AAPC Insurance Policies & Contracts 3 — Questions and Answers
Question 1: A provider who signs a participation agreement with Medicare must accept assignment, which means they agree to:
- Bill Medicare as secondary to all other payers
- Accept Medicare's allowed amount as payment in full (Correct answer)
- Submit all claims electronically
- Waive all patient cost-sharing amounts
Correct answer: Accept Medicare's allowed amount as payment in full
Accepting assignment means the provider accepts Medicare's approved amount as full payment and cannot bill the patient more than applicable cost-sharing.
Question 2: The term 'allowed amount' in an insurance contract refers to:
- The total amount billed by the provider
- The maximum the insurer will pay for a specific service (Correct answer)
- The patient's deductible and copay combined
- The amount paid to out-of-network providers only
Correct answer: The maximum the insurer will pay for a specific service
The allowed amount (also called the allowable or fee schedule amount) is the maximum reimbursement the payer will provide for a given service.
Question 3: Which type of insurance policy requires the insured to choose a primary care physician who manages all care and referrals?
- PPO
- HMO (Correct answer)
- POS
- EPO
Correct answer: HMO
Health Maintenance Organizations (HMOs) require members to select a PCP who acts as a gatekeeper and coordinates all referrals.
Question 4: A payer contract states that the provider cannot bill patients for the difference between the billed amount and the allowed amount. This is known as:
- Balance billing prohibition (Correct answer)
- Coordination of benefits
- Non-assignment clause
- Indemnification clause
Correct answer: Balance billing prohibition
A balance billing prohibition in a provider contