What factor is medical necessity based onWhat factor is medical necessity based on

Feb 15, 2024

Question 1

What factor is medical necessity based on?

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A) The beneficial effects of a service for the patient’s physical needs and quality of life

B) The cost of a service compared with the beneficial effects on the patient’s health

C) The availability of a service at the facility

D) The reimbursement available for a given service

Question 2

The first prospective payment system (PPS) for inpatient care was developed in 1983. The newest PPS is used to manage the costs for

A) medical homes.

B) assisted living facilities.

C) home health care

D) inpatient psychiatric facilities

Question 3

The category “Commercial payers” includes private health information and

A) employer-based group health insurers.

B) Medicare/Medicaid.

C) TriCare

D) Blue Cross and Blue Shield

Question 4

LCDs and NCDs are review policies that describe the circumstances of coverage for various types of medical treatment. They advise physicians which services Medicare considers reasonable and necessary and may indicate the need for an advance beneficiary notice. They are developed by the Centers for Medicare and Medicaid Services (CMS) and Medicare Administrative Contractors. LCD and NCD are acronyms that stand for

A) local contractor’s decisions and national contractor’s decisions.

B) list of covered decisions and noncovered decisions.

C) local covered determinations and noncovered determinations.

D) local coverage determinations and national coverage determinations.

Question 5

A Medicare patient was seen by Dr. Zachary, who is a nonparticipating physician. The charge for the office visit was $125. The Medicare beneficiary had already met his deductible. The Medicare Fee Schedule amount is $100. Dr. Zachary does not accept assignment. The office manager will apply a practice termed as “balance billing,” which means that the patient is

A) financially liable for charges in excess of the Medicare Fee Schedule, up to a limit.

B) financially liable for the Medicare Fee Schedule amount.

C) financially liable for only the deductible.

D) not financially liable for any amount.

Question 6

CMS adjusts the Medicare Severity DRGs and the reimbursement rates every

A) quarter

B) calendar year beginning January 1

C) month

D) fiscal year beginning October 1

Question 7

The prospective payment system used to reimburse hospitals for Medicare hospital outpatients is called




D) APCs.

Question 8

An Advance Beneficiary Notice (ABN) is a document signed by the

A) physician advisor indicating that the patient’s stay is denied.

B) provider indicating that Medicare will not pay for certain services.

C) patient indicating whether he/she wants to receive services that Medicare probably will not pay for.

D) utilization review coordinator indicating that the patient stay is not medically necessary

Question 9

In a global payment methodology, which is sometimes applied to radiological and similar types of procedures that involve professional and technical components, all of the following are part of the “technical” components EXCEPT

A) radiological supplies.

B) physician services.

C) radiologic technicians.

D) radiological equipment.

Question 10

The standard claim form used by hospitals to request reimbursement for inpatient and outpatient procedures performed or services provided is called the

A) UB-04

B) CMS-1491

C) CMS-1500

D) CMS-1600

Question 11

A Medicare Summary Notice (MSN) is sent to ________ as their EOB.

A) patients (beneficiaries)

B) skilled nursing facilities

C) physicians

D) hospitals

Question 12

When a provider, knowingly or unknowingly, uses practices that are inconsistent with accepted medical practice and that directly or indirectly result in unnecessary costs to the Medicare program, this is called

A) abuse

B) fraud

C) economic shift

D) unbundling

Question 13

In calculating the fee for a physician’s reimbursement, the three relative value units are each multiplied by the

A) cost of living index for the particular region.

B) national conversion factor.

C) usual and customary fees for the service.

D) geographic practice cost indices.

Question 14

Which of the following helps the organization prioritize investment opportunities?

A) profitability index

B) return on investment

C) internal rate of return

D) net present value

Question 15

Your organization’s employees consist of a mixture of women and men. The women are of all ages, some are single mothers, others are married women with no children, and still others are women who care for older parents at home. The men also have varying personal lifestyles. Human Resources have designed a new benefit program that allows employees to choose from an array of benefits based on their own needs or lifestyle. The new benefit program is called a(n)

A) flexible benefit plan.

B) employee-driven benefit plan.

C) prepaid benefit plan.

D) cafeteria benefit plan.

Question 16

Under APCs, the payment status indicator “N” means that the payment

A) is packaged into the payment for other services.

B) is for ancillary services.

C) is discounted at 50%.

D) is for a clinic or an emergency visit.

Question 17

Assume the patient has already met his or her deductible and that the physician is a Medicare participating (PAR) provider. The physician’s standard fee for the services provided is $120.00. Medicare’s PAR fee is $60.00. How much reimbursement will the physician receive from Medicare?

A) $60.00

B) $48.00

C) $96.00

D) $120.00

Question 18

This information is published by the Medicare Administrative Contractors (MACs) to describe when and under what circumstances Medicare will cover a service. The ICD-10-CM, ICD-10-PCS, and CPT/HCPCS codes are listed in the memoranda.

