I85PREP
⌘ K
CPHIMS study materials
CPHIMS study resources

CPHIMS practice questions

One question at a time. Build your CPHIMS understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Healthcare Environment

Which population is eligible for Medicare based primarily on age?

  1. Children under 18
  2. Adults age 65 and older Correct answer.
  3. All adults age 55 and older
  4. Only military veterans

Explanation

Medicare is the federal health insurance program that covers people age 65 and older, certain younger people with disabilities, and people with end-stage renal disease. Age 65 is the primary age-based eligibility threshold.

Question 2Healthcare Environment

Under the Medicare inpatient prospective payment system, hospitals are paid a fixed amount based on which classification?

  1. The assigned diagnosis-related group Correct answer.
  2. The patient's length of stay in days
  3. The number of procedures performed
  4. The hospital's actual cost for the stay

Explanation

The IPPS pays acute care hospitals a predetermined amount per discharge based on the Medicare Severity Diagnosis-Related Group. Payment is not based on the hospital's actual costs or length of stay.

Question 3Healthcare Environment

Which federal regulation establishes national standards for protecting individually identifiable health information?

  1. The False Claims Act
  2. The HIPAA Privacy Rule Correct answer.
  3. The Anti-Kickback Statute
  4. The Stark Law

Explanation

The HIPAA Privacy Rule sets national standards for the use and disclosure of protected health information. It applies to covered entities such as providers, plans, and clearinghouses.

Question 4Healthcare Environment

The Centers for Medicare & Medicaid Services (CMS) is primarily responsible for:

  1. Administering Medicare and Medicaid Correct answer.
  2. Publishing clinical practice guidelines
  3. Accrediting hospitals for quality
  4. Approving new prescription drugs for the market

Explanation

CMS is the federal agency within HHS that administers Medicare, Medicaid, the Children's Health Insurance Program, and related quality programs. Drug approval and clinical guideline development are handled by other bodies.

Question 5Healthcare Environment

Which setting provides short-term, acute care for patients with severe illness or injury?

  1. Skilled nursing facility
  2. Assisted living facility
  3. Acute care hospital Correct answer.
  4. Home health agency

Explanation

Acute care hospitals provide short-term treatment for severe injury or illness. Skilled nursing, assisted living, and home health provide post-acute or long-term support.

Question 6Healthcare Environment

What is the primary purpose of ICD-10-CM codes in the United States?

  1. To measure patient satisfaction scores
  2. To list medications dispensed by pharmacies
  3. To identify medical procedures for billing
  4. To classify patient diagnoses Correct answer.

Explanation

ICD-10-CM classifies diagnoses, symptoms, and reasons for encounters for morbidity coding and billing. Procedures are coded with ICD-10-PCS or CPT, and medications with NDC.

Question 7Healthcare Environment

The HITECH Act of 2009 established which financial incentive program for hospitals and eligible professionals?

  1. The Physician Quality Reporting System
  2. The Hospital Readmissions Reduction Program
  3. The EHR meaningful use incentive program Correct answer.
  4. The Value-Based Purchasing Program

Explanation

HITECH created the Medicare and Medicaid EHR Incentive Programs, often called meaningful use, to promote adoption of certified EHRs. The other programs address readmissions, quality reporting, or value-based payment.

Question 8Healthcare Environment

In a capitation payment model, a provider is paid:

  1. A fixed amount per patient Correct answer.
  2. A fee for each service rendered
  3. A percentage of billed charges
  4. A bonus for each hospital admission

Explanation

Capitation pays a provider a set amount per enrolled patient for a defined period, shifting financial risk to the provider. Fee-for-service pays per service, and percentage-of-charges is a discounted charge arrangement.

