AHIP Governance and Regulation Questions + Answers

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Question 1
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
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)


Answer : D

Question 2
The following statements are about the Federal Employees Health Benefits Program
(FEHBP), which is administered by the Office of Personnel Management (OPM). Three of the statements are true and one statement is false. Select the answer choice that contains the FALSE statement.
A. For every plan in the FEHBP, OPM annually determines the lowest premium that is actuarially sound and then negotiates with each plan to establish that premium rate.
B. Once a health plan has submitted its rate proposals for a contract year to the OPM, it cannot adjust its premium rate for any reason.
C. To cover its administrative costs, OPM sets aside 1% of all FEHBP premiums.
D. Each spring, OPM sends all plan providers its call letter, a document that specifies the kinds of benefits that must be available to plan participants and cost goals and procedural changes that the plans need to adopt.


Answer : A

Question 3
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 -
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)


Answer : A

Question 4
The following situations illustrate per se violations of federal antitrust laws:
Situation A - Two groups of providers agreed among themselves that each provider will do business with health plans only on a fee-for-service basis.
Situation B - In order to avoid competing with each other, two independent, competing physician-hospital organizations (PHOs) divide the geographic areas in which they will market their services.
From the following answer choices, select the response that correctly identifies the types of per se violations illustrated by these situations.
A. Situation A: price fixing; Situation B: horizontal division of markets
B. Situation A: price fixing; Situation B: tying arrangement
C. Situation A: horizontal group boycott; Situation B: horizontal division of markets
D. Situation A: horizontal group boycott; Situation B: tying arrangement


Answer : A

Question 5
Some health plans qualify as tax-exempt organizations under Sections 501(c)(3) and
501(c)(4) of the Internal Revenue Code. One true statement regarding a health plan that qualifies as a 501(c)(4) social welfare organization, in comparison to a health plan that qualifies as a 501(c)(3) charitable organization, is that a
A. 501(c)(4) social welfare organization is allowed to distribute profits for the benefit of individuals, whereas a 501(c)(3) charitable organization can use surplus only for the benefit of the organization, the community, or a charity
B. 501(c)(4) social welfare organization can raise operating funds through the sale of tax- exempt bonds, whereas a 501(c)(3) charitable organization does not have this advantage
C. 501(c)(4) social welfare organization has less flexibility in determining use of funds for social or political activities than does a 501(c)(3) charitable organization
D. 501(c)(4) exemption is easier to obtain than a 501(c)(3) exemption, because 501(c)(4) social welfare organizations are allowed to benefit a comparatively smaller group of individuals


Answer : D


Question 6
Arthur Dace, a plan member of the Bloom Health Plan, tried repeatedly over an extended period to schedule an appointment with Dr. Pyle, his primary care physician (PCP). Mr.
Dace informally surveyed other Bloom plan members and found that many people were experiencing similar problems getting an appointment with this particular provider. Mr.
Dace threatened to take legal action against Bloom, alleging that the health plan had deliberately allowed a large number of patients to select Dr. Pyle as their PCP, thus making it difficult for patients to make appointments with Dr. Pyle.
Bloom recommended, and Mr. Dace agreed to use, an alternative dispute resolution (ADR) method that is quicker and less expensive than litigation. Under this ADR method, both
Bloom and Mr. Dace presented their evidence to a panel of medical and legal experts, who issued a decision that Bloom's utilization management practices in this case did not constitute a form of abuse. The panel's decision is legally binding on both parties.
This information indicates that Bloom resolved its dispute with Mr. Dace by using an ADR method known as:
A. Corporate risk management
B. An ombudsman program
C. An ethics committee
D. Arbitration


Answer : D

Question 7
Determine whether the following statement is true or false:
Failing to adopt and implement standards for the prompt investigation and settlement of claims is an example of an activity that would be considered an improper claims practice according to the NAIC Model Unfair Claims Settlement Practices Act.
A. True
B. False


Answer : A

Question 8
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.
One type of acquisition is called a stock purchase. In a typical stock purchase, a company acquires (51% / 100%) of the voting shares of another company's stock, thereby making the acquired company a subsidiary. The (acquired / acquiring) company holds all of the assets and liabilities of the acquired company.
A. 51% / acquired
B. 51% / acquiring
C. 100% / acquired
D. 100% / acquiring


