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AHIP PHIAS practice questions

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Question 1Health Insurance Advanced Studies - Medical Plans and Managed Care

Under a typical health maintenance organization (HMO) arrangement, which statement best describes the member's financial responsibility when receiving care from an in-network provider?

  1. The member generally pays a fixed copayment at the time of service with no deductible for covered in-network care. Correct answer.
  2. The member pays a coinsurance percentage after satisfying an annual deductible for every service.
  3. The member pays the full charge and then submits a claim for reimbursement at the plan's discretion.
  4. The member pays nothing at all, since HMO plans do not use cost sharing.

Explanation

HMO products typically use fixed copayments for in-network services and often have no deductible for routine covered care. Cost sharing is predictable and collected at the point of service. Reimbursement-based models and universal deductibles are characteristic of other plan designs.

Question 2Health Insurance Advanced Studies - Medical Plans and Managed Care

A preferred provider organization (PPO) member sees an out-of-network specialist. How does a typical PPO usually handle this?

  1. It covers the service at a reduced benefit level with higher member cost sharing. Correct answer.
  2. It pays the same as in-network but waives the deductible.
  3. It denies all coverage because PPOs cover only network providers.
  4. It requires a referral from a primary care physician before any out-of-network care.

Explanation

PPOs generally permit out-of-network care but apply lower benefits, meaning higher coinsurance, separate deductibles, or balance billing exposure. In-network care receives the richer benefit. This flexibility distinguishes PPOs from closed-panel models.

Question 3Health Insurance Advanced Studies - Medical Plans and Managed Care

Which plan type combines HMO-like in-network benefits with the option to use out-of-network providers after meeting a deductible and obtaining a referral?

  1. Point of service (POS) plan Correct answer.
  2. Indemnity (fee-for-service) plan
  3. Health reimbursement arrangement (HRA)
  4. Exclusive provider organization (EPO)

Explanation

A POS plan blends HMO and PPO features: a primary care gatekeeper manages in-network care, and out-of-network care is available with a deductible and reduced benefits. EPOs generally provide no out-of-network coverage. Indemnity plans lack network tiers and gatekeeping.

Question 4Health Insurance Advanced Studies - Medical Plans and Managed Care

What is the primary distinguishing feature of an exclusive provider organization (EPO)?

  1. Members may self-refer to any specialist without network restrictions.
  2. Members receive coverage only for services rendered by network providers, except emergencies. Correct answer.
  3. Members must choose a primary care physician who authorizes all specialist care.
  4. Members pay a deductible only for out-of-network care.

Explanation

EPOs require members to use the network for covered non-emergency services; there is generally no out-of-network benefit. They typically do not require gatekeeping referrals. This makes them a lower-cost alternative to PPOs.

Question 5Health Insurance Advanced Studies - Medical Plans and Managed Care

In managed care terminology, what does a primary care physician (PCP) serve as when acting as a gatekeeper?

  1. A claims adjudicator who determines payment amounts
  2. An underwriter who assesses the member's risk level
  3. A network recruiter who contracts with specialists
  4. The entry point for care who authorizes referrals to specialists Correct answer.

Explanation

The gatekeeper role makes the PCP the first contact for care and the authorizing agent for specialist referrals. This controls utilization and coordinates care. Claims adjudication, underwriting, and network contracting are separate functions.

Question 6Health Insurance Advanced Studies - Medical Plans and Managed Care

A member enrolled in a managed care plan needs a non-emergency MRI. The plan requires the physician to contact the plan and obtain approval before the MRI is performed. This process is called:

  1. Concurrent review
  2. Retrospective review
  3. Case management
  4. Prospective (pre-service) utilization review Correct answer.

Explanation

Prospective utilization review occurs before the service is delivered and determines whether it will be covered. Concurrent review happens during an ongoing stay, and retrospective review happens after care. Case management coordinates care for high-cost or complex members.

Question 7Health Insurance Advanced Studies - Medical Plans and Managed Care

Which utilization management technique involves reviewing a hospital stay while the patient is still admitted to confirm continued medical necessity?

  1. Precertification
  2. Credentialing
  3. Retrospective review
  4. Concurrent review Correct answer.

Explanation

Concurrent review is conducted during an inpatient stay to confirm that continued care meets medical necessity criteria. Precertification is pre-service, and retrospective review occurs after discharge. Credentialing verifies provider qualifications.

