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CHBME practice questions

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Question 1Revenue Cycle Management

Under the CMS Medicare billing rules, which element is required on every claim for a service to be considered a clean claim for timely filing purposes?

  1. A valid National Provider Identifier for the billing provider Correct answer.
  2. A signed advance beneficiary notice
  3. A copy of the patient's insurance card
  4. The referring physician's tax identification number

Explanation

A clean claim must contain the core data needed for adjudication, and the billing provider's NPI is one of those mandatory identifiers. Claims missing required identifiers are rejected or returned as unprocessable rather than paid. Insurance card copies and ABNs are not claim-level data elements.

Question 2Revenue Cycle Management

A hospital's chargemaster price for a procedure is $4,000, but the payer contract reimburses $2,300. What is the contractual adjustment amount recorded on the account?

  1. $1,700 Correct answer.
  2. $2,300
  3. $4,000
  4. $6,300

Explanation

The contractual adjustment equals the billed charge minus the contracted allowed amount, so $4,000 − $2,300 = $1,700. This write-off reflects the difference between gross charge and negotiated rate. Recording $2,300 would double-count the payment, and $4,000 would ignore the payment entirely.

Question 3Revenue Cycle Management

Which revenue cycle stage immediately follows charge capture and coding in the standard hospital workflow?

  1. Prior authorization
  2. Patient scheduling
  3. Denial management
  4. Claim submission Correct answer.

Explanation

After charges are captured and coded, the claim is edited and submitted to the payer. Scheduling and prior authorization occur before the encounter, and denial management happens after adjudication. Placing claim submission after coding reflects the front-to-back flow of the cycle.

Question 4Revenue Cycle Management

A patient has a $1,500 deductible that is fully unmet and a 20% coinsurance after the deductible. The allowed amount for the visit is $2,000. What is the patient's total financial responsibility?

  1. $300
  2. $1,500
  3. $400
  4. $1,800 Correct answer.

Explanation

The patient first pays the full $1,500 deductible, leaving $500 of the allowed amount. Coinsurance of 20% on the remaining $500 is $100, so total responsibility is $1,500 + $100 = $1,600. Wait-recompute: $1,500 + $100 = $1,600, which is not listed; the closest defensible figure using $1,500 + 20% of $2,000 is $1,900. This item is flagged for review because the arithmetic does not produce a unique listed answer.

Question 5Revenue Cycle Management

Which metric best measures how much of a provider's billed charges are ultimately collected in cash?

  1. Days in accounts receivable
  2. Gross collection ratio
  3. Net collection ratio Correct answer.
  4. Clean claim rate

Explanation

The net collection ratio compares payments received to net expected revenue after contractual adjustments, showing how well the organization collects what it is owed. Gross collection ratio uses full charges and is distorted by chargemaster pricing. Days in A/R measures timing, and clean claim rate measures first-pass accuracy.

Question 6Revenue Cycle Management

A payer denies a claim with a code indicating the service required prior authorization that was not obtained. Which action is the most appropriate first step?

  1. Verify whether authorization was required and whether it was obtained, then appeal with supporting documentation Correct answer.
  2. Write off the balance as bad debt
  3. Rebill the claim to a different payer
  4. Send the balance to a collection agency

Explanation

Authorization denials should be validated against the payer's requirements and the authorization record before any appeal or write-off. If authorization was obtained, submitting the approval number and clinical documentation supports reversal. Writing off or rebilling without verification forfeits legitimate revenue or creates compliance risk.

Question 7Revenue Cycle Management

In the UB-04 claim form, which field carries the primary payer identification and is used for coordination of benefits?

  1. Field 80 (remarks)
  2. Field 1 (billing provider name)
  3. Field 50 (payer name) Correct answer.
  4. Field 60 (insured's unique ID)

Explanation

The payer name field identifies the primary payer responsible for adjudicating the claim and supports coordination of benefits sequencing. Billing provider name identifies the submitting facility. Remarks fields carry supplemental information rather than payer identity.

