Correct. CQI in healthcare is a structural organizational process which involves personnel in planning and executing a continuous stream of improvements in systems in order to provide quality healthcare that meets or exceeds customer expectations.



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Canyon used a process measure to evaluate the performance of Dr. Enberg when it evaluated whether:

Dr. Enberg's young patients receive appropriate immunizations at the right ages Correct. Process measures evaluate the healthcare services offered by a provider to the health plan and its members. Process measures apply to such areas as the availability and use of preventive health screenings or childhood immunizations.Dr. Enberg conforms to standards for prescribing controlled substances Incorrect. This is an example of a structural measure. Structural measures evaluate the quality of a provider's staff, equipment, and facilities. Aspects of a provider's practice that are appropriate for structural measurements include the provider's procedures for controlling infection and the provider's compliance with regulatory or accreditation requirements in such areas as licensing and medical record keeping practices.the condition of one of Dr. Enberg's patients improved after the patient received medical treatment from Dr. Enberg Incorrect. This is an example of an outcomes measure. Outcomes measures evaluate a patient's condition after a clinical treatment. One example of an outcomes measure is the five-year patient survival rate following a specific treatment plan for a particular illness or a particular patient population.Dr. Enberg's procedures are adequate for ensuring patients' access to medical care Incorrect. This is an example of a structural measure. Structural measures evaluate the quality of a provider's staff, equipment, and facilities. Aspects of a provider's practice that are appropriate for structural measurements include the provider's procedures for controlling infection and the provider's compliance with regulatory or accreditation requirements in such areas as licensing and medical record keeping practices.

74. When evaluating the success of providers in meeting standards, a health plan must make adjustments for case mix or severity. One true statement about case mix/severity adjustments is that they:

typically are more important in measuring the performance of PCPs than they are in measuring the performance of specialists Incorrect. Case mix/severity adjustments are particularly important in measuring a specialist's performance. Because specialists treat patients with existing medical conditions referred by PCPs, a specialist's patient base is fundamentally different from the general patient population.help compensate for any unusual factors that may exist in a provider's patient population or in a particular patient Correct. An adjustment for case mix or severity is a statistical adjustment that is made for an individual provider's patient population in order to compensate for utilization and clinical variances created by such factors as the age and sex of a patient and the patient's health status. Case mix/severity adjustments allow for a more equitable comparison of data between providers for both inpatient and outpatient care.tend to increase the number of providers who are considered to be outliers

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Incorrect. Case mix/severity adjustments help reduce the number of providers who might otherwise be considered outliers. An outlier is a provider who is using medical resources at a much higher or lower rate or in a manner noticeably different than the provider's peersallow for a more equitable comparison of data between providers of outpatient care but not providers of inpatient care Incorrect. Case mix/severity adjustments allow for a more equitable comparison of data between providers for both inpatient and outpatient care.

Problem 1

The national average cost per covered employee for PPO rental networks is $2.52 PMPM. This cost translates into roughly 1% of the health plan premium cost, assuming a premium of $250 per employee per month. By multiplying the network rental cost per member by the estimated number of plan members, the health plan can determine the overall cost of renting the network. Figure 2B-8 illustrates how the network rental cost is calculated.

Problem 2

If the provider charges $100 for a procedure, but the discounted FFS is $90 (90% of the provider's usual fee), the health plan will base its payment on the DFFS, which is lower than the provider's billed charge. Conversely, if the provider charges only $80 for the procedure, the provider will receive payment based on the submitted charge, because it is lower than the DFFS.

Problem 31. Patient A is a member of Health Plan B, which allows access to any provider. 2. Patient A receives treatment that costs $1,000 from Provider C, who is not

affiliated with Health Plan B. 3. Provider C submits a claim for the full amount of charges ($1,000) to Health Plan

B.

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4. Health Plan B contacts a discount broker, typically a PPO or a third party administrator (TPA), that has access to a list of the provider's discounted reimbursement arrangements with various health plans. Discount brokers typically purchase lists of contracted providers and their reimbursement rates from area PPOs.

5. The discount broker finds that Provider C has a contract with PPO D (the silent PPO in this situation) for a 20% discount off standard charges, and informs Health Plan B of this arrangement.