Question 9Healthcare Environment

Under the CMS Hospital Value-Based Purchasing program, a portion of Medicare inpatient payments is adjusted based on:

  1. The number of beds in the hospital
  2. Quality and patient experience Correct answer.
  3. Whether the hospital is rural
  4. The hospital's teaching status

Explanation

Hospital VBP withholds a percentage of Medicare inpatient payments and redistributes it based on quality, safety, efficiency, and patient experience measures. Teaching status, bed count, and rural location affect other payment adjustments, not the VBP scoring directly.

Question 10Healthcare Environment

Medicaid is best described as:

  1. A fully federally funded veterans program
  2. A state-only program for the elderly
  3. A federal-state low-income program Correct answer.
  4. A private plan for federal employees

Explanation

Medicaid is jointly funded by federal and state governments and administered by states under federal requirements, covering low-income and other eligible groups. It is not fully federal, private, or state-only.

Question 11Healthcare Environment

Under the HIPAA Breach Notification Rule, a covered entity generally must notify affected individuals within what time frame after discovering a breach?

  1. 7 calendar days
  2. 6 months
  3. 60 days Correct answer.
  4. 24 hours

Explanation

The HIPAA Breach Notification Rule generally requires individual notice without unreasonable delay and no later than 60 calendar days after discovery. Notice to HHS and media may also apply for large breaches.

Question 12Healthcare Environment

What is the primary purpose of the HL7 Fast Healthcare Interoperability Resources (FHIR) standard?

  1. To define hospital accreditation requirements
  2. To standardize pharmacy inventory codes
  3. To exchange health data electronically Correct answer.
  4. To encode medical diagnoses for billing

Explanation

FHIR is an HL7 standard that uses web-based application programming interfaces to exchange healthcare data between systems. It does not set accreditation, diagnosis coding, or pharmacy inventory rules.

Question 13Healthcare Environment

Which terminology standard is specifically designed for identifying laboratory tests and observations?

  1. NDC
  2. CPT
  3. ICD-10-PCS
  4. LOINC Correct answer.

Explanation

LOINC provides standardized codes for laboratory tests and clinical observations. ICD-10-PCS codes procedures, CPT codes services, and NDC identifies drug products.

Question 14Healthcare Environment

A hospital's accreditation by The Joint Commission most directly supports which goal?

  1. Approving new clinical trials
  2. Meeting quality and safety standards Correct answer.
  3. Receiving Medicare payment
  4. Demonstrating compliance with state tax rules

Explanation

The Joint Commission is an independent accrediting body that evaluates healthcare organizations against quality and safety standards. It does not pay claims, set Medicare rates, or approve drugs.

Question 15Healthcare Environment

An Accountable Care Organization (ACO) is designed primarily to:

  1. Coordinate care and share savings Correct answer.
  2. Eliminate electronic health records
  3. Increase fee-for-service billing volume
  4. Limit patient choice of providers

Explanation

An ACO is a group of providers that takes responsibility for the cost and quality of care for an assigned population and may share in savings. It does not aim to increase billing volume or limit patient choice.

Question 16Healthcare Environment

The HIPAA minimum necessary standard requires covered entities to:

  1. Retain records for at least 21 years
  2. Limit PHI to what is needed Correct answer.
  3. Disclose all records to any treating clinician
  4. Obtain consent for every treatment encounter

Explanation

The minimum necessary standard requires covered entities to make reasonable efforts to limit PHI use, disclosure, and requests to the minimum needed for the purpose. It does not require consent for every encounter or a 21-year retention period.

Question 17Healthcare Environment

A patient placed in hospital observation status rather than inpatient status may face which financial consequence under Medicare?

  1. Automatic conversion to inpatient coverage
  2. Reduced physician professional fees
  3. Higher cost sharing and no SNF benefit Correct answer.
  4. No coverage for emergency department care

Explanation

Observation status is an outpatient designation, so Medicare Part B cost-sharing and SNF eligibility rules apply differently than for inpatient stays. Patients may face higher out-of-pocket costs and may not qualify for SNF coverage.