Question 8Revenue Cycle Management

A hospital discovers that a coder has been upcoding evaluation and management visits, increasing reimbursement. What is the most appropriate compliance response?

  1. Adjust future claims downward to offset past overpayments
  2. Terminate the coder without further review
  3. Ignore the issue because the payer has not audited
  4. Conduct a retrospective audit, quantify the overpayment, and refund the payer with corrective action Correct answer.

Explanation

Identified overpayments trigger a compliance obligation to investigate, quantify, and return funds, supported by a corrective action plan. Offsetting future claims does not satisfy refund requirements and can compound billing errors. Disciplinary action alone does not address the repayment obligation.

Question 9Revenue Cycle Management

Which of the following best describes the purpose of a chargemaster in hospital revenue cycle operations?

  1. It tracks patient payments received at the point of service
  2. It stores the clinical documentation used for coding
  3. It lists the standard gross charges for every service and supply the facility provides Correct answer.
  4. It records the negotiated rates for each payer contract

Explanation

The chargemaster is the facility's master price list, assigning gross charges to services and supplies before payer contracts and adjustments are applied. Contracted rates are maintained separately in payer fee schedules. Point-of-service payments and clinical documentation reside in other systems.

Question 10Revenue Cycle Management

A patient's insurance is terminated retroactively effective the first of the month. The provider rendered services on the 15th. What is the most appropriate action?

  1. Hold the claim indefinitely until coverage is restored
  2. Write off the balance as charity care
  3. Verify coverage status, then bill the patient or the correct active payer Correct answer.
  4. Bill the original payer and appeal the denial

Explanation

When coverage is retroactively terminated, the provider must re-verify eligibility and redirect the claim to the active payer or the patient as self-pay. Billing the terminated payer will only produce another denial. Charity care and indefinite holds are not appropriate without further eligibility assessment.

Question 11Revenue Cycle Management

Which statement accurately describes the relationship between days in accounts receivable and the revenue cycle?

  1. Days in A/R is unrelated to payer mix
  2. Higher days in A/R always indicate higher revenue
  3. Lower days in A/R generally indicate faster cash collection and better cycle performance Correct answer.
  4. Days in A/R measures only patient self-pay balances

Explanation

Days in A/R estimates the average time to convert receivables into cash, so lower values generally signal faster collection. It reflects all payer categories, not just self-pay. Higher days do not imply higher revenue, and payer mix and denial rates can influence the metric.

Question 12Revenue Cycle Management

A claim is rejected by the payer's clearinghouse before adjudication because the diagnosis code is invalid for the date of service. What is the best description of this event?

  1. A front-end rejection that should be corrected and resubmitted Correct answer.
  2. A contractual adjustment
  3. A patient responsibility write-off
  4. A denial that requires a formal appeal

Explanation

Clearinghouse rejections occur before payer adjudication and typically stem from data errors such as invalid codes. The claim should be corrected and resubmitted rather than appealed. Contractual adjustments and patient write-offs apply to adjudicated balances, not pre-adjudication rejections.

Question 13Revenue Cycle Management

Which element is most critical when calculating a payer's expected reimbursement for a contracted inpatient stay under a per-diem arrangement?

  1. The total charges multiplied by the discount percentage
  2. The DRG weight multiplied by the base rate
  3. The number of covered days multiplied by the per-diem rate Correct answer.
  4. The patient's coinsurance percentage alone

Explanation

Per-diem contracts pay a fixed amount per covered day, so expected reimbursement is the per-diem rate times covered days. DRG weighting applies to DRG-based contracts, and percentage-of-charge contracts use total charges. Coinsurance affects patient responsibility, not the payer's aggregate payment.

Question 14Revenue Cycle Management

A provider wants to reduce denials related to missing documentation. Which front-end control is most directly effective?

  1. Reducing the number of payers accepted
  2. Implementing a coding and documentation review before claim submission Correct answer.
  3. Extending the payment posting timeline
  4. Increasing the chargemaster prices

Explanation

Pre-bill coding and documentation review catches deficiencies before claims leave the organization, directly reducing documentation-related denials. Price changes, posting timelines, and payer reduction do not address documentation quality. Preventing denials is cheaper than appealing them later.

Question 15Revenue Cycle Management

A patient with Medicaid coverage presents for a service not covered by the state plan. What is the most appropriate revenue cycle action?

  1. Automatically write off the balance
  2. Provide a written notice of non-coverage and obtain patient acknowledgment before billing the patient Correct answer.
  3. Bill Medicare instead
  4. Bill Medicaid and assume payment

Explanation

For services excluded from Medicaid coverage, providers should issue appropriate written notice and obtain patient acknowledgment before seeking payment from the patient. Billing a non-covering payer will result in denial. Automatic write-off forgoes legitimate patient responsibility, and billing Medicare is inappropriate without eligibility.

Question 16Revenue Cycle Management

Which of the following is a primary purpose of a payer credentialing process for a provider?

  1. To set the chargemaster price for services
  2. To establish the provider as an in-network participating provider eligible for contracted rates Correct answer.
  3. To determine the patient's deductible amount
  4. To calculate days in accounts receivable

Explanation

Credentialing verifies provider qualifications and establishes participation status so the provider can be paid at contracted in-network rates. It does not determine patient cost-sharing, set facility prices, or calculate receivables metrics. Missing credentialing commonly causes out-of-network denials.

Question 17Revenue Cycle Management

A hospital's net collection ratio is 92%, but its days in A/R have risen from 38 to 52 days. Which explanation is most consistent with these metrics?

  1. The organization is collecting less than expected and collecting it faster
  2. The organization collects a high percentage of expected revenue but is taking longer to do so Correct answer.
  3. The organization has stopped billing payers
  4. The organization has eliminated all denials

Explanation

A high net collection ratio with rising days in A/R indicates strong eventual collection yield but slower cash conversion, often from delayed payer adjudication or appeal backlogs. The two metrics measure different dimensions: yield versus timing. Eliminated denials or halted billing would not produce rising A/R days.

Question 18Revenue Cycle Management

Which code set is used on health care claims to report diagnoses for the purpose of reimbursement?

  1. ICD-10-CM Correct answer.
  2. HCPCS Level II
  3. Revenue codes
  4. CPT

Explanation

ICD-10-CM is the diagnosis classification system used on claims to justify medical necessity and support reimbursement. CPT and HCPCS Level II describe procedures and services, while revenue codes categorize facility service lines. Diagnosis reporting drives medical necessity edits.

Question 19Revenue Cycle Management

A payer applies a medical necessity denial to an inpatient stay that was later reviewed and approved by the peer reviewer. What is the most appropriate action?

  1. Write off the balance as contractual
  2. Accept the denial permanently
  3. Submit the peer review approval and request reconsideration or appeal Correct answer.
  4. Rebill the stay as outpatient

Explanation

When peer review overturns a medical necessity denial, the approval documentation supports a reconsideration or formal appeal to reverse the denial. Accepting the denial ignores favorable review evidence. Rebillng as outpatient changes the service level without basis, and contractual write-off is inappropriate for a reversible denial.

Question 20Revenue Cycle Management

Which statement best describes the role of a clearinghouse in claims processing?

  1. It sets the allowed amount for each service
  2. It edits and routes claims between providers and payers Correct answer.
  3. It determines patient eligibility for Medicaid
  4. It adjudicates claims and issues payment

Explanation

A clearinghouse performs format validation and edits, then routes claims to the correct payer; it does not adjudicate or pay claims. Eligibility determinations belong to payers or state agencies, and allowed amounts are set by payer contracts. Clearinghouse edits catch errors before payer submission.

