Exam 3: Health Plan Finance and Risk Management

The following statements describe two types, or models, of HMOs: The Quest HMO has contracted with only one multi-specialty group of physicians. These physicians are employees of the group practice, have an equity interest in the practice, and provide

In most cases, medical errors are caused by breakdowns in the healthcare system rather than by provider mistakes.

During an open enrollment period in 1997, Amy Hadek enrolled through her employer for group health coverage with the Owl Health Plan, a federally qualified HMO. At the time of her enrollment, Ms. Hadek had three pre-existing medical conditions: angina, former broken ankle, and high blood pressure. Which of these conditions apply?

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

In order to help review its institutional utilization rates, the Sahalee Medical Group, a health plan, uses the standard formula to calculate hospital bed days per 1,000 plan members for the month to date (MTD). On April 20, Sahalee used the following information to calculate this: Current plan census - 375 Plan membership - 500,000 What is the bed days for a single day?

The accounting department of the Enterprise health plan adheres to the following policies: Policy A-Report gains only after they actually occur Policy B-Report losses immediately Policy C-Record expenses only when they are certain Policy D-Record revenues only when they are certain Of these Enterprise policies, the ones that are consistent with the accounting principle of conservatism are Policies

If the Ascot health plan's accountants follow the going-concern concept under GAAP, then these accountants most likely

The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities. The main purpose of Caribou's balance sheet is to

______________ HMOs can't medically underwrite any group - incl small groups.

The Fiesta Health Plan prices its products in such a way that the rates for its products are reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that Murdock's experience rate is $180 PMPM. Fiesta would correctly calculate that its blended rate PMPM for Murdock should be Fiesta's retention charge plus

Employer-sponsored benefit plans that provide healthcare benefits must comply with the Employee Retirement Income Security Act (ERISA). One of the most significant features of ERISA is that it:

When pricing its product, the Panda Health Plan assumes a 4% interest rate on its investments. Panda also assumes a crediting interest rate of 4%. The actual interest rate earned by Panda on the assets supporting its product is 6%. The following statements can correctly be made about the investment margin and interest margin for Panda's products.

The Health Maintenance Organization (HMO) Model Act, developed by the National Association of Insurance Commissioners (NAIC), represents one approach to developing solvency standards. One drawback to this type of solvency regulation is that it

An HMO that combines characteristics of two or more HMO models is sometimes referred to as a

In the following paragraph, a sentence contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have selected. The Igloo health plan recognizes the receipt of its premium income during the accounting period in which the income is earned, regardless of when cash changes hands. However, Igloo recognizes its expenses when it earns the revenues related to those expenses, regardless of when it receives cash for the revenues earned. This information indicates that the (realization/capitalization) principle governs Igloo's revenue recognition, whereas the (matching/initial-recording) principle governs its expense recognition.

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

All CDHP products provide federal tax advantages while allowing consumers to save money for their healthcare.

The purest form of a self-funded benefit plan is one in which the employer pays benefits from current revenue, administers all aspects of the plan, and bears the risk that actual benefit payments will exceed the expected amount of payments. A decision to use this kind of self-funding is generally considered most desirable when certain conditions are present. These conditions most likely include that the benefit plan

Health plans sometimes use global fees to reimburse providers. Health plans would use this method of provider reimbursement for all of the following reasons EXCEPT that global fees

In order to generate exchanges with consumers, healthcare plan marketers use the four elements of the marketing mix: product, price, place (distribution), and