Question 8Health Insurance Advanced Studies - Medical Plans and Managed Care

A hospital and a health plan agree that the hospital will accept a fixed amount per day for each covered inpatient admission regardless of the actual charges. This payment arrangement is best described as:

  1. Capitation
  2. Per diem reimbursement Correct answer.
  3. Global budget
  4. Fee-for-service reimbursement

Explanation

A per diem arrangement pays a set amount for each day of care. Capitation pays a fixed amount per member per period regardless of services used. Fee-for-service pays for each service rendered, and a global budget caps total spending for a defined population or period.

Question 9Health Insurance Advanced Studies - Medical Plans and Managed Care

Under a capitation arrangement, a physician group receives a fixed payment per member per month. What financial risk does the group assume?

  1. The group earns more when members use more services.
  2. The group's revenue is unaffected by the number of members enrolled.
  3. The group is guaranteed payment for each service rendered.
  4. The group bears the cost if utilization exceeds the fixed payment. Correct answer.

Explanation

Capitation transfers utilization risk to the provider: the payment is fixed per member per period, so higher-than-expected utilization reduces the provider's margin. Revenue depends on enrollment counts, and services are not separately reimbursed. This creates an incentive to manage care efficiently.

Question 10Health Insurance Advanced Studies - Medical Plans and Managed Care

Which statement accurately describes the relationship between a health plan and a provider network's contracted reimbursement rate?

  1. Network providers set their own rates and the plan must pay whatever is billed.
  2. Network providers may bill members for any difference between charges and the contracted rate.
  3. Network providers are paid the same rate as out-of-network providers.
  4. Network providers agree to accept the contracted rate as payment in full, subject to member cost sharing. Correct answer.

Explanation

By contracting, network providers accept the negotiated rate as payment in full, with the member responsible only for applicable cost sharing. Balance billing of the difference is generally prohibited for in-network care. Out-of-network providers are not bound by these rates.

Question 11Health Insurance Advanced Studies - Medical Plans and Managed Care

What is the main purpose of a health plan's credentialing process for providers?

  1. To verify that providers meet qualifications such as licensure and training to participate in the network Correct answer.
  2. To assign members to primary care physicians
  3. To determine the member's premium tier
  4. To negotiate reimbursement rates with each provider

Explanation

Credentialing confirms that a provider holds the required licenses, education, and clinical qualifications to join the network. It protects members and supports quality standards. Rate negotiation and member assignment are separate processes.

Question 12Health Insurance Advanced Studies - Medical Plans and Managed Care

A member calls the plan's 24-hour line with symptoms that appear life-threatening. Under prudent layperson standards applicable to emergency care, the plan should:

  1. Require precertification before the member seeks emergency care
  2. Cover the emergency service based on the symptoms that would lead a prudent layperson to seek immediate care Correct answer.
  3. Deny coverage if the final diagnosis turns out to be non-emergency
  4. Direct the member to the nearest in-network urgent care clinic

Explanation

Prudent layperson standards base emergency coverage on the presenting symptoms rather than the final diagnosis, and prior authorization cannot be required for true emergencies. This protects members who reasonably believe immediate care is needed. Denial based solely on a non-emergency final diagnosis conflicts with the standard.

Question 13Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following best describes the role of a pharmacy benefit manager (PBM) in a managed care plan?

  1. It adjudicates medical claims for physician office visits.
  2. It credential physicians for the medical network.
  3. It administers prescription drug benefits, including formulary management and pharmacy networks. Correct answer.
  4. It underwrites the medical risk for inpatient hospital services.

Explanation

PBMs administer the pharmacy benefit by managing formularies, negotiating drug prices, and maintaining pharmacy networks. They do not underwrite medical risk or credential physicians. Medical claim adjudication for office visits is separate from the pharmacy benefit.

Question 14Health Insurance Advanced Studies - Medical Plans and Managed Care

A plan places a drug on its formulary with a requirement that the member first try a lower-cost alternative before the plan will cover the preferred drug. This requirement is known as:

  1. Quantity limit
  2. Prior authorization
  3. Tier exception
  4. Step therapy Correct answer.

Explanation

Step therapy requires members to try a preferred, often lower-cost drug before a more expensive option is covered. Prior authorization requires plan approval before dispensing, quantity limits cap the amount dispensed, and tier exceptions change a drug's cost-sharing tier.