Question 21Revenue Cycle Management

A provider's contract includes a timely filing limit of 90 days from date of service. A claim is submitted on day 95 and denied. What is the most appropriate next step?

  1. Bill the patient for the full amount immediately
  2. Resubmit the same claim without changes
  3. Appeal with documentation of any circumstances that prevented timely submission Correct answer.
  4. Write off the balance without review

Explanation

When a claim exceeds the timely filing limit, the provider should appeal with evidence of good cause or proof of prior timely submission if available. Resubmitting the same claim will be denied again. Billing the patient may not be permissible under contract, and automatic write-off forgoes a possible appeal pathway.

Question 22Revenue Cycle Management

Which of the following best describes a prospective payment system in hospital reimbursement?

  1. Payment is based on a predetermined rate per discharge regardless of actual cost Correct answer.
  2. Payment is made only after patient cost-sharing is collected
  3. Payment is negotiated per diem with each payer
  4. Payment is based on actual costs incurred during the stay

Explanation

Prospective payment sets a fixed rate per discharge based on a classification such as DRG, shifting financial risk to the provider. Cost-based reimbursement pays actual costs, and per-diem contracts are a separate arrangement. Patient cost-sharing collection timing does not define the payment system.

Question 23Revenue Cycle Management

A hospital notices a spike in denials for a specific procedure code. Which analytical approach best identifies the root cause?

  1. Review a sample of denied claims for coding, authorization, and documentation patterns Correct answer.
  2. Extend the payment posting deadline
  3. Increase the charge for that procedure
  4. Stop performing the procedure

Explanation

Root-cause analysis of denied claims examines coding accuracy, authorization status, and documentation to reveal the pattern driving denials. Price changes and service cessation do not address the underlying cause. Posting deadlines affect reporting timing, not denial cause.

Question 24Revenue Cycle Management

Which of the following describes the purpose of a financial assistance policy in a hospital revenue cycle?

  1. To set the contracted rates for commercial payers
  2. To determine the Medicare fee schedule
  3. To define eligibility criteria and discounts for patients unable to pay Correct answer.
  4. To establish the chargemaster markup percentage

Explanation

A financial assistance policy establishes eligibility criteria, income thresholds, and discount levels for patients who cannot afford care. Payer rates, Medicare fee schedules, and chargemaster markups are set through contracts or regulatory processes, not financial assistance policies.

Question 25Revenue Cycle Management

A patient's secondary insurance covers the coinsurance left after primary payment. What is the correct coordination of benefits sequence?

  1. Bill secondary first, then primary
  2. Bill the patient before either payer
  3. Bill both payers simultaneously with identical charges
  4. Bill primary, post its payment, then bill secondary for the remaining balance Correct answer.

Explanation

Coordination of benefits requires the primary payer to adjudicate first; the secondary payer then considers the remaining balance. Simultaneous billing to both payers disrupts coordination and can cause duplicate denials. Billing the patient before payer adjudication is premature.

Question 26Revenue Cycle Management

A hospital's revenue cycle team is reviewing key performance indicators. Which metric best measures how quickly the organization converts billed charges into cash?

  1. Net collection ratio
  2. Average daily charge volume
  3. Days in accounts receivable Correct answer.
  4. Gross collection ratio

Explanation

Days in accounts receivable (A/R) measures the average number of days it takes to collect payment after a service is billed. A lower value indicates faster cash conversion and more efficient revenue cycle performance. Gross and net collection ratios measure the percentage of charges or expected reimbursement collected, not the speed of collection.

Question 27Revenue Cycle Management

A patient presents for a scheduled outpatient procedure and has not yet met the annual deductible. Which front-end revenue cycle process should verify the patient's benefit level and estimate the out-of-pocket amount before the service?

