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Question 1.1. (TCO 7) Employee covered health plans are most likely to be?
(Points : 5)
High deductible health plans with a savings option.
HMOs.
PPOs.
Traditional indemnity plans

Question 2.2. (TCO 7) Capitation plans are more common for physician payment
because: (Points : 5)
they can better control utilization.
physicians want more risk in their payment plans.
they are concerned about adverse selection.
physicians have larger reserves and can assume more risk.

Question 3.3. (TCO 7) The James Clinic is an organization of 100 physicians in a

variety of specialties. They recently contracted with Prudential Health Plan on a
capitated basis to provide all medical services to Prudential's members for the
next three years. This HMO model would be defined as a: (Points : 5)
Staff Model
Group Model
Individual Practice Association Model
Network Model

Question 4.4. (TCO 7) Suppose that AT&T had made an offer to acquire Merck
Pharmaceuticals. Ignoring potential antitrust problems, this merger would be
classified as a: (Points : 5)
Cross-border merger
Horizontal merger
Conglomerate merger
Vertical merger

Question 5. 5. (TCO 7) An HMO has a Point of Service (POS) option for

its members, but will pay only 80 percent of approved charges. If a
member goes out of network for a medical procedure with a charge of
$2,000, of which $1,200 is approved, how much must the member pay?
(Points : 10)

The approved amount is $1200. Thus the amount paid is 80% of this amount:
1200*0.8=$720
Thus in total the member must pay: 2000-720=$1280

Question 6. 6. (TCO 7) A hospital incurs $10 million of cost to treat

Medicaid patients and receives $7 million in payment. Actual charges
for these Medicaid patients were $20 million. The net community
benefit expense that would be reported in Schedule H of IRS Form 990
would be? (Points : 10)

Net community benefit expense that would be reported in Schedule H of IRS

Form 990 would be
= $20- $14 million
= $6 million

Question 7. 7. (TCO 7) How is charity care usually defined? (Points : 10)

Charity care usually defined as offering of services where there is no expectation to
receive cash. It occurs in providing health care services free of charge to different
individuals who are poor and cannot meet the financial criteria. In simple words it means
that not billing the poor people for the care they receive. But now it is a broad definition
which also includes identifying and covering the difference between the cost of services a poor
person receives and the amount received through third parties. It is also found that definition of charity
care is not simple rather complicated. It has raised many issues because hospitals refer residual
unpaid debt to collection before ultimately writing it off as a business expense and thus it become it
become difficult to identify it as charity.