6. Health Plan B applies the 20% discount to the $1,000 claim and remits the resulting $800 to Provider C, along with an explanation of benefits (EOB) that cites Provider C's arrangement with PPO D. Unless Provider C rechecks Patient A's records for verification of health plan coverage, Provider C will not realize that Patient A was not a member of PPO D and that Patient A's charges were not subject to PPO D's discount.

7. Health Plan B pays an access fee to the discount broker and retains the remainder of the discounted fee.

Problem 4

A health plan has a conversion factor of $10 per unit. A service that is assigned a unit value of 10.0 will be reimbursed at $100 (10.0 units x $10 = $100), while a service with a unit value of 15.0 will be reimbursed at $150 (15.0 units x $10 = $150).

Problem 5

Stop-Loss Insurance

A provider group purchases individual stop-loss coverage for primary and specialty care services with a $5,000 attachment point and 10% coinsurance. If the accrued cost for the primary and specialty care treatment of a patient is $8,000, the provider group assumes responsibility for the first $5,000 (the attachment point) plus 10% of the remaining $3,000 (the coinsurance) for a total of $5,300. The insurer would reimburse the provider group for the remaining $2,700.23

A provider group with 5,000 plan members purchases aggregate stop-loss coverage for its hospital risk pool with a threshold of 115% of projected costs and a 10% coinsurance provision. The provider group funds a hospital risk pool at $40 PMPM. The estimated risk pool (projected costs for hospital care) for the year would total $2,400,000 ($40 x 5,000 members x 12 months). The stop-loss insurer would reimburse the provider group for 90% of hospital costs in excess of $2,760,000 (1.15 x $2,400,000). If actual hospital costs are $3,000,000, the insurer reimburses the provider group for $216,000 (0.90 x [$3,000,000 - $2,760,000]).24

Problem 6

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Discounted Fee-for-Service

the UCR charge for a particular procedure is $100. Under a 20% discount arrangement, a specialist who submits a claim for $100 for that procedure would receive $80 from the health plan. Under a volume-based system, the specialist might receive $90 per procedure for 0 to 10 procedures performed during a specific period, $80 per procedure for 11 to 20 procedures, and $70 per procedure for 21 to 30 procedures.

Problem 7

Capitation Systems

Patients utilize PCP services an average of three times per year at an average cost of $48. The PMPM capitation payment the PCP would receive each month for each plan member would be $12.00 [(3 × $48) ÷ 12]. A PCP serving 2,000 plan members would receive $24,000 in reimbursement each month.

Average utilization of cardiology services might be as low as 0.2 per year. Even if the average cost of cardiology services is $72.00, the PMPM capitation rate for the cardiologist would only be $1.20 [(0.2 × $72) ÷ 12]. The cardiologist would have to be capitated for approximately 20,000 patients to receive an amount comparable to the amount received by the PCP.

Problem 8

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Problem 9

Discounted Fee-for-Service Payments

A health plan might negotiate a 10% discount for 0 to 100 total bed days, a 20% discount for 101 to 200 bed days, and increasing discounts for additional bed days up to a specified maximum.

Problem 10

If a health plan’s total medical expenses for a certain time period are $450,000 and total revenues for the same period are $500,000, the medical loss ratio for that period is 0.90 or 90% ($450,000 ÷ $500,000).

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Problem 11

A pharmacy that receives a 15% discount under its contract with a drug manufacturer can purchase a drug with an AWP of $25.00 for only $21.25 ($25.00 – $3.75). The difference between the AWP and the actual purchase price belongs to the pharmacy.

Problem 12

The MAC list may specify a cost of 8 cents per tablet for a particular drug. If the pharmacy purchases that drug for 10 cents per tablet, the health plan will reimburse only 8 cents of the cost and the pharmacy may not bill the subscriber for the remaining 2 cents. If the pharmacy purchases the drug for 6 cents per tablet, it can charge the health plan only 6 cents, and not the 8 cents specified on the MAC list. MAC pricing is used primarily for multisource and generic products.

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Problem 13

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ahm 530 questions and problems from text

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