Question

Chapter 21: Operational Finance and Budgeting

1. ___ is the primary revenue source for HMOs.

A. Investments

B. Equity financing

C. Withholds

D. Premium revenue

2. ___ rating entails the application of a standard rate to all groups within the community being underwritten.

A. Experience rating

B. Basic community rating

C. Adjusted community rating

D. None of the above

3. ___ develops a group rate on the basis of a group’s actual experience.

A. Experience rating

B. Basic community rating

C. Adjusted community rating

D. None of the above

4. Medical expenses of an MCO may be incurred on a:

A. Capitated basis

B. Fee schedule

C. Per diem arrangement

D. All of the above

5. ___ is a method of measuring the minimum amount of capital appropriate for an MCO to support its overall business operations on the basis of its size and the degree of risk taken into account each of the five major categories of risk.

A. ABC analysis

B. RBC

C. Pareto analysis

D. None of the above

6. The Sarbanes Oxley Act of 2002 created which of the following

A. Securities and Exchange Commission

B. Institute of Internal Auditors

C. Public Company Accounting Oversight Board

D. NAIC

Chapter 22: Underwriting and Rating Functions

1.?___ involves gathering information about applicants or groups of applicants to determine an adequate, competitive, and equitable rate at which to insure them.

A.?Adjusting

B.?Underwriting

C.?Rating

D.?None of the above

2.?___ involves calculating the premium to be charged for a specific individual or group on the basis of information gathered during the ___ process.

A.?Rating, Underwriting

B.?Underwriting, Rating

C.?Rating, Adjusting

D.?None of the above

3.?The best data source for any health plan is ___ because it implicitly recognizes all the plan-specific characteristics.

A.?Underwriting

B.?Actuarial consulting firms’ data

C.?Experience

D.?All of the above

4.?___ rates are high enough to generate sufficient revenue to cover all claims and other plan expenses and to yield an acceptable return on equity.

A.?Equitable

B.?Adequate

C.?Competitive

D.?None of the above

5.?_   rates will approximate any given group’s costs without an unreasonable amount of cross-subsidization across groups.

A.?Equitable

B.?Adequate

C.?Competitive

D.?None of the above

6. Why is historical persistency an important factor to consider when underwriting?

A. There are significant fixed costs to write a new group

B. Groups that change carriers often are cheaper to underwrite

C. Multi-year relationships with groups may be required by law

D. None of the above

7. Applicants/groups with poor credit histories may be required to do which of the following?

A. Produce some form of collateral

B. Produce a letter of credit

C. Pay premiums in advance of the coverage period

D. Any of the above

Chapter 23: Information Systems and EDI for Managed Care Organizations

1.?True or false? MCO rely greatly on information systems to reduce costs and improve service.

2.?True or false? Claims processing is the primary differentiator between health plans in the marketplace.

3.?True or false? The most common form of claims submission is electronic.

4.?True or false? The largest opportunity to improve healthcare utilization, quality, and cost is through proactive and intensive medical and case management leverage medical management software.