Question 15Health Insurance Advanced Studies - Medical Plans and Managed Care

How does a health maintenance organization's (HMO) closed-panel structure typically affect the member's choice of providers?

  1. Members generally must receive covered care from network providers, with exceptions such as emergencies. Correct answer.
  2. Members may see any licensed provider and the plan pays the same benefit.
  3. Members must obtain care only from the plan's employed physicians in all cases.
  4. Members may see out-of-network providers but pay a higher coinsurance.

Explanation

A closed-panel HMO limits covered non-emergency care to network providers. Members generally bear the full cost of unauthorized out-of-network care. Not all HMOs employ their physicians; many contract with independent network providers.

Question 16Health Insurance Advanced Studies - Medical Plans and Managed Care

A self-insured employer sponsors a group health plan. Which statement about this arrangement is correct?

  1. State insurance mandates automatically apply because the plan is self-funded.
  2. The employer is prohibited from using a third-party administrator.
  3. The employer must purchase stop-loss coverage by federal law.
  4. The employer assumes the financial risk for claims rather than purchasing a fully insured policy. Correct answer.

Explanation

In a self-insured arrangement, the employer funds claims directly and bears the risk, often using a third-party administrator for claims processing. ERISA generally preempts state insurance mandates for self-funded plans. Stop-loss coverage is optional and used to limit catastrophic risk.

Question 17Health Insurance Advanced Studies - Medical Plans and Managed Care

An employer wants to cap its exposure to very large individual claims under its self-funded plan. Which product addresses this need?

  1. Specific stop-loss insurance Correct answer.
  2. A health reimbursement arrangement
  3. A health savings account
  4. A flexible spending account

Explanation

Specific stop-loss insurance reimburses the employer for claims exceeding a set threshold for an individual. Aggregate stop-loss covers total claims above a threshold. HSAs, HRAs, and FSAs are consumer-directed accounts, not risk-transfer products.

Question 18Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following best characterizes a consumer-directed health plan paired with a health savings account (HSA)?

  1. It requires members to use only network providers and prohibits out-of-network care.
  2. It is available only to self-insured employer groups.
  3. It eliminates cost sharing at the point of service.
  4. It typically features a high-deductible health plan and a tax-advantaged account the member can use for qualified medical expenses. Correct answer.

Explanation

HSAs must be paired with a qualifying high-deductible health plan and let members save pre-tax dollars for qualified medical expenses. Funds roll over and are portable. HSAs are available in the individual and group markets, not solely to self-insured employers.

Question 19Health Insurance Advanced Studies - Medical Plans and Managed Care

A member receives a bill from an out-of-network provider that exceeds the plan's allowed amount, and the member is responsible for the difference. This amount is commonly called:

  1. Copayment
  2. Deductible
  3. Coinsurance
  4. Balance billing Correct answer.

Explanation

Balance billing is the difference between the provider's charge and the plan's allowed amount, which the member may owe when using out-of-network providers. Coinsurance is a percentage of the allowed amount, a copayment is a fixed dollar amount, and a deductible is the amount paid before benefits begin.

Question 20Health Insurance Advanced Studies - Medical Plans and Managed Care

Which statement accurately distinguishes a copayment from coinsurance?

  1. A copayment is a fixed dollar amount, while coinsurance is a percentage of the allowed charge. Correct answer.
  2. A copayment is paid by the provider, while coinsurance is paid by the member.
  3. A copayment is a percentage, while coinsurance is a fixed dollar amount.
  4. A copayment applies only after the deductible, while coinsurance never does.

Explanation

Copayments are fixed dollar amounts for covered services, whereas coinsurance is a percentage share of the allowed charge. Both are forms of member cost sharing. Copayments may or may not be subject to the deductible depending on plan design.

Question 21Health Insurance Advanced Studies - Medical Plans and Managed Care

A managed care plan uses a case management program for members with complex chronic conditions. What is the primary goal of this program?

  1. To process claims more quickly
  2. To replace the member's primary care physician
  3. To coordinate care and improve outcomes while managing costs for high-risk members Correct answer.
  4. To deny coverage for expensive treatments

Explanation

Case management coordinates services for high-cost, high-risk members to improve outcomes and control spending. It supports rather than replaces the treating physician. Denying coverage and speeding claims are not its purpose.

Question 22Health Insurance Advanced Studies - Medical Plans and Managed Care

A provider group accepts both capitation and fee-for-service payments. Under the capitated portion, the group is at risk for utilization. Which action best aligns with managing that risk?

