Exam 3: Health Plan Finance and Risk Management

The McGwire Health Plan is a for-profit health plan that issues stock. Events that will cause the owners' equity account of McGwire to change include

The Brookhaven Company is the parent company of two subsidiaries: an HMO and an insurance company. The headings on Brookhaven's financial statements read "Consolidated Financial Statements of Brookhaven Company." From the following answer choices, select the response that correctly indicates, under the entity concept, whether the HMO and the insurance company are accounted for as separate entities and whether the subsidiaries' financial results would be included in Brookhaven's consolidated financial statements.

The Kayak Company self funds the health plan for its employees. This plan is an example of a type of self-funded plan known as a general asset plan. The fact that this is a completely selffunded plan indicates that

In order to cover some of the gap between FFS Medicare coverage and the actual cost of services, beneficiaries often rely on Medicare supplements. Which of the following statements about Medicare supplements is correct?

The ability of a health plan to effectively perform the rating and underwriting functions has become critical to the plan's success. In developing its pricing strategy, a health plan has to address the marketplace's ongoing trends and factors, which include

One true statement about cash-basis accounting is that

Although the process is voluntary for health plans, external accreditation is becoming more and more important as states and purchasers require health plans undergo some type of external review process. This process:

Federal Employee Health Benefits Program (FEHBP) requires health plans offering services to federal employees and their dependents to provide:

The Newfeld Hospital has contracted with the Azalea Health Plan to provide inpatient services to Azalea's enrolled members. The contract calls for Azalea to provide specific stop-loss coverage to Newfeld once Newfeld's treatment costs reach $20,000 per case and for Newfeld to pay 20% of the next $50,000 of expenses for this case. After Newfeld's treatment costs on a case reach $70,000, Azalea reimburses the hospital for all subsequent treatment costs. One true statement about this specific stop-loss coverage is that

Health savings accounts were created by which of the following laws:

A key factor that distinguishes the various types of health plans is the type and amount of risk that a health plan assumes with respect to the delivery and financing of healthcare benefits. An example of a type of health plan that typically assumes the financial risk of delivering and financing healthcare benefits is a

Health plans require utilization review for all services administered by its participating physicians.

In assessing the potential degree of risk represented by a proposed insured, a health underwriter considers the factor of antiselection. Antiselection can correctly be defined as the

Dr. Milton Ware, a physician in the Riverside MCO's network of providers, is reimbursed under a fee schedule arrangement for medical services he provides to Riverside members. Dr. Ware's provider contract with Riverside contains a typical no-balance billing provision. One purpose of this provision is to:

The Jasmine Company, which self funds the health plan for its 200 employees, has established a 501(c)(9) trust as a means of addressing possible claims fluctuations under the health plan. This plan is not a part of a collective bargaining process. A potential disadvantage to Jasmine of using a 501(c)(9) trust is that

If Grace Wilson is eligible for benefits under both the Medicare and Medicaid programs, then

Health plans sometimes contract with independent organizations to provide specialty services, such as vision care or rehabilitation services, to plan members. For health plan partners what is required?

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. To prepare its cash flow statement, Caribou uses the direct method rather than the indirect method.

Two sets of financial accounting standards are generally accepted accounting principles (GAAP) and statutory accounting practices (SAP). One true statement about these financial accounting standards is that

Beginning in the early 1980s, several factors contributed to increased demand for behavioral healthcare services. These factors included: