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MHA 706 MIDTERM- LORD EXAM
WITH COMPLETE SOLUTI ONS
RATED A+
Question 1: What are the pros and cons of proprietorships
and partnerships?CORRECT ANSWER: Pros: Ease of Information, Subject to a few regulations, no corporation income taxes.
Cons: Limited life, difficult to transfer, unlimited liability,
difficult to raise capital.
Question 2: What are the pros and cons of corporations?
CORRECT ANSWER: Pros: Unlimited life, easy transfer of ownership, limited liability, ease of raising
capital. Cons: Cost of formation and reporting, double or
triple taxes must be paid.
Question 3: What is a non-profit organization?
CORRECT ANSWER: Exempt from taxes. Goal is to
improve community.
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Question 4: What is a for-profit organization?
CORRECT ANSWER: (Investor Owned) Goal is to
maximize shareholder return. Owe taxes.
Question 5: What is the agency problem?
CORRECT ANSWER: the possibility of conflict of
interest between the stockholders and management of a
firm. Example: Hire someone to carry out a job function,
but they go out of their interests instead of best interests of company/organization.
Question 6: What is the third-party payor system in the
US (i.e., private vs public)?CORRECT ANSWER: Private: Blue Cross Blue Shield,
Commercial Insurers, Self-Insurers (AETNA). Public:
Medicare and Medicaid-both offer services to different levels. "Safety net" Lowest reimbursement rates.
Question 7: What are the reimbursement methods (fee-
for-service vs. capitation)?
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CORRECT ANSWER: Fee for Service: payment is tied to amount of services provided (Decades ago) Dental
industry. Capitation: payment is tied to the size of the
covered population (number of enrollees) Payment is based on per # per month. Decreasing utilization Population is healthier.
Question 8: What are the Medicare reimbursement parts
for different types of providers?
CORRECT ANSWER: Medicare parts A, B & C.
Question 9: What is Medicare Part A (aka Hospital
Insurance or HI)?
CORRECT ANSWER: Provides hospital insurance
automatically at age 65 (if FICA qualified) at no fee but may have deductible & co-pay.
Question 10: What is Medicare Part B?
CORRECT ANSWER: The part of the Medicare
program that pays for physician services, outpatient
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hospital services, durable medical equipment, and other services and supplies.
Question 11: What is Medicare Part C (Medicare
Advantage)?
CORRECT ANSWER: •Replaces and covers expenses
found in Part A and B, •Medicare private fee-for-service plans (PFFS), •Medicare managed care plans (HMOs and PPOs), •Medicare specialty plans
Question 12: What is Medicare—Part D Prescription
Drug Coverage?
CORRECT ANSWER: a United States federal-
government program to subsidize the costs of prescription drugs and prescription drug insurance premiums for Medicare beneficiaries.
Question 13: What is the impact of the Affordable Care
Act (what the bill changed about the healthcare environment)?