Question 18Healthcare Environment

The Affordable Care Act created health insurance marketplaces primarily to:

  1. Help individuals and small firms buy coverage Correct answer.
  2. Replace all employer-sponsored insurance plans
  3. Set national hospital reimbursement rates
  4. Fund Medicare Advantage plan payments

Explanation

The ACA marketplaces are online exchanges where individuals and small employers can compare and purchase qualified health plans, often with subsidies. They do not replace employer coverage or set hospital rates.

Question 19Healthcare Environment

In a computerized provider order entry (CPOE) system, an order set is used to:

  1. Encrypt patient data at rest
  2. Group orders for a clinical condition Correct answer.
  3. Coordinate facility maintenance requests
  4. Track staff credentialing records

Explanation

An order set is a preconfigured group of orders and tests for a common condition that clinicians can select in CPOE. It supports standardization and efficiency rather than encryption, maintenance, or credentialing.

Question 20Healthcare Environment

Electronic laboratory reporting to public health agencies is primarily used to:

  1. Update patient portals
  2. Detect disease outbreaks Correct answer.
  3. Manage pharmacy inventory levels
  4. Submit insurance claims

Explanation

Electronic laboratory reporting sends notifiable condition results to public health agencies so they can detect, investigate, and monitor outbreaks. Claims, portals, and inventory are unrelated uses.

Question 21Healthcare Environment

Which service is generally covered under Medicare Part A rather than Part B?

  1. Outpatient physical therapy
  2. Durable medical equipment
  3. Inpatient hospital stay Correct answer.
  4. Physician office visit

Explanation

Medicare Part A covers inpatient hospital stays, skilled nursing facility care after a qualifying stay, hospice, and some home health. Part B covers physician visits, outpatient therapy, and durable medical equipment.

Question 22Healthcare Environment

In Medicare Advantage risk adjustment, diagnostic codes are used to:

  1. Calculate physician license fees
  2. Adjust payments for expected costs Correct answer.
  3. Set the plan's marketing budget
  4. Determine hospital accreditation status

Explanation

Medicare Advantage plans are paid a risk-adjusted capitation rate based on diagnoses that predict expected healthcare costs. Accurate diagnosis coding affects payment but not marketing budgets, accreditation, or license fees.

Question 23Healthcare Environment

The ONC Health IT Certification Program is primarily intended to:

  1. Approve new prescription medications
  2. Set hospital charity care policies
  3. License physicians to practice medicine
  4. Certify EHRs against federal criteria Correct answer.

Explanation

The ONC Health IT Certification Program certifies health IT products, including EHRs, against federal standards and criteria for interoperability, privacy, and security. It does not license clinicians, approve drugs, or set charity care policy.

Question 24Healthcare Environment

EMTALA requires Medicare-participating hospitals to:

  1. Provide free care to uninsured patients
  2. Transfer patients only to for-profit hospitals
  3. Provide screening exams for emergencies Correct answer.
  4. Admit every patient for inpatient surgery

Explanation

EMTALA requires Medicare-participating hospitals with emergency departments to provide an appropriate medical screening examination and stabilizing treatment regardless of ability to pay. It does not require free care or dictate hospital ownership for transfers.

Question 25Healthcare Environment

Under the Inpatient Prospective Payment System, which factor directly adjusts a hospital's Medicare payment for regional labor costs?

  1. The charity care percentage
  2. The readmission rate
  3. The case-mix index
  4. The wage index Correct answer.

Explanation

The IPPS wage index adjusts the labor-related portion of Medicare inpatient payments to reflect regional differences in hospital wage levels. Case-mix index reflects patient severity, while readmission and charity care affect other programs.

Question 26Healthcare Environment

Medicare Part D provides coverage for which of the following?

  1. Skilled nursing facility care
  2. Outpatient prescription drugs Correct answer.
  3. Inpatient hospital stays
  4. Physician office visits

Explanation

Part D is the voluntary outpatient prescription drug benefit delivered through stand-alone drug plans and Medicare Advantage prescription drug plans. Inpatient hospital and skilled nursing facility care fall under Part A, while physician services fall under Part B.

Question 27Healthcare Environment

A covered service has an allowed amount of $1,000. The member has already met the deductible and has 20% coinsurance with no other cost sharing. How much does the member owe?

  1. $400
  2. $200 Correct answer.
  3. $1,000
  4. $0

Explanation

Coinsurance is the member's percentage share of the allowed amount, so 20% of $1,000 equals $200. The plan pays the remaining 80%, or $800.

Question 28Healthcare Environment

An annual deductible in a health plan is best described as:

  1. The maximum amount the plan pays in a year
  2. A fixed dollar amount collected at each visit
  3. Amount the member pays before the plan pays Correct answer.
  4. A percentage of each claim paid by the member

Explanation

The deductible is the amount a member must pay for covered services before the plan begins sharing costs in a plan year. Copays and coinsurance are separate forms of cost sharing that may apply after the deductible is met.

Question 29Healthcare Environment

Which service does Medicare Part A cover for a beneficiary who meets the program's conditions?

  1. Custodial nursing home care
  2. Routine dental and vision care
  3. Outpatient prescription medications
  4. A short skilled nursing facility stay Correct answer.

Explanation

Part A covers inpatient hospital care, short-term skilled nursing facility care following a qualifying inpatient stay, hospice, and some home health services. Long-term custodial care falls outside the Medicare benefit.

Question 30Healthcare Environment

A health information exchange (HIE) is primarily intended to:

  1. Provide malpractice coverage to participating clinicians
  2. License physicians to practice across state lines
  3. Set Medicare payment rates for participating hospitals
  4. Enable clinical data sharing among organizations Correct answer.

Explanation

An HIE allows clinical information to follow patients across organizational boundaries, supporting care coordination, transitions of care, and reduced duplicate testing. Payment setting, liability coverage, and licensure are handled by other entities.

Question 31Healthcare Environment

The DICOM standard is used primarily to:

  1. Represent clinical terms in a controlled vocabulary
  2. Transmit pharmacy claims to payers
  3. Exchange medical images and related metadata Correct answer.
  4. Encode laboratory results for public health reporting

Explanation

DICOM defines formats and services for storing, querying, and transmitting medical images along with associated metadata such as patient and acquisition details. Laboratory, pharmacy, and terminology needs are addressed by other standards.

Question 32Healthcare Environment

Under HIPAA, which of the following is classified as a covered entity?

  1. A health plan that pays claims for its members Correct answer.
  2. A software vendor that sells scheduling tools to clinics
  3. A patient advocacy nonprofit organization
  4. A landscaping contractor serving a hospital campus

Explanation

Covered entities are health plans, healthcare clearinghouses, and healthcare providers that transmit health information electronically for covered transactions. Vendors and unrelated businesses are not covered entities, although a vendor handling protected health information for a covered entity may be a business associate.

Question 33Healthcare Environment

An out-of-pocket maximum in a health plan limits:

  1. How much cost sharing a member pays in a year Correct answer.
  2. The premium an employer pays for family coverage
  3. Total charges a hospital may bill per admission
  4. How many specialists a member may see in a year

Explanation

The out-of-pocket maximum caps the cost sharing a member pays for covered in-network essential benefits during a plan year; once reached, the plan generally pays covered benefits in full. Premiums and charges for non-covered services typically do not count toward the limit.

Question 34Healthcare Environment

Under the Medicare inpatient prospective payment system, the MS-DRG assigned to a stay is determined primarily by:

  1. The number of prior inpatient admissions in the year
  2. The patient's county of residence
  3. Principal diagnosis, procedures, and complications Correct answer.
  4. The attending physician's years of clinical experience

Explanation

The MS-DRG grouper uses the principal diagnosis, the procedures performed, and complicating or comorbid conditions to assign a group and relative weight. Geographic location and clinician characteristics enter other payment adjustments, not DRG assignment.