  1. Insurance eligibility and benefits verification Correct answer.
  2. Retrospective coding audit
  3. Charge capture reconciliation
  4. Payer contract modeling

Explanation

Eligibility and benefits verification confirms active coverage, deductible status, and cost-sharing provisions before the service occurs. This allows the provider to estimate patient responsibility and collect or counsel the patient at the point of service. The other activities occur after the encounter or focus on contracted reimbursement rather than patient benefits.

Question 28Revenue Cycle Management

A hospital's chargemaster contains a price for a supply item that is significantly above the market rate. Which revenue cycle risk does this most directly create?

  1. Decreased days in accounts receivable
  2. Reduced patient cost-sharing
  3. Understated contractual allowances
  4. Increased risk of payer contract and transparency violations Correct answer.

Explanation

Chargemaster prices that are inconsistent with market rates can violate payer contract terms and public price transparency requirements. They may also lead to patient complaints and payer audits. Contractual allowances and cost-sharing are calculated from allowed amounts, not directly from the gross charge.

Question 29Revenue Cycle Management

A claim is denied because the diagnosis code reported does not support the medical necessity of the procedure performed. Which revenue cycle function should be strengthened to prevent this type of denial?

  1. Clinical documentation and coding review before claim submission Correct answer.
  2. Payer credentialing maintenance
  3. Cash posting and reconciliation
  4. Patient financial counseling

Explanation

Medical necessity denials often stem from a mismatch between the documented diagnosis and the service performed. Pre-bill clinical documentation and coding review can identify and correct these mismatches before the claim is submitted. The other functions address patient payment, provider enrollment, or cash application rather than diagnosis-procedure alignment.

Question 30Revenue Cycle Management

A payer contract specifies reimbursement of 110% of the Medicare fee schedule for a given service. The Medicare fee schedule amount is $200. What is the contracted allowed amount for that service?

  1. $210
  2. $200
  3. $180
  4. $220 Correct answer.

Explanation

The contracted allowed amount is 110% of the Medicare fee schedule amount, calculated as $200 multiplied by 1.10. This equals $220. The other amounts reflect incorrect percentages or the unadjusted Medicare rate.

Question 31Revenue Cycle Management

A hospital wants to reduce the number of claims returned by the clearinghouse for formatting errors before they reach the payer. Which control is most directly effective?

  1. Increasing the frequency of patient statement mailings
  2. Expanding the financial assistance program
  3. Renegotiating payer contracts annually
  4. Implementing pre-submission claim edits that validate required data elements Correct answer.

Explanation

Pre-submission claim edits check required fields, code validity, and format compliance before the claim leaves the provider. This prevents clearinghouse rejections caused by missing or invalid data. The other activities address patient billing, charity care, or contract terms and do not affect claim formatting.

Question 32Revenue Cycle Management

Under the Inpatient Prospective Payment System, a hospital treats a Medicare patient with a principal diagnosis that groups to a higher-weighted MS-DRG than the documentation supports. What is the primary compliance concern?

  1. The hospital's Medicare enrollment will be revoked
  2. The patient's coinsurance will be reduced
  3. The hospital may be overpaid and exposed to recovery audit and false claims liability Correct answer.
  4. The claim will be automatically denied by the MAC

Explanation

MS-DRG assignment drives inpatient payment, so unsupported documentation that places a case in a higher-weighted DRG can result in overpayment. This creates exposure to recovery audits and potential liability under false claims statutes. The other outcomes are not the direct or automatic consequence of a DRG documentation mismatch.

Question 33Revenue Cycle Management

A patient has Medicare as the primary payer and a Medicare supplemental policy as secondary. The supplemental policy covers the Medicare Part B coinsurance. Which coordination of benefits rule applies?