  1. Reducing preventive care visits to lower short-term costs
  2. Encouraging members to use the emergency department for routine care
  3. Investing in care coordination to reduce avoidable hospitalizations Correct answer.
  4. Increasing the number of services billed per member

Explanation

Under capitation, the provider keeps the savings from avoided unnecessary utilization, so care coordination that prevents avoidable hospitalizations protects the group's margin. Increasing volume does not increase capitated revenue. Reducing preventive care can raise long-term costs.

Question 23Health Insurance Advanced Studies - Medical Plans and Managed Care

An insurer is designing a network and must decide between a broad PPO network and a narrow network. Which trade-off is most accurate?

  1. A broad network always produces lower costs because it increases competition among providers.
  2. A narrow network always increases premiums because fewer providers share the risk.
  3. A narrow network typically offers lower negotiated rates but may reduce member choice and require more disruption. Correct answer.
  4. Network breadth has no effect on premium or member satisfaction.

Explanation

Narrow networks generally secure lower rates from a smaller set of providers in exchange for volume, which can lower premiums but reduce choice and may disrupt continuity of care. Broad networks offer more choice but typically cost more. Network breadth materially affects both cost and satisfaction.

Question 24Health Insurance Advanced Studies - Medical Plans and Managed Care

A member's plan uses a tiered network in which providers are grouped by cost and quality. How does this design typically affect the member?

  1. The member pays the same cost sharing regardless of the provider's tier.
  2. The member is prohibited from using providers in the non-preferred tier.
  3. The member pays lower cost sharing when using providers in the preferred tier. Correct answer.
  4. The member's premium is set by the tier of the provider they choose.

Explanation

Tiered networks steer members toward higher-value providers by assigning lower cost sharing to preferred tiers. Non-preferred providers remain available but cost the member more. Premiums are not determined by a member's provider choices.

Question 25Health Insurance Advanced Studies - Medical Plans and Managed Care

A plan's medical loss ratio (MLR) is calculated as incurred claims plus quality improvement expenses divided by premiums. What does a higher MLR indicate?

  1. The plan has a larger provider network than its competitors.
  2. The plan's administrative costs are rising faster than its claims.
  3. The plan is denying more claims than average.
  4. A larger share of premium dollars is being spent on clinical care and quality rather than administration and profit. Correct answer.

Explanation

MLR measures the proportion of premium revenue spent on claims and quality improvement. A higher ratio means more of each premium dollar goes to care rather than administration or margin. It does not directly measure claim denials or network size.

Question 26Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following best describes the primary care provider's role as a gatekeeper in a traditional HMO?

  1. The PCP manages all specialty referrals and must authorize them. Correct answer.
  2. The PCP only provides care for acute illnesses, not preventive services.
  3. The PCP directly pays specialists from a personal account.
  4. The PCP is not involved in coordinating care for members.

Explanation

In a traditional HMO, the primary care provider (PCP) acts as a gatekeeper by coordinating care and authorizing referrals to specialists. This helps manage costs and ensure appropriate use of services. The PCP also provides preventive care and ongoing health maintenance.

Question 27Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following is a common feature of a preferred provider organization (PPO) network?

  1. Members must choose a primary care provider to coordinate all care.
  2. Members can see any provider, but pay less when using in-network providers. Correct answer.
  3. Members must obtain a referral from a specialist to see a primary care provider.
  4. Members are restricted to a closed panel of salaried physicians.

Explanation

PPOs typically allow members to see any provider, but offer financial incentives (lower cost-sharing) for using in-network providers. They do not require a PCP or referrals, and they are not closed-panel like traditional HMOs.

Question 28Health Insurance Advanced Studies - Medical Plans and Managed Care

What is the purpose of a health plan's utilization review program?

  1. To evaluate the medical necessity and appropriateness of care before, during, or after services are provided. Correct answer.
  2. To negotiate payment rates with providers and hospitals.
  3. To process claims and issue payments to providers.
  4. To credential providers and verify their licenses and malpractice history.

Explanation

Utilization review assesses the medical necessity, appropriateness, and efficiency of healthcare services. It can occur prospectively, concurrently, or retrospectively. Credentialing, rate negotiation, and claims processing are separate functions.

Question 29Health Insurance Advanced Studies - Medical Plans and Managed Care

In a managed care plan, what does the term 'network' refer to?