Question 35Healthcare Environment

In a bundled payment arrangement, a single payment covers:

  1. The hospital's capital equipment purchases
  2. Only the surgeon's professional fees
  3. A defined episode of care across providers Correct answer.
  4. Each service individually as it is delivered

Explanation

Bundled payment combines the expected costs of an episode, such as a joint replacement plus related post-acute care, into one amount shared among participating providers. This structure rewards coordination and discourages unnecessary utilization.

Question 36Healthcare Environment

The federal physician self-referral law, known as the Stark Law, primarily restricts:

  1. Sharing patient records between affiliated hospitals
  2. Self-referrals for designated health services Correct answer.
  3. Billing for services by unlicensed staff
  4. Direct-to-consumer marketing of prescription drugs

Explanation

The Stark Law prohibits physicians from referring Medicare patients to entities for designated health services when the physician or an immediate family member has a financial relationship with that entity, unless an exception applies. Its focus is self-referral rather than marketing or data sharing.

Question 37Healthcare Environment

The federal Anti-Kickback Statute prohibits:

  1. Offering payment to induce federal referrals Correct answer.
  2. Billing Medicare for services not documented
  3. Waiving a copay because of financial hardship
  4. Sharing eligibility data with a health plan

Explanation

The Anti-Kickback Statute makes it a crime to knowingly offer, pay, solicit, or receive remuneration to induce referrals or purchases of items or services reimbursed by federal healthcare programs. It targets improper inducements rather than documentation accuracy.

Question 38Healthcare Environment

A vendor that hosts a hospital's patient portal and handles protected health information on the hospital's behalf is generally a:

  1. Public health authority
  2. Business associate Correct answer.
  3. Accrediting body
  4. Covered entity

Explanation

A business associate performs functions or services involving protected health information on behalf of a covered entity and must operate under a written agreement with required safeguards. The hospital itself is the covered entity in this relationship.

Question 39Healthcare Environment

In the ASC X12 electronic transactions used in healthcare, the 835 is:

  1. A claim submission for inpatient services
  2. An eligibility inquiry sent to a payer
  3. A remittance advice explaining payment Correct answer.
  4. A benefit enrollment file sent to a payer

Explanation

The 835 transaction is the electronic remittance advice that reports payments, adjustments, and denials for submitted claims. Claims are transmitted in the 837, and eligibility is checked using the 270/271 pair.

Question 40Healthcare Environment

Pharmacy claims submitted to a pharmacy benefit manager are most commonly formatted using which standard?

  1. HL7 version 2
  2. DICOM
  3. ASC X12 837
  4. NCPDP Correct answer.

Explanation

NCPDP standards, including the Telecommunication Standard, support real-time pharmacy claim adjudication with pharmacy benefit managers and payers. HL7, DICOM, and X12 837 serve other exchange needs.

Question 41Healthcare Environment

HEDIS is a set of measures used primarily to:

  1. Benchmark health plan quality performance Correct answer.
  2. Set hospital DRG weights
  3. Report communicable disease to public health
  4. Certify electronic health record software

Explanation

HEDIS is a standardized measure set maintained by NCQA that compares health plans on preventive care, chronic disease management, and member experience. It does not set payment weights, certify software, or serve as a disease surveillance system.

Question 42Healthcare Environment

CMS Star Ratings for Medicare Advantage plans are used to:

  1. Determine the plan's provider network size
  2. Set the plan's monthly premium
  3. Assign each enrollee to a primary care physician
  4. Measure quality and adjust plan payments Correct answer.

Explanation

Star Ratings summarize clinical quality, member experience, and operational performance, and higher ratings can earn quality bonus payments that affect plan revenue. They do not determine premiums, network size, or individual care assignments.

Question 43Healthcare Environment

The Medicare and Medicaid EHR incentive payments for hospitals and eligible professionals were originally created through which program?