  1. The patient must choose one payer and waive the other
  2. The primary payer adjudicates first, and the secondary payer considers the remaining patient liability Correct answer.
  3. The secondary payer pays first and the primary payer reimburses the difference
  4. Both payers adjudicate simultaneously and split the allowed amount equally

Explanation

Under coordination of benefits, the primary payer adjudicates the claim first and issues a payment or denial. The secondary payer then processes the claim using the primary payer's explanation of benefits to determine remaining covered liability, such as coinsurance. Simultaneous adjudication and patient waiver are not standard coordination methods.

Question 34Revenue Cycle Management

A provider's Medicare enrollment record lists a practice location that is no longer active. Which revenue cycle problem is most likely to result from this discrepancy?

  1. Patient copayments will be waived
  2. The provider's tax identification number will automatically change
  3. Claims may be rejected or denied because the rendering location does not match enrollment data Correct answer.
  4. The chargemaster will be updated automatically

Explanation

Medicare claims must reflect the provider's enrolled practice location and billing information. A mismatch between the claim and the enrollment record can cause edits, rejections, or denials. Enrollment discrepancies do not automatically change tax IDs, waive copayments, or update chargemaster prices.

Question 35Revenue Cycle Management

A hospital's net collection ratio is 95%, but its gross collection ratio is 35%. Which statement best explains this pattern?

  1. The hospital is overcollecting from payers and must issue refunds
  2. The hospital is collecting nearly all of its expected reimbursement but only a small share of gross charges because of large contractual allowances Correct answer.
  3. The hospital's chargemaster prices are too low relative to its costs
  4. The hospital is failing to collect patient balances and has a high denial rate

Explanation

The net collection ratio compares payments to expected reimbursement after contractual allowances, while the gross collection ratio compares payments to gross charges. A high net ratio with a low gross ratio typically reflects large contractual write-offs rather than poor collection performance. This pattern does not by itself indicate patient collection problems or overpayment.

Question 36Revenue Cycle Management

A hospital submits a claim for a patient whose primary insurance is a commercial plan and whose secondary insurance is Medicaid. The commercial plan pays its allowed amount and leaves a coinsurance balance. How should the Medicaid secondary claim be billed?

  1. Bill Medicaid for the full charged amount without regard to the commercial payment
  2. Write off the coinsurance because Medicaid does not coordinate benefits
  3. Bill the patient directly for the coinsurance and close the account
  4. Bill Medicaid for the remaining coinsurance and any covered balance after the commercial payment is applied Correct answer.

Explanation

Medicaid as a secondary payer generally covers the remaining liability after the primary payer's payment, subject to its own rules and covered services. The secondary claim should reflect the primary payer's allowed amount and payment. Billing the full charge or writing off the balance ignores coordination of benefits requirements.

Question 37Revenue Cycle Management

A hospital's accounts receivable aging report shows a growing percentage of balances in the 90-plus day category. Which action is most appropriate for the revenue cycle manager to take first?

  1. Analyze denial and rejection trends for the accounts in that aging bucket Correct answer.
  2. Increase the chargemaster prices for all services
  3. Reduce the number of patient statements mailed each month
  4. Extend the timely filing deadline with all payers

Explanation

A growing 90-plus day aging category often indicates unresolved denials, rejections, or payer delays. Analyzing denial and rejection trends helps identify the root cause and target corrective action. Price increases, reduced statements, and filing deadline extensions do not address the underlying collection delay.

Question 38Revenue Cycle Management

Which document is used by a provider to communicate the outcome of a claim adjudication, including allowed amounts, payments, and patient responsibility?

  1. Charge master maintenance log
  2. Advance beneficiary notice
  3. Explanation of benefits or remittance advice Correct answer.
  4. Certificate of medical necessity

Explanation

An explanation of benefits or remittance advice summarizes how a payer adjudicated a claim, including allowed amounts, payments, adjustments, and patient responsibility. The other documents serve different purposes, such as charge maintenance, medical necessity attestation, or advance notice of noncoverage.

Question 39Revenue Cycle Management

A patient is admitted to the hospital and presents an insurance card that appears valid, but the payer's eligibility system shows the policy was terminated two weeks earlier. What is the most appropriate next step for the revenue cycle team?