  1. The system used to transmit claims electronically.
  2. The list of medications covered by the plan.
  3. The set of benefits covered under the plan.
  4. The group of providers and facilities that have contracted with the plan to provide services to members. Correct answer.

Explanation

A network is the panel of contracted providers and facilities that agree to provide services to plan members under negotiated terms. The other options describe claims systems, benefit packages, and formularies, respectively.

Question 30Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following is an example of a preventive service typically covered without cost-sharing under managed care plans?

  1. Prescription eyeglasses
  2. Chiropractic adjustments
  3. Annual wellness visit Correct answer.
  4. Cosmetic surgery

Explanation

Preventive services such as annual wellness visits are often covered without cost-sharing to encourage early detection and disease prevention. Prescription eyeglasses, cosmetic surgery, and chiropractic adjustments are generally not classified as preventive and may involve cost-sharing or limited coverage.

Question 31Health Insurance Advanced Studies - Medical Plans and Managed Care

What is the main function of a health plan's provider directory?

  1. To outline the appeals process for denied claims.
  2. To describe the plan's credentialing standards.
  3. To provide a list of medications covered by the plan.
  4. To list the plan's contracted providers and their specialties, locations, and accepting-new-patient status. Correct answer.

Explanation

A provider directory helps members find in-network providers by listing contracted providers along with relevant details such as specialty, location, and whether they are accepting new patients. It does not list covered drugs, appeals processes, or credentialing standards.

Question 32Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following statements about exclusive provider organizations (EPOs) is correct?

  1. Members can see any provider without any network restrictions.
  2. Members must use in-network providers except in emergencies, and there is no coverage for out-of-network non-emergency care. Correct answer.
  3. Members must have a primary care provider and obtain referrals for specialists.
  4. Members pay the same cost-sharing for in-network and out-of-network providers.

Explanation

EPOs typically require members to use the network for non-emergency care; out-of-network services are not covered except in emergencies. They do not require a PCP or referrals, and they do not cover out-of-network care except for emergencies.

Question 33Health Insurance Advanced Studies - Medical Plans and Managed Care

What is the purpose of a health plan's grievance procedure?

  1. To determine whether a provider is qualified to join the network.
  2. To allow members to formally express dissatisfaction with the plan or its providers and seek resolution. Correct answer.
  3. To review the medical necessity of a proposed service before it is provided.
  4. To set the payment rates for network providers.

Explanation

A grievance procedure gives members a formal channel to complain about the plan or its providers and to seek resolution. Credentialing, rate-setting, and pre-service utilization review are separate processes.

Question 34Health Insurance Advanced Studies - Medical Plans and Managed Care

A member in a managed care plan needs a specialist visit. The plan requires the member to obtain a referral from their primary care provider before seeing the specialist. What type of plan is this most likely to be?

  1. A POS plan
  2. A traditional HMO Correct answer.
  3. A PPO
  4. An indemnity plan

Explanation

Traditional HMOs often require a PCP referral for specialist visits. PPOs and indemnity plans generally do not require referrals. POS plans may require referrals but also allow out-of-network care with different cost-sharing; the question describes a pure referral requirement typical of an HMO.

Question 35Health Insurance Advanced Studies - Medical Plans and Managed Care

A health plan wants to encourage providers to use evidence-based guidelines for managing chronic conditions. Which strategy is most directly aimed at achieving this goal?

  1. Requiring prior authorization for all specialist visits.
  2. Increasing the capitation rate paid to primary care providers.
  3. Reducing the number of providers in the network.
  4. Implementing a pay-for-performance program that rewards providers for meeting quality metrics. Correct answer.

Explanation

Pay-for-performance programs tie financial rewards to quality and efficiency metrics, encouraging providers to follow evidence-based guidelines. Capitation changes payment structure but not necessarily guideline adherence. Narrowing the network or adding prior authorization does not directly promote guideline use.

Question 36Health Insurance Advanced Studies - Medical Plans and Managed Care

In a managed care plan, which of the following best describes the purpose of disease management programs?

  1. To process claims and handle member billing inquiries.
  2. To improve health outcomes and reduce costs for members with chronic conditions through coordinated care and education. Correct answer.
  3. To provide acute care services for episodic illnesses.
  4. To manage the plan's provider network and credentialing.

