AHM-510 Exam - Governance and Regulation

NEW QUESTION 1
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 physicianhospital 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

NEW QUESTION 2
SoundCare Health Services, an MCO, 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 3
Indigo Health Plan advertised a specific individual health insurance policy through a direct mail advertisement that provided detailed information about the product. In order to comply with the NAIC Model Rules Governing Advertisements of Accident and Sickness Insurance, Indigo must disclose whether the advertised policy contains any exceptions, reductions, or limitations. Thus, Indigo disclosed in the advertisement that one policy provision limits coverage for dental exams to
$50 per exam and to one exam per calendar year. This information indicates that, with respect to the definitions in the NAIC Model Rules, Indigo's advertisement is an example of an

• A. Invitation to contract, and it discloses a policy provision known as an exception
• B. Invitation to contract, and it discloses a policy provision known as a reduction
• C. Invitation to inquire, and it discloses a policy provision known as an exception
• D. Invitation to inquire, and it discloses a policy provision known as a reduction

Answer: B

NEW QUESTION 4
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

NEW QUESTION 5
State X issued a nonresident license to Tamara Pensky, a sales representative of the Verity Health Plan. In doing so, State X imposed a countersignature requirement, which requires that

• A. An officer of Verity sign a written statement which indicates that Verity appoints M
• B. Pensky as an agent who is authorized to market Verity's products
• C. An officer of Verity sign a written statement which certifies that Verity has investigated M
• D. Pensky's qualifications and background and believes she is trustworthy and competent
• E. Applications solicited by M
• F. Pensky must be signed by an individual who holds a resident License
• G. Applications solicited by M
• H. Pensky must be signed by an officer of Verity

Answer: C

NEW QUESTION 6
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.
Tidewater's participating policy owners have the right to

• A. Elect the board of directors on the basis of one vote per policy owner
• B. Elect the board of directors on the basis of one vote for each policy a person owns
• C. Participate in developing a corporate mission statement and strategic plans
• D. Receive stock dividends for each policy they own

Answer: A

NEW 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

NEW QUESTION 8
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 9
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

NEW QUESTION 10
The board of directors of the Garnet Health Plan, an integrated delivery system (IDS), includes
physicians and hospital representatives who sometimes feel compelled to represent a specific organization that is only one part of the IDS. Such a circumstance can lead to , which is a situation in which the members of the board focus on the best interests of component parts of the enterprise rather than on the best interests of Garnet as a whole.

• A. An enterprise-focused board
• B. Representational governance
• C. Enterprise liability
• D. Boundary spanning

Answer: B

NEW QUESTION 11
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

NEW QUESTION 12
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 13
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.
In the case of Pacificare of Oklahoma, Inc. v. Burrage, the U.S. Court of Appeals for the Tenth Circuit considered whether ERISA preempts medical malpractice claims against health plans based on certain liability theories. In this case, the Tenth Circuit court held that ERISA (should / should not) preempt a liability claim against an HMO for the malpractice of one of its primary care physicians, and therefore the HMO was subject to a claim of (subordinated / vicarious) liability.

• A. Should / subordinated
• B. Should / vicarious
• C. Should not / subordinated
• D. Should not / vicarious

Answer: D

NEW QUESTION 14
Directors on a health plan's board must demonstrate their compliance with three duties in all their decisions. Directors who exercise their duties in good faith and with the same degree of diligence and skill that an ordinary, reasonable person would be expected to display in the same situation are meeting the duty known as the

• A. Duty of loyalty
• B. Duty to supervise
• C. Duty of care
• D. Trustee duty

Answer: C

NEW QUESTION 15
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 underutilizationType of compensation arrangement FFS arrangement
• B. Type of abuse underutilizationType of compensation arrangement capitation arrangement
• C. Type of abuse overutilizationType of compensation arrangement FFS arrangement
• D. Type of abuse overutilizationType of compensation arrangement capitation arrangement

Answer: B

NEW QUESTION 16
Solvency standards for Medicare provider-sponsored organizations (PSOs) are divided into three parts: (1) the initial stage, (2) the ongoing stage, and (3) insolvency. In the initial stage, prior to CMS approval, a Medicare PSO typically must have a minimum net worth of

• A. $750,000
• B. $1,000,000
• C. $1,500,000
• D. $2,000,000

Answer: C

NEW QUESTION 17
The Opal Health Plan complies with all of the provisions of the Newborns' and Mothers' Health Protection Act of 1996 (NMHPA). Samantha Hill and Debra Chao are Opal enrollees. Ms. Hill was hospitalized for a cesarean birth, and Ms. Chao was hospitalized for a normal delivery. From the following answer choices, select the response that indicates the minimum hospital stay for which Opal, under NMHPA, must provide benefits for Ms. Hill and Ms. Chao.

• A. M
• B. Hill: 72 hours; M
• C. Chao: 24 hours
• D. M
• E. Hill: 72 hours; M
• F. Chao: 48 hours
• G. M
• H. Hill: 96 hours; M
• I. Chao: 24 hours
• J. M
• K. Hill: 96 hours; M
• L. Chao: 48 hours

Answer: D

NEW QUESTION 18
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