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

A.

One reason that health plans in the Medicare and Medicaid markets experience financial risk is that government regulations determine which services must be provided to Medicare and Medicaid enrollees.

B.

Effective use of hospital utilization is the single most likely factor to contribute to the success of a Medicare-contracting health plan.

C.

If a Medicare-contracting health plan is a provider-sponsored organization (PSO), it is prohibited from sharing financial risk with its providers.

D.

Typically, providers are more reluctant to accept financial risk in connection with providing services to the Medicaid population than with providing services to the Medicare population.

The following statements are about federal laws and regulations which affect health plans that offer products and services to the employer group market. Select the answer choice containing the correct statement.

A.

Amendments to the HMO Act of 1973 require federally qualified HMOs to adjust a group's prior premiums on the basis of the group's experience during the prior rating period.

B.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 requires that, if a plan sponsor elects to terminate its group coverage with a health plan, then the health plan must continue its coverage for the COBRA-qualified beneficiaries in the group.

C.

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 generally requires the guaranteed renewal of healthcare coverage for certain individuals and for both small and large groups, regardless of the health status of any member.

D.

The Mental Health Parity Act (MHPA) of 1996 mandates that all health plans must offer benefits for mental healthcare.

The reimbursement arrangement that Dr. Caroline Monroe has with the Exmoor Health Plan includes a typical withhold arrangement. One true statement about this withhold arrangement is that, for a given financial period,

A.

Dr. Monroe and Exmoor are equally responsible for making up the difference if cost overruns exceed the amount of money withheld

B.

Exmoor most likely distributes to Dr. Monroe the entire amount withheld from her if her costs are below the amount budgeted for the period

C.

Exmoor pays Dr. Monroe at the end of the period an amount over and above her usual reimbursement, and this amount is based on the performance of the plan as a whole

D.

Exmoor most likely withholds between 3% and 5% of Dr. Monroe's total reimbursement

For each of its products, the Wisteria Health Plan monitors the provider reimbursement trend and the residual trend. One true statement about these trends is that

A.

The provider reimbursement trend probably is more difficult for Wisteria to quantify than is the residual trend

B.

Wisteria's residual trend is the difference between the total trend and the portion of the total trend caused by changes in Wisteria's provider reimbursement levels

C.

The residual trend most likely has more impact on Wisteria's total trend than does the provider reimbursement trend

D.

An example of a residual trend would be a 5% increase in the capitation rate paid to a PCP by Wisteria

The following statements are about carve-out programs. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

A.

In the type of carve-out in which entire categories of care are administered by independent organizations, a health plan typically reimburses these organizations under an FFS contract.

B.

Typically, a health plan will offer carved-out services to its enrollees, but will manage these services separately.

C.

Carve-outs are services that are excluded from a capitation payment, a risk pool, or a health benefit plan.

D.

The most rapidly growing area related to carve-outs is disease management (DM).

The Acorn Health Plan uses a resource-based relative value scale (RBRVS) to help determine the reimbursement amounts that Acorn should make to providers who are compensated under an FFS system. With regard to the advantages and disadvantages to Acorn of using RBRVS, it can correctly be stated that

A.

An advantage of using RBRVS is that it can assist Acorn in developing reimbursement schedules for various types of providers in a comprehensive healthcare plan

B.

An advantage of using RBRVS is that it puts providers who render more medical services than necessary at financial risk for this overutilization

C.

A disadvantage of using RBRVS is that it will be difficult for Acorn to track treatment rates for the health plan's quality and cost management functions

D.

A disadvantage of using RBRVS is that it rewards procedural healthcare services more than cognitive healthcare services

Mandated benefit laws are state or federal laws that require health plans to arrange for the financing and delivery of particular benefits. Within a market, the implementation of mandated benefit laws is likely to cause __________.

A.

A reduction in the number of self-funded healthcare plans

B.

An increase in the cost to the health plans

C.

A reduction in the size of the provider panels of health plans

D.

A reduction in the uniformity among the healthcare plans of competing health plans

Because a health plan cannot decline coverage for individuals who are eligible for conversion of group health coverage to individual health coverage, the bulk of the health plan's underwriting for conversion policies is accomplished through health plan design.

A.

True

B.

False

The Zane health plan uses a base of accounting known as accrual-basis accounting. With regard to this base of accounting, it can correctly be stated that accrual-basis accounting

A.

Enables an interested party to view the consequences of obligations incurred by Zane, but only if the health plan ultimately completes the business transaction

B.

Is not suitable for measuring Zane's profitability

C.

Requires Zane to record revenues when they are earned and expenses when they are incurred, even if cash has not actually changed hands

D.

Prohibits Zane from making adjusting entries to its accounting records at the end of each accounting year

With regard to capitation arrangements for hospitals, it can correctly be Back to Top stated that

A.

The most common reimbursement method for hospitals is professional services capitation

B.

Most jurisdictions prohibit hospitals and physicians from joining together to receive global capitations that cover institutional services provided by the hospitals

C.

Ahealth plan typically can capitate a hospital for outpatient laboratory and X-ray services only if the health plan also capitates the hospital for inpatient care

D.

Many hospitals have formed physician hospital organizations (PHOs), hospital systems, or integrated delivery systems (IDSs) that can accept global capitation payments from health plans