NEW QUESTION 1
Third party administrators (TPAs) provide various administrative services to health plans or groups that provide health benefit plans to their employees or members. Many state laws that regulate TPAs are based on the NAIC Third Party Administrator Model Statute. One provision of the TPA Model Law is that it

• A. Prohibits TPAs from performing insurance functions such as underwriting and claims processing
• B. Prohibits TPAs from entering into an agreement under which the amount of the TPA's compensation is based on the amount of premium or charges the TPA collects
• C. Requires TPAs, upon the termination of a TPA agreement with a group, to immediately transfer all its records relating to the group to the new administrator
• D. Requires TPAs to notify the state insurance department immediately following any material change in the TPA's ownership or control

Answer: D

NEW QUESTION 2
Determine whether the following statement is true or false:
Although most-favored-nation (MFN) clauses in contracts between health plans and healthcare providers are not per se illegal, they should be reviewed under the rule of reason analysis for antitrust purposes.

• A. True, because the Federal Trade Commission (FTC) ruled that MFN clauses are not per se illegal and the FTC encourages health plans to include them in provider contracts.
• B. True, because although MFN clauses are not per se illegal, they violate antitrust laws if they have a predatory purpose and an anticompetitive effect.
• C. False, because MFN clauses involve decisions by providers concerning the level of fees to charge, and thus they are per se illegal.
• D. False, because MFN clauses are not per se illegal, and thus they are exempt from antitrust laws and regulation by the FTC.

Answer: B

NEW QUESTION 3
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 selffunding

• 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

Answer: C

NEW QUESTION 4
From the following answer choices, choose the term that best corresponds to this description. Barrington Health Services, Inc. contracts with a state Medicaid agency as a fiscal intermediary. Barrington does not provide medical services, but contracts with medical providers on behalf of the state Medicaid agency.

• A. Health insuring organization (HIO)
• B. Independent practice association (IPA)
• C. Physician practice management (PPM) company
• D. Peer review organization (PRO)

Answer: A

NEW QUESTION 5
The following statements are about market conduct examinations of health plans. Select the answer choice that contains the correct statement.

• A. Multistate examinations are not appropriate for financial examinations, because regulatory requirements concerning a health plan's financial condition tend to vary from state to state.
• B. Market conduct examinations of a health plan's advertising and sales materials include comparing the advertising materials to the policies they advertise.
• C. Once an examination report is provided to the state insurance department, a health plan is not given an opportunity to present a formal objection to the report.
• D. In imposing sanctions on health plans, state insurance departments are required to follow federal sentencing guidelines.

Answer: B

NEW QUESTION 6
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.
Every employee benefit plan governed by the Employee Retirement Income Security Act (ERISA) must distribute a summary plan description (SPD) to participants within (90 / 120) days after the date on which the plan is adopted or made effective. Thereafter, if the plan is amended, a new SPD must be distributed every (5 / 10) years.

• A. 90 / 5
• B. 90 / 10
• C. 120 / 5
• D. 120 / 10

Answer: C

NEW QUESTION 7
The Balanced Budget Act (BBA) of 1997 created the Medicare+Choice plan. One provision of the BBA under Medicare+Choice is that the BBA

• A. Requires health plans to qualify as either a competitive medical plan (CMP) or a federally qualified HMO in order to participate in the Medicare program
• B. Eliminates funding for demonstration projects such as the Medicare Enrollment Demonstration Project
• C. Narrows the geographic variations in payments to Medicare health plans by lowering the growth rate of payments in high-payment counties and raising the rates in low-payment counties
• D. Increases Graduate Medical Education (GME) payments to hospitals for the training and cost of educating and training residents

Answer: C

NEW QUESTION 8
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

NEW 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.
With regard to the state in which Tidewater is domiciled, it is correct to say that, from the perspective of both Ontario and Manitoba, Tidewater is considered to be the type of corporation known as:

• A. A foreign corporation
• B. An alien corporation
• C. A sister corporation
• D. A domestic corporation

Answer: B

NEW QUESTION 10
Health maintenance organizations (HMOs) seeking federal qualification under the HMO Act of 1973 and its amendments must meet requirements in four basic operational areas. One operational requirement for qualification is that an HMO must

• A. Ensure that at least 1/3 of its policy-making body is comprised of HMO members
• B. Ensure that there is adequate representation of underserved communities on its policy-making body
• C. Have an ongoing quality assurance program that meets the requirements of the Centers for Medicaid & Medicare Services (CMS), stresses health outcomes, and provides for review by health professionals
• D. Test, safeguard, and promote quality of care by following detailed programmatic techniques that are explained in CMS's Federally Qualified HMO (FQHMO) Manual

Answer: C

NEW QUESTION 11
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

• A. An environmental analysis
• B. An internal assessment
• C. An environmental forecast
• D. A community analysis

Answer: B

NEW QUESTION 12
Health plans typically divide their costs into medical and administrative expenses. Examples of medical expenses are.

• A. Equipment costs
• B. Salaries and benefits for executives and for all functional areas
• C. Sales and marketing costs
• D. Payments to providers for the delivery of healthcare

Answer: D

NEW QUESTION 13
Nightingale Health Systems, a health plan, operates in a state that requires health plans to allow enrollees to visit obstetricians and gynecologists without a referral from a primary care provider. This information indicates that Nightingale must comply with a type of mandate known as a:

• A. Direct access law
• B. Scope-of-practice law
• C. Provider contracting mandate
• D. Physician incentive law

Answer: A

NEW QUESTION 14
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.
By combining under Diversified a group of businesses that produce unrelated products and by consolidating the management of the businesses, Tidewater has achieved the type(s) of integration known as

• A. Conglomerate integration and operational integration
• B. Horizontal integration and operational integration
• C. Horizontal integration and virtual integration
• D. Conglomerate integration only

Answer: A

NEW QUESTION 15
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

NEW QUESTION 16
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