Answer : C

Question 9
Arthur Dace, a plan member of the Bloom health plan, tried repeatedly over an extended period to schedule an appointment with Dr. Pyle, his primary care physician (PCP). Mr.
Dace informally surveyed other Bloom plan members and found that many people were experiencing similar problems getting an appointment with this particular provider. Mr.
Dace threatened to take legal action against Bloom, alleging that the health plan had deliberately allowed a large number of patients to select Dr. Pyle as their PCP, thus making it difficult for patients to make appointments with Dr. Pyle.
Bloom recommended, and Mr. Dace agreed to use, an alternative dispute resolution (ADR) method that is quicker and less expensive than litigation. Under this ADR method, both
Bloom and Mr. Dace presented their evidence to a panel of medical and legal experts, who issued a decision that Bloom's utilization management practices in this case did not constitute a form of abuse. The panel's decision is legally binding on both parties.
Different types of compensation arrangements in managed care plans, from fee-for-service
(FFS) arrangements to capitation arrangements, lead to different types of fraud and abuse.
From the answer choices below, select the response that identifies the form of abuse in which Bloom is allegedly engaging, according to Mr. Dace's complaint, and whether this form of abuse is more likely to occur in FFS compensation arrangements or in capitation arrangements.
A. Type of abuse underutilization Type of compensation arrangement FFS arrangement
B. Type of abuse underutilization Type of compensation arrangement capitation arrangement
C. Type of abuse overutilization Type of compensation arrangement FFS arrangement
D. Type of abuse overutilization Type of compensation arrangement capitation arrangement


Answer : B

Question 10
The Department of Health and Human Services (HHS) has delegated its responsibility for development and oversight of regulations under the Health Insurance Portability and
Accountability Act (HIPAA) to an office within the Centers for Medicaid & Medicare
Services (CMS). The CMS office that is responsible for enforcing the federal requirements of HIPAA is the
A. Center for Health Plans and Providers (CHPPs)
B. Center for Medicaid and State Operations
C. Center for Beneficiary Services
D. Center for Managed Care


Answer : B


Question 11
The Nonprofit Institutions Act allows the Neighbor Hospital, a not-for-profit hospital, to purchase at a discount drugs for its 'own use'. Consider whether the following sales of drugs were not for Neighbor's own use and therefore were subject to antitrust enforcement:
Elijah Jamison, a former patient of Neighbor, renewed a prescription that was originally dispensed when he was discharged from Neighbor.
Neighbor filled a prescription for Camille Raynaud, who has no connection to Neighbor other than that her prescribing physician is located in a nearby physician's office building.
Neighbor filled a prescription for Nigel Dixon, who is a friend of a Neighbor medical staff member.
With respect to the United States Supreme Court's definition of 'own use,' the drug sales that were not for Neighbor's own use were the sales that Neighbor made to
A. Mr. Jamison, Ms. Raynaud, and Mr. Dixon
B. Mr. Jamison and Ms. Raynaud only
C. Mr. Dixon only
D. None of these individuals


Answer : A

Question 12
One provision of the Mental Health Parity Act of 1996 (MHPA) is that the MHPA prohibits group health plans from
A. Setting a cap for a group member's lifetime medical health benefits that is higher than the cap for the member's lifetime mental health benefits
B. Imposing limits on the number of days or visits for mental health treatment
C. Charging deductibles for mental health benefits that are higher than the deductibles for medical benefits
D. Imposing annual limits on the number of outpatient visits and inpatient hospital stays for mental health services


Answer : A

Question 13
One typical difference between a for-profit health plan's board of directors and a not-for- profit health plan's board of directors is that the directors in a for-profit health plan
A. Can serve on the board for a period of no more than ten years, whereas the terms of service for a not-for-profit board's directors are usually unlimited by the director's age or by a preset maximum number of years of service
B. Must participate in raising capital for the health plan, whereas a not-for-profit board's directors are prohibited from participating directly in raising capital for the health plan
C. Are directly accountable to shareholders, whereas a not-for-profit board's directors are accountable to plan members and the community
D. Are not compensated for board participation, whereas a not-for-profit board's directors are compensated for board participation


Answer : C

Question 14
There are several exceptions to the Ethics in Patient Referrals Act and its amendments
(the Stark laws), which prohibit a physician from referring Medicare or Medicaid patients for certain designated services or supplies provided by entities in which the physician has a financial interest. Consider whether the situations described below qualify as exceptions to the Stark laws:
Situation A: Dr. Wong is a physician in the Marvel Health Plan's provider network and has a financial relationship with Marvel arising from the health plan's compensation for his services. Marvel is not a prepaid health plan.
Situation B: Dr. Ryder is a physician in the provider network of the Glen Health Plan, which is not a prepaid health plan. In situations of medical necessity, Dr. Ryder refers Glen patients to a physical therapy clinic that leases office space from him.
Situation C: Dr. Yost has a compensation arrangement with a health plan for providing health services under the Medicare+Choice program.
An arrangement that is exempt from the Stark laws is described in
A. All of these situations
B. Situations A and C only
C. Situation B only
D. Situation C only