Explanation

Disease management programs focus on chronic conditions, using coordinated care, education, and monitoring to improve outcomes and control costs. They are not for acute episodic care, network management, or claims processing.

Question 37Health Insurance Advanced Studies - Medical Plans and Managed Care

A self-insured employer plan uses a third-party administrator (TPA) to handle claims. Which statement about this arrangement is correct?

  1. The employer transfers all risk to an insurance company.
  2. The TPA bears the financial risk for claims and pays them from its own funds.
  3. The employer bears the financial risk for claims, while the TPA administers the plan. Correct answer.
  4. The TPA provides stop-loss insurance to the employer.

Explanation

In a self-insured arrangement, the employer retains financial risk for claims and typically hires a TPA to administer the plan (e.g., process claims, manage networks). The TPA does not bear the risk, and stop-loss insurance is provided by a separate insurer.

Question 38Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following is a key difference between an HMO and a POS plan?

  1. POS plans allow members to use out-of-network providers with higher cost-sharing, while HMOs generally do not cover out-of-network care except emergencies. Correct answer.
  2. HMOs allow members to self-refer to specialists, while POS plans require referrals.
  3. HMOs require a primary care provider, while POS plans do not.
  4. POS plans do not use provider networks, while HMOs do.

Explanation

POS plans combine HMO and PPO features: they typically require a PCP and referrals for in-network care but allow out-of-network care with higher cost-sharing. HMOs generally do not cover out-of-network non-emergency care. Both HMOs and POS plans usually require a PCP.

Question 39Health Insurance Advanced Studies - Medical Plans and Managed Care

A member's health plan uses a closed formulary. What does this mean for the member?

  1. The member can obtain any drug at the same cost-sharing.
  2. The plan covers all FDA-approved drugs without restriction.
  3. The formulary is not available to members.
  4. The plan covers only the drugs listed on its formulary, with limited exceptions. Correct answer.

Explanation

A closed formulary means the plan covers only the drugs on its formulary list; non-formulary drugs are generally not covered except through an exceptions process. This is distinct from an open formulary, which may cover non-listed drugs at higher cost-sharing.

Question 40Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following best describes the role of a primary care case manager (PCCM) in a managed care plan?

  1. The PCCM negotiates contracts with specialists.
  2. The PCCM conducts credentialing of providers.
  3. The PCCM coordinates care for members with complex needs and helps ensure appropriate use of services. Correct answer.
  4. The PCCM processes claims and handles billing inquiries.

Explanation

A primary care case manager coordinates care for members, especially those with complex conditions, to ensure appropriate and efficient use of services. Claims processing, contract negotiation, and credentialing are separate functions.

Question 41Health Insurance Advanced Studies - Medical Plans and Managed Care

A health plan is implementing a new utilization management program. Which of the following is an example of a concurrent review?

  1. Reviewing a claim after the service has been provided to determine payment.
  2. Reviewing a hospital stay while the patient is still admitted to determine continued medical necessity. Correct answer.
  3. Reviewing a request for a non-emergency procedure before it is scheduled.
  4. Reviewing a provider's credentials before adding them to the network.

Explanation

Concurrent review occurs during an ongoing hospital stay to assess continued medical necessity and plan discharge. Prospective review occurs before service, retrospective review after service, and credentialing is unrelated to utilization review.

Question 42Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following statements about a health plan's use of capitation is correct?

  1. Capitation pays providers a fixed amount per member per month regardless of services used. Correct answer.
  2. Capitation is a method of paying hospitals a per-diem rate.
  3. Capitation pays providers a fee for each service rendered.
  4. Capitation is a type of stop-loss insurance.

Explanation

Capitation is a payment model where providers receive a fixed payment per member per month, regardless of the number or type of services provided. Fee-for-service pays per service, per-diem pays per day, and stop-loss insurance protects against catastrophic losses.

Question 43Health Insurance Advanced Studies - Medical Plans and Managed Care

A member enrolled in a managed care plan is admitted to the hospital for an emergency. The plan does not require prior authorization for emergency admissions. What should the member do?

  1. Seek emergency care immediately; the plan should be notified according to its rules, but authorization is not required before treatment. Correct answer.
  2. Go to an out-of-network hospital only if the plan approves it first.
  3. Wait for the plan to approve the admission before seeking care.
  4. Call the plan to obtain prior authorization before going to the hospital.

Explanation

Under prudent layperson standards and typical managed care rules, emergency care does not require prior authorization. The member should seek immediate care and notify the plan afterward as required. Delaying care to obtain authorization is inappropriate.

Question 44Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following best describes the purpose of a health plan's credentialing process?

  1. To assign members to primary care providers.
  2. To verify that providers meet the plan's qualifications, including licensure, training, and malpractice history. Correct answer.
  3. To determine the reimbursement rate for each provider.
  4. To review the medical necessity of services.

Explanation

Credentialing verifies providers' qualifications, such as licenses, board certification, and malpractice history, to ensure they meet the plan's standards. Reimbursement rates, member assignment, and medical necessity review are separate processes.

Question 45Health Insurance Advanced Studies - Medical Plans and Managed Care

A health plan offers a tiered network where providers are grouped by cost and quality. How does this design typically affect members?

  1. Members must use providers in the lowest-cost tier only.
  2. Members pay lower cost-sharing when they choose providers in higher-value tiers. Correct answer.
  3. Members are restricted to a single tier of providers.
  4. Members pay the same cost-sharing regardless of provider tier.

Explanation

Tiered networks encourage members to use higher-value providers by offering lower cost-sharing for those in preferred tiers. Members can typically choose any tier but pay more for higher-cost tiers. They are not restricted to a single tier.

Question 46Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following is a characteristic of a health maintenance organization (HMO) model?

  1. The HMO pays providers on a fee-for-service basis without any risk-sharing.
  2. The HMO does not require members to have a primary care provider.
  3. The HMO assumes financial risk for providing comprehensive services to enrollees for a fixed prepaid premium. Correct answer.
  4. The HMO allows members to see any provider without network restrictions.

Explanation

HMOs typically receive a fixed prepaid premium and assume financial risk for providing covered services. They often use capitation or other risk-sharing arrangements with providers. They are network-based and usually require a PCP.

Question 47Health Insurance Advanced Studies - Medical Plans and Managed Care

A managed care plan is considering implementing a narrow network to reduce costs. Which of the following is a potential disadvantage of this strategy?

  1. Members may have fewer choices of providers, which could reduce satisfaction. Correct answer.
  2. The plan may face fewer regulatory requirements.
  3. The plan may have less ability to negotiate discounts with providers.
  4. The plan may attract more members due to broader access.

Explanation

A narrow network reduces the number of contracted providers, which can limit member choice and potentially reduce satisfaction. However, it may increase the plan's negotiating leverage and lower costs. It does not typically broaden access or reduce regulatory requirements.

Question 48Health Insurance Advanced Studies - Medical Plans and Managed Care

In the context of managed care, what is the purpose of a 'stop-loss' provision in a provider contract?

  1. To limit the provider's financial exposure for high-cost cases after a certain threshold is reached. Correct answer.
  2. To require the provider to obtain prior authorization for all services.
  3. To set a maximum number of patients a provider can see.
  4. To establish a cap on the plan's administrative costs.

Explanation

A stop-loss provision protects providers (or the plan) from catastrophic financial losses by limiting exposure after claims exceed a specified threshold. It is not related to prior authorization, patient volume, or administrative costs.

Question 49Health Insurance Advanced Studies - Medical Plans and Managed Care

A health plan's medical loss ratio (MLR) is calculated as incurred claims plus quality improvement expenses divided by premiums. If a plan's MLR is below the required minimum, what is the plan typically required to do?

  1. Expand the provider network.
  2. Increase premiums for the next year.
  3. Issue rebates to members. Correct answer.
  4. Reduce provider reimbursement rates.

Explanation

Under the Affordable Care Act, if a plan's MLR falls below the required minimum (e.g., 80% or 85% depending on market), the plan must issue rebates to members. The other actions are not automatic requirements tied to MLR.

Question 50Health Insurance Advanced Studies - Medical Plans and Managed Care

Which of the following best describes the concept of 'adverse selection' in managed care?

  1. The process of selecting providers based on quality and cost.
  2. The tendency for individuals with higher health risks to enroll in more generous health plans, leading to higher costs for those plans. Correct answer.
  3. The practice of denying coverage to individuals with pre-existing conditions.
  4. The method of selecting claims for audit.

Explanation

Adverse selection occurs when individuals with greater health needs are more likely to enroll in comprehensive plans, potentially driving up costs. It is not about provider selection, denying coverage (which is prohibited for pre-existing conditions under ACA), or claims auditing.