A) SI/IS (Severity of llness/Intensity of Service Criteria)

B) PEPP (Payment Error Prevention Program)

C) OSHA (Occupational Safety and Health Administration)

D) LCD (Local Coverage Determinations)

Question 19

____ are errors in medical care that are clearly identifiable, preventable, and serious in their consequences for patients.

A) Misadventures

B) Never events or Sentinel events

C) Potential compensable events

D) Adverse preventable events

Question 20

The term used to indicate that the service or procedure is reasonable and necessary for the diagnosis or treatment of illness or injury consistent with generally accepted standards of care is

A) appropriateness

B) evidence-based medicine

C) medical neccessity

D) benchmarking

Question 21

This is the amount the facility actually bills for the services it provides.

A) costs

B) reimbursement

C) charges

D) contractual allowance

Question 22

When the third-party payer refuses to grant payment to the provider, this is called a

A) clean claim

B) denied claim

C) unprocessed claim

D) rejected claim

Question 23

Under the APC methodology, discounted payments occur when

A) there are two or more (multiple) procedures that are assigned to status indicator “S.”

B) there are two or more (multiple) procedures that are assigned to status indicator “T.”

C) modifier-78 is used to indicate a procedure is terminated after the patient is prepared but before anesthesia is started.

D) pass-through drugs are assigned to status indicator “K.”

Question 24

Use the following table to answer the question.


Charge Service Code

Item Service Description

General Ledger Key




Revenue Code

Activity Date


CT scan; head; w/out contrast








CT scan; head; with contrast







Under ASC-PPS, the patient is responsible for paying the coinsurance amount based upon ____ of the national median charge for the services rendered.

A) 15%

B) 20%

C) 80%

D) 50%

Question 25

A lump-sum payment distributed among the physicians who performed the procedure or interpreted its results and the health care facility that provided equipment, supplies, and technical support is known as

A) an economic stimulus

B) a global payment

C) a fee-for-service

D) capitation

Question 26

Use the following case scenario to answer the question.
A patient with Medicare is seen in the physician’s office.
The total charge for this office visit is $250.00.
The patient has previously paid his deductible under Medicare Part B.
The PAR Medicare fee schedule amount for this service is $200.00.
The nonPAR Medicare fee schedule amount for this service is $190.00.

If this physician is a nonparticipating physician who does NOT accept assignment for this claim, the total amount the physician will receive is

A) $218.50

B) $200.00

C) $190.00

D) $250.00

Question 27

The Centers for Medicare and Medicaid Services (CMS) will make an adjustment to the MS-DRG payment for certain conditions that the patient was not admitted with, but were acquired during the hospital stay. Therefore, hospitals are required to report an indicator for each diagnosis. This indicator is referred to as

A) present on admission.

B) a hospital acquired condition.

C) a payment status indicator.

D) risk assessment.

Question 28

What prospective payment system reimburses the provider according to prospectively determined rates for a 60-day episode of care?

A) long-term care Medicare severity diagnosis-related groups

B) home health resource groups

C) inpatient rehabilitation facility

D) the skilled nursing facility prospective payment system

Question 29

The following type of hospital is considered excluded when it applies for and receives a waiver from CMS. This means that the hospital does not participate in the inpatient prospective payment system (IPPS)

A) long-term care hospital

B) rehabilitation hospital

C) cancer hospital

D) psychiatric hospital

Question 30

Based on CMS’s DRG system, other systems have been developed for payment purposes. The one that classifies the non-Medicare population, such as HIV patients, neonates, and pediatric patients, is known as





Question 31

This initiative was instituted by the government to eliminate fraud and abuse and recover overpayments, and involves the use of ______________. Charts are audited to identify Medicare overpayments and underpayments. These entities are paid based on a percentage of money they identify and collect on behalf of the government.

A) Medicare Code Editors (MCE)

B) Clinical Data Abstraction Centers (CDAC)

C) Quality Improvement Organizations (QIO)

D) Recovery Audit Contractors (RAC)

Question 32

The Hospital Value-Based Purchasing (Hospital VBP) Program adjusts a hospital’s payments based on their performance in all of these domains except

A) tthe Outcomes Domain

B) the Patient Experience of Care Domain

C) the Clinical Process of Care Domain

D) the Patient Safety Domain

Question 33

These are financial protections to ensure that certain types of facilities (e.g., children’s hospitals) recoup all of their losses due to the differences in their APC payments and the pre-APC payments.

A) limiting change

B) pass through

C) indemnity insurance

D) hold harmless

Question 34

Under the inpatient prospective payment system (IPPS), there is a 3-day payment window (formerly referred to as the 72-hour rule). This rule requires that outpatient preadmission services that are provided by a hospital up to three calendar days prior to a patient’s inpatient admission be covered by the IPPS MS-DRG payment for

A) diganostic services and therapeutic (or nondiagnostic) services whereby the inpatient principal diagnosis code (ICD-10-CM) exactly matches the code used for preadmission services.