Answer : D

Question 15
There are several approaches to the interagency division of responsibility for managed care entity (MCE) oversight. In State M, the state Medicaid agency, the state department of health, and the state insurance department are all responsible for ensuring that quality improvement programs are in place among the same group of MCEs and that these programs meet each agency's rules and regulations for such programs. This information indicates that State M uses the approach known as the
A. Parallel model
B. Shared model
C. Concurrent model
D. PACE model


Answer : C


Question 16
From the following answer choices, choose the term that best corresponds to this description. The SureQual Group is a group of practicing physicians and other healthcare professionals paid by the federal government to review services ordered or furnished by other practitioners in the same medical fields for the purpose of determining whether medical services provided were reasonable and necessary, and to monitor the quality of care given to Medicare patients.
A. Health insuring organization (HIO)
B. Independent practice association (IPA)
C. Physician practice management (PPM) company
D. Peer review organization (PRO)


Answer : D

Question 17
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
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


Answer : A

Question 18
One example of health plan's influence on the practice of medicine is that, during the past decade, the focus of healthcare has moved toward _________________, which is designed to reduce the overall need for healthcare services by providing patients with decision-making information.
A. Demand management
B. Managed competition
C. Comprehensive coverage
D. Private inurement


Answer : A

Question 19
The Hanford Health Plan has delegated the credentialing of its providers to the Sienna
Group, a credential verification organization (CVO). If the contract between Hanford and
Sienna complies with all of the National Committee for Quality Assurance (NCQA) guidelines for delegation of credentialing, then this contract
A. Transfers to Sienna all rights to terminate or suspend individual practitioners or providers in Hanford's provider network
B. Describes the process by which Hanford evaluates Sienna's performance in credentialing providers
C. Both A and B
D. A only
E. B only
F. Neither A nor B


Answer : C

Question 20
The National Association of Insurance Commissioners (NAIC) adopted the Health
Maintenance Organization Model Act (HMO Model Act) to regulate the development and operations of HMOs. One true statement regarding the HMO Model Act is that the act
A. includes mental health services in its definition of basic healthcare services
B. authorizes only one state agency-the department of insurance-to regulate HMOs
C. requires HMOs to place a deposit in trust with the state insurance commissioner for the purpose of protecting the interests of enrollees should an HMO become financially impaired
D. requires HMOs that wish to offer a point-of-service (POS) product to contract with a licensed insurance company to provide POS options to plan members


Answer : C


Question 21
In the course of doing business, health plans conduct basic corporate transactions. For example, when a health plan engages in the corporate transaction known as aggressive sourcing, the health plan
A. Chooses to contract with vendors who provide specific functions that would otherwise be performed in-house, such as paying claims
B. Seeks to obtain the best deals from various vendors for equipment, supplies, and services such as telephones, overnight mail, computer hardware and software, and copy machines
C. Merges with one or more companies to form an entirely new company
D. Joins with one or more companies, but retains its autonomy and relies on the other companies to perform specific functions


Answer : B

Question 22
The following statements describe various state benefit mandates. Select the answer choice that describes a state law pertaining to off-label uses for drugs.
A. State A mandates that health plans provide benefits for experimental drugs for the treatment of terminal diseases such as AIDS and cancer.
B. State B mandates that health plans have a procedure in place to allow a patient to have a non-formulary drug covered under certain conditions.
C. State C mandates that, in dispensing generic drugs, pharmacies must label drug containers with the name of the substituted generic medication.
D. State D mandates that health plans provide benefits for the treatment of one form of cancer with specific drugs that had originally been approved by the Food and Drug Administration (FDA) to treat other forms of cancer.


Answer : D

Question 23
A federal law that significantly affects health plans is the Health Insurance Portability and
Accountability Act of 1996 (HIPAA). In order to comply with HIPAA provisions, issuers offering group health coverage generally must.
A. Renew group health policies in both small and large group markets, regardless of the health status of any group member
B. Provide a plan member with a certificate of creditable coverage at the time the member enrolls in the group plan
C. Both A and B
D. A only
E. B only
F. Neither A nor B


Answer : B

Question 24
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.
A. More / more
B. More / less
C. Less / more
D. Less / less


Answer : C

Question 25
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
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)


Answer : D