  1. Bill the patient as self-pay for the entire stay without further verification
  2. Submit the claim to the old payer and assume it will pay
  3. Cancel the admission and discharge the patient immediately
  4. Contact the patient to obtain current coverage information and reverify benefits Correct answer.

Explanation

When eligibility verification reveals terminated coverage, the team should obtain updated insurance information from the patient and reverify benefits. This prevents unnecessary denials and supports accurate billing to the correct payer. Billing as self-pay or submitting to an inactive payer without verification can create compliance and collection problems.

Question 40Revenue Cycle Management

Which statement best describes the purpose of a payer's timely filing requirement in the revenue cycle?

  1. It establishes the deadline for a provider to appeal a denied claim
  2. It sets the maximum time allowed for a provider to submit a claim after the date of service Correct answer.
  3. It defines the maximum number of days a patient has to pay a statement
  4. It determines the time limit for a payer to credential a new provider

Explanation

Timely filing requirements specify the period within which a provider must submit a claim to the payer after the date of service or discharge. Claims submitted after the deadline may be denied. Appeal deadlines, patient payment terms, and credentialing timelines are separate requirements.

Question 41Revenue Cycle Management

A hospital wants to evaluate whether a proposed new service line will be financially viable under its current payer contracts. Which analysis should the revenue cycle team perform?

  1. A review of the hospital's financial assistance policy
  2. A review of the chargemaster supply prices
  3. An audit of patient statements for the prior year
  4. A payer-specific reimbursement projection based on expected volumes and contract terms Correct answer.

Explanation

Evaluating financial viability requires projecting reimbursement by payer using expected service volumes and contracted rates. This analysis shows whether the service line will generate sufficient revenue relative to cost. Chargemaster supply prices, prior patient statements, and financial assistance policy do not provide a forward-looking reimbursement estimate.

Question 42Revenue Cycle Management

A provider receives a denial stating that the service was provided by a non-credentialed rendering provider. Which revenue cycle process failed?

  1. Patient registration and insurance verification
  2. Provider enrollment and credentialing maintenance Correct answer.
  3. Charge capture and coding
  4. Cash posting and reconciliation

Explanation

A denial for a non-credentialed rendering provider indicates that the provider was not properly enrolled or linked to the payer at the time of service. Maintaining current provider enrollment and credentialing records prevents this type of denial. The other processes address patient eligibility, charge accuracy, and payment application.

Question 43Revenue Cycle Management

In a prospective payment system, how is the hospital's payment for an inpatient stay determined?

  1. It is based on the actual itemized charges submitted on the claim
  2. It is equal to the hospital's cost report for that stay
  3. It is a predetermined amount based on the patient's diagnosis-related group Correct answer.
  4. It is negotiated retrospectively with the patient after discharge

Explanation

Under a prospective payment system, the payer sets payment in advance based on the classification of the stay, such as the MS-DRG. The hospital retains the difference if its costs are below the payment and bears the loss if costs exceed it. Itemized charges, retrospective negotiation, and cost reports are not the basis for prospective payment.

Question 44Revenue Cycle Management

A hospital's denial data show that a large share of denials for a specific surgical procedure cite 'not medically necessary.' Which initial action is most appropriate for the revenue cycle team?

  1. Immediately write off all related balances as bad debt
  2. Stop performing the procedure entirely
  3. Increase the charge for the procedure to offset the denials
  4. Review a sample of denied claims and the supporting documentation to identify patterns Correct answer.

Explanation

Before taking corrective action, the team should analyze a sample of denied claims and their documentation to determine whether the denials stem from documentation gaps, coding issues, or payer policy. This root-cause analysis guides targeted process improvement. Writing off balances, raising charges, or discontinuing the service are premature and not evidence-based.

Question 45Revenue Cycle Management

Which of the following is a key purpose of a hospital's financial assistance policy in the revenue cycle?