  1. The Sustainable Growth Rate formula
  2. The Hospital Readmissions Reduction Program
  3. The inpatient prospective payment system
  4. The Meaningful Use program Correct answer.

Explanation

The EHR Incentive Programs, commonly known as Meaningful Use and later renamed Promoting Interoperability, paid incentives for adopting and meaningfully using certified EHR technology. The other programs address readmissions penalties, physician payment formulas, and inpatient payment methods.

Question 44Healthcare Environment

The Veterans Health Administration differs from Medicare chiefly in that the VHA:

  1. Sets national quality reporting standards
  2. Runs its own hospitals and clinics for veterans Correct answer.
  3. Pays private insurers for veterans' care
  4. Administers grant funding to community hospitals

Explanation

The VHA is a federally operated integrated delivery system that owns and staffs hospitals and clinics for eligible veterans. Medicare, by contrast, is a payer that reimburses independent providers for covered services.

Question 45Healthcare Environment

Prior authorization requires that:

  1. A patient pays the full cost of a service up front
  2. A service is delivered only by a specialist
  3. The payer approves a service before it is delivered Correct answer.
  4. A provider submits the claim within 24 hours

Explanation

Prior authorization is a utilization management step in which the payer reviews and approves coverage for a service before it is provided. It is not a payment timing rule, a network restriction, or a claims filing deadline.

Question 46Healthcare Environment

The Trusted Exchange Framework and Common Agreement (TEFCA) is intended primarily to:

  1. Create a nationwide network-of-networks for exchange Correct answer.
  2. Set certification criteria for EHR software
  3. Standardize medical device connectivity profiles
  4. Supersede state privacy laws with a single federal standard

Explanation

TEFCA, developed under the 21st Century Cures Act, establishes common governance and a common agreement among qualified health information networks so that health data can be exchanged nationwide. It builds on existing privacy law rather than replacing it.

Question 47Healthcare Environment

Records held by a federally assisted substance use disorder treatment program are protected by:

  1. 42 CFR Part 2 Correct answer.
  2. The Emergency Medical Treatment and Labor Act
  3. The Freedom of Information Act
  4. The Clinical Laboratory Improvement Amendments

Explanation

42 CFR Part 2 governs records created by federally assisted substance use disorder programs and generally requires patient-specific consent for most disclosures, making it stricter than HIPAA in many situations. The other authorities address government records access, laboratory quality, and emergency screening obligations.

Question 48Healthcare Environment

The 340B Drug Pricing Program allows eligible covered entities to:

  1. Share drug rebates directly with prescribing physicians
  2. Bill Medicare at list price for discounted drugs
  3. Buy outpatient drugs at discounted prices Correct answer.
  4. Dispense controlled substances without DEA registration

Explanation

Section 340B requires manufacturers to sell covered outpatient drugs at reduced prices to eligible entities such as certain hospitals and clinics serving low-income populations. The program does not affect DEA registration and does not authorize rebate sharing with prescribers.

Question 49Healthcare Environment

The Children's Health Insurance Program (CHIP) is financed through:

  1. Federal-state partnership with enhanced matching Correct answer.
  2. Payroll taxes paid by employers only
  3. Premium subsidies issued by private insurers
  4. State general funds with no federal contribution

Explanation

CHIP is a joint federal-state program covering children in families with incomes above Medicaid eligibility levels, with the federal government matching state spending at an enhanced rate. It is not financed solely by states, payroll taxes, or private premium subsidies.

Question 50Healthcare Environment

During medical staff credentialing, primary source verification means confirming a clinician's credentials by:

  1. Checking the clinician's personal website
  2. Contacting the issuing institution or body directly Correct answer.
  3. Accepting a copied certificate from the application
  4. Reviewing a colleague's written recommendation

Explanation

Primary source verification confirms qualifications directly with the issuing body, such as a medical school, residency program, licensing board, or certifying board, rather than relying on documents the applicant supplies. This practice supports patient safety and accreditation expectations.