Chapter 24: Health Plans and Medicare

1. Which type of MA plan is experiencing an increase in availability and enrollment due to broad waivers from CMS?

A. Medical savings account plan.

B. Health Maintenance Organization plan.

C. Private fee-for-service plan.

D. Group retiree plan.

2. Dual Eligible Special Needs Plans enroll individuals who are “dual eligible.” Who are the “dual eligible”?

A. Individuals who are eligible for Medicare and have Long-Term care insurance

B. Individuals who are eligible for Medicare and Medicaid

C. Individuals who are eligible for Medicare and are institutionalized

D. Individuals who are eligible for Medicare and have a severe or disabling chronic condition

3. Plans can receive bonus payments for high star quality ratings. The bonus payments can be used to:

A. Provide additional benefits

B. Reduce cost sharing

C. Reduce enrollee premiums

D. All of the above

4.   If a plan’s bid to CMS exceeds the benchmark, the plan must charge enrollees the difference in the form of :

A. A monthly premium

B. Higher deductibles

C. Reduced services

D. Higher copayments

5. MA plans must have a quality improvement program that measures performance under the program and includes:

A. Chronic Care Improvement Programs (CCIP)

B. Quality Improvement Projects (QIPs)

C. Health Information Systems

D. All of the above

6. Which of the following is most likely to cause the rise of Medicare enrollment in MA plans over the next few decades?

A. The Affordable Care Act

B. Baby Boomer interest in staying in managed care when becoming eligible for Medicare

C. Politicians encouraging Medicare beneficiaries to choose MA over FFS

D. Increased marketing by MA plans to raise awareness of MA

Answer 1

1. ___ is the primary revenue source for HMOs.

Correct Answer:- D. Premium revenue

Reason:- Most of HMOs earn their revenue from premium revenues.

2. ___ rating entails the application of a standard rate to all groups within the community being underwritten.

Correct Answer:- None of the above

Reason:- Community rating entails the application of a standard rate to all groups within the community being underwritten.

3. ___ develops a group rate on the basis of a group’s actual experience.

Correct Answer:- A. Experience rating

Reason:- experience rating produces a group rate for group’s actual experience.

4. Medical expenses of an MCO may be incurred on a:

Correct Answer:- All of the above

Reason:- capitated basis, fee schedule, per diem arrangement are the sources of medical expenses.

5. ___ is a method of measuring the minimum amount of capital appropriate for an MCO to support its overall business operations on the basis of its size and the degree of risk taken into account each of the five major categories of risk.

Correct Answer:- RBC

Reason:- Risk Based Capital is a method of measuring the minimum amount of capital appropriate for an MCO to support its overall business operations on the basis of its size and the degree of risk taken into account each of the five major categories of risk.

6. The Sarbanes Oxley Act of 2002 created which of the following

Correct Answer:- C. Public Company Accounting Oversight Board

Reason:- Public Company Accounting Oversight Board was formed by The Sarbanes Oxley Act of 2002

1.___ involves gathering information about applicants or groups of applicants to determine an adequate, competitive, and equitable rate at which to insure them.

Correct Answer:- Underwriting

Reason:- Underwriting is a process of gathering information about applicants or groups of applicants to determine an adequate, competitive, and equitable rate at which to insure them.

2.___ involves calculating the premium to be charged for a specific individual or group on the basis of information gathered during the ___ process.

Correct Answer:- A. Rating, Underwriting

Answer:- Rating is a process of determining the premium to be charged for a specific individual or group on the basis of information gathered during the underwriting process.

3.The best data source for any health plan is ___ because it implicitly recognizes all the plan-specific characteristics.

Correct Answer:- C. Experience

Reason:- Experience is the best data source.

4.___ rates are high enough to generate sufficient revenue to cover all claims and other plan expenses and to yield an acceptable return on equity.

Correct Answer:- B. Adequate

Reason:- Adequate rates are sufficient to have the required revenue generation to cover all the expenses including claims.

5._   rates will approximate any given group’s costs without an unreasonable amount of cross-subsidization across groups.

Correct Answer:-A. Equitable

Reason:- Equitable rates will fulfill the costs of groups without any undue amount of cross subsidy.

7. Applicants/groups with poor credit histories may be required to do which of the following?

Correct Answer:- D:- Any of the above

Reason:- Applicants/groups with poor credit histories may be required to Produce a letter of credit or Produce some form of collateral or Pay premiums in advance of the coverage period

1.MCO rely greatly on information systems to reduce costs and improve service.

Correct Answer:- True

Reason:- cost reduction and service improvement is obtained with the help of IS.

2. Claims processing is the primary differentiator between health plans in the marketplace.

Correct Answer:- false

Reason:- Claim processing is the secondary factor.

3. The most common form of claims submission is electronic.

Correct Answer:- True

Reason:- Electronic modes can be used for claim submission.

4. The largest opportunity to improve healthcare utilization, quality, and cost is through proactive and intensive medical and case management leverage medical management software.

Correct Answer:- True