B) diagnostic services.

C) therapeutic (or nondiagnostic) services whereby the inpatient principal diagnosis code (ICD-10-CM) does not match the code used for preadmission services.

D) therapeutic (or nondiagnostic) services whereby the inpatient principal diagnosis code (ICD-10-CM) exactly matches the code used for preadmission services.

Question 35

Under APCs, payment status indicator “T” means

A) significant procedure, multiple procedure reduction applies.

B) significant procedure, not discounted when multiple.

C) clinic or emergency department visit (medical visits).

D) ancillary services.

Question 36

_______________________ offers voluntary, supplemental medical insurance to help pay for physician’s services, outpatient hospital services, medical services, and medical-surgical supplies not covered by the hospitalization plan.

A) Medicare A

B) Medicare B

C) Medicare C

D) Medicare D

Question 37

The process by which health care facilities and providers ensure their financial viability by increasing revenue, improving cash flow and enhancing the patient’s experience is called

A) patient orientation.

B) revenue cycle management.

C) accounts receivable.

D) accounting.

Question 38

To monitor timely claims processing in a hospital, a summary report of “patient receivables” is generated frequently. Aged receivables can negatively affect a facility’s cash flow; therefore, to maintain the facility’s fiscal integrity, the HIM manager must routinely analyze this report. Though this report has no standard title, it is often called the

A) DNFB (discharged, no final bill).

B) chargemaster.

C) remittance advice.

D) periodic interim payments.

Question 39

A three-digit code that describes a classification of a product or service provided to a patient is a

A) Revenue code.

B) CPT code.

C) ICD-10-CM code.

D) HCPCS Level II code.

Question 40

This is the difference between what is charged and what is paid.

A) costs

B) customary

C) reimbursement

D) contractual allowance

Question 41

Under APCs, payment status indicator “C” means

A) significant procedure, not discounted when multiple.

B) inpatient procedures/services.

C) ancillary services.

D) significant procedure, multiple procedure reduction applies.

Question 42

The prospective payment system based on resource utilization groups (RUGs) is used for reimbursement to ____________________ for patients with Medicare.

A) intermediate care facilities

B) freestanding ambulatory surgery centers

C) hospital-based outpatients

D) skilled nursing facilities

Question 43

Make Me Better Clink (MMBC) provides well child visits and childhood immunizations for four insurance companies. Data on the services they provided and the reimbursement they received from the four companies are listed in the two tables below.

Table 1 Well Child Visits






$ 31,196.55






$ 54,631.50



$ 26,991.75

Table 2 Immunizations









9,053 70



3,580 92




Most of the children who are seen at MMBC will have a well child visit and two immunizations. If you add the reimbursement for two immunizations to the reimbursement for each well child visit, which insurance company benefits MMBC most?

A) SureHealth

B) Getwell

C) Lifecare

D) BeHealthy

Question 44

The _______________ is a statement sent to the provider to explain payments made by third-party payers.

A) remittance advice

B) advance beneficiary notice

C) attestation statement

D) acknowledgment notice

Question 45

APCs are groups of services that the OPPS will reimburse. Which one of the following services is not included in APCs?

A) screening exams

B) preventative services

C) organ transplantation

D) radiation therapy

Question 46

The ________________________ refers to a statement sent to the patient to show how much the provider billed, how much Medicare reimbursed the provider, and what the patient must pay the provider.

A) Medicare summary notice

B) remittance advice

C) coordination of benefits

D) advance beneficiary notice

Question 47

When health care providers are found guilty under any of the civil false claims statutes, the Office of Inspector General is responsible for negotiating these settlements and the provider is placed under a

A) Recovery Audit Contract.

B) Noncompliance Agreement.

C) Fraud Prevention Memorandum of Understanding.

D) Corporate Integrity Agreement.

Question 48

As part of a team responsible for revenue analysis at your facility, you recommend a yearly review of which of the following?

A) CAHO requirements

B) the CMS Scope of Work

C) Blue Cross-Blue Shield beneficiary notices

D) OIG workplan

Question 49

Commercial insurance plans usually reimburse health care providers under some type of __________ payment system, whereas the federal Medicare program uses some type of _________ payment system.

A) prospective, concurrent

B) retrospective, concurrent

C) prospective, retrospective

D) retrospective, prospective

Question 50

The prospective payment system used to reimburse home health agencies for patients with Medicare utilizes data from the:

A) UACDS (Uniform Ambulatory Core Data Set).

B) MDS (Minimum Data Set).

C) UHDDS (Uniform Hospital Discharge Data Set).

D) OASIS (Outcome and Assessment Information Set).


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