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Governance and Regulation Questions and Answers

Question 1

In the paragraph below, a statement contains two pairs of terms enclosed in parentheses.

Determine which term in each pair correctly completes the statement. Then select the answer choice containing the two terms that you have chosen.

Inflation plays a role in the health plan environment by influencing the prices of healthcare services, supplies, and coverage. During an inflationary period, consumers typically have (more / less) purchasing power because the prices of goods and services increase (more / less) quickly than income.

Options:

A.

More / more

B.

More / less

C.

Less / more

D.

Less / less

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Question 2

Certificate of need (CON) laws apply to health plans in a variety of ways, depending upon the state. By definition, CON laws are laws that are designed to

Options:

A.

Regulate the construction, renovation, and acquisition of healthcare facilities as well as the purchase of major medical equipment in a geographical area

B.

Protect commerce from unlawful restraint of trade, price discrimination, price fixing, reduced competition, and monopolies

C.

Determine benefit payments when a person is covered by more than one plan, such as two group health plans

D.

License and regulate health plans that wish to establish and operate an HMO

Question 3

In examining accountability in the current managed care environment, one is likely to find that combinations of various models of accountability are in operation. Under one model of accountability, the primary mechanisms for accountability are the mechanisms of the marketplace-failure to meet standards will result in a loss of demand for services. By definition, this model of accountability is called the

Options:

A.

Professional model of accountability

B.

Political model of accountability

C.

Due diligence model of accountability

D.

Economic model of accountability

Question 4

SoundCare Health Services, a health plan, recently conducted a situation analysis. One step in this analysis required SoundCare to examine its current activities, its strengths and weaknesses, and its ability to respond to potential threats and opportunities in the environment. This activity provided SoundCare with a realistic appraisal of its capabilities. One weakness that SoundCare identified during this process was that it lacked an effective program for preventing and detecting violations of law. SoundCare decided to remedy this weakness by using the 1991 Federal Sentencing Guidelines for Organizations as a model for its compliance program.

By definition, the activity that SoundCare conducted when it examined its strengths, weaknesses, and capabilities is known as

Options:

A.

An environmental analysis

B.

An internal assessment

C.

An environmental forecast

D.

A community analysis

Question 5

One federal law amended the Social Security Act to allow states to set their own qualification standards for HMOs that contracted with state Medicaid programs and revised the requirement that participating HMOs have an enrollment mix of no more than 50% combined Medicare and Medicaid members.

This act, which was the true stimulus for increasing participation by health plans in Medicaid, is called the

Options:

A.

Omnibus Budget Reconciliation Act of 1981 (OBRA-81)

B.

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)

C.

Employee Retirement Income Security Act of 1974 (ERISA)

D.

Federal Employees Health Benefits Act of 1958 (FEHB Act)

Question 6

The Wentworth Corporation uses a self-funded plan to provide its employees with healthcare benefits. One consequence of Wentworth's approach to providing healthcare benefits is that self-funding

Options:

A.

Requires that Wentworth self-administer its healthcare benefit plan

B.

Requires that Wentworth pay higher state premium taxes than do insurers and health plans

C.

Eliminates the need for Wentworth to pay a risk charge to an insurer or health plan

D.

Increases the number of benefit and rating mandates that apply to Wentworth's plan

Question 7

Antitrust laws can affect the formation, merger activities, or acquisition initiatives of a health plan. In the United States, the two federal agencies that have the primary responsibility for enforcing antitrust laws are the

Options:

A.

Internal Revenue Service (IRS) and the Department of Justice (DOJ)

B.

Office of Inspector General (OIG) and the Department of Defense (DOD)

C.

Federal Trade Commission (FTC) and the Department of Labor (DOL)

D.

Federal Trade Commission (FTC) and the Department of Justice (DOJ)

Question 8

While traditional workers' compensation laws have restricted the use of managed care techniques, many states now allow managed workers' compensation. One common characteristic of managed workers' compensation plans is that they

Options:

A.

Discourage injured employees from returning to work until they are able to assume all the duties of their jobs

B.

Use low copayments to encourage employees to choose preferred providers

C.

Cover an employee's medical costs, but they do not provide coverage for lost wages

D.

Rely on total disability management to control indemnity benefits

Question 9

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba.

Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses.

In creating Diversified, Tidewater formed the type of company known as

Options:

A.

A mutual holding company

B.

A spin-off company

C.

An upstream holding company

D.

A downstream holding company

Question 10

TRICARE, a military healthcare program, offers eligible beneficiaries three options for healthcare services: TRICARE Prime, TRICARE Extra, and TRICARE Standard. With respect to plan features, both an annual deductible and claims filing requirements must be met, regardless of whether care is delivered by network providers, under

Options:

A.

TRICARE Prime and TRICARE Extra only

B.

TRICARE Extra and TRICARE Standard only

C.

TRICARE Standard only

D.

None of these healthcare options

Question 11

Health plans should monitor changes in the environment and emerging trends, because changes in society will affect the managed care industry. One true statement regarding recent changes in the environment in which health plans operate is that

Options:

A.

Women as a group receive more healthcare and interact more often with health plans than do men over the course of a lifetime

B.

The focus of healthcare during the past decade has shifted away from outpatient care to inpatient hospital treatment

C.

The uninsured population in the United States has been decreasing in recent years

D.

The decline in overall inflation in the 1990s failed to slow the growth in healthcare inflation

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Total 76 questions