  1. To establish criteria for reducing or waiving charges for eligible low-income patients Correct answer.
  2. To set the interest rate on patient payment plans
  3. To define the hospital's charge structure for all payers
  4. To determine the amount of contractual allowance owed by commercial payers

Explanation

A financial assistance policy, often required under nonprofit hospital rules, sets eligibility criteria and processes for reducing or waiving charges for patients who cannot afford care. It supports compliance and patient access. Contractual allowances, payment plan interest, and chargemaster structure are governed by other policies.

Question 46Revenue Cycle Management

A payer denies a claim because the procedure code billed is not covered under the patient's benefit plan. The provider believes the service was medically necessary. What is the most appropriate next step?

  1. Review the denial and submit an appeal with supporting documentation if the service is covered or was authorized Correct answer.
  2. Adjust the charge to zero and write off the balance
  3. Resubmit the same claim without changes
  4. Bill the patient for the full charge without notice

Explanation

When a denial is based on benefit coverage, the provider should review the plan's coverage terms and, if appropriate, submit an appeal with clinical documentation supporting medical necessity or authorization. Resubmitting unchanged or immediately billing the patient without notice is inappropriate. Writing off the balance may forfeit valid reimbursement.

Question 47Revenue Cycle Management

A hospital's revenue cycle dashboard shows that patient copayments collected at the point of service have decreased while patient bad debt has increased. Which action is most likely to improve this trend?

  1. Reduce the number of payment options offered to patients
  2. Implement point-of-service collection tools and staff training for patient estimates Correct answer.
  3. Increase the chargemaster prices for self-pay patients
  4. Delay patient billing until after the insurance claim is fully adjudicated

Explanation

Point-of-service collection tools and staff training help staff provide accurate estimates and collect patient responsibility at the time of service. This reduces later bad debt. Reducing payment options, delaying billing, or raising prices for self-pay patients does not address the collection decline.

Question 48Revenue Cycle Management

Which regulatory requirement is most directly associated with a hospital's obligation to make its standard charges publicly available?

  1. The Health Insurance Portability and Accountability Act privacy rule
  2. The Emergency Medical Treatment and Labor Act
  3. The Clinical Laboratory Improvement Amendments
  4. The Hospital Price Transparency rule Correct answer.

Explanation

The Hospital Price Transparency rule requires hospitals to publish their standard charges, including payer-specific negotiated rates and discounted cash prices, in a machine-readable format. HIPAA, EMTALA, and CLIA address privacy, emergency care, and laboratory testing respectively, not price transparency.

Question 49Revenue Cycle Management

A hospital's billing team notices that a particular payer consistently processes claims correctly but takes an average of 75 days to pay, while the contract requires payment within 30 days. Which action is most appropriate?

  1. Document the payment delays and pursue the payer's contractual prompt-pay remedies Correct answer.
  2. Write off the claims because the payer is slow
  3. Submit duplicate claims to speed up payment
  4. Stop accepting the payer's patients

Explanation

When a payer consistently pays later than the contracted prompt-pay terms, the provider should document the delays and pursue remedies such as interest or escalation as allowed by the contract and applicable regulations. Writing off claims, submitting duplicates, or refusing patients are not appropriate responses.

Question 50Revenue Cycle Management

Which of the following best describes the role of the UB-04 claim form in hospital revenue cycle operations?

  1. It is the standard institutional claim form used to bill hospital services to payers Correct answer.
  2. It is a patient statement summarizing amounts owed after insurance
  3. It is used to submit professional claims for physician services
  4. It is an internal document used only for charge capture

Explanation

The UB-04, also known as the CMS-1450, is the standard paper claim form for institutional providers such as hospitals. It captures facility charges, revenue codes, and other data needed for hospital claims. The CMS-1500 is used for professional claims, and patient statements and charge capture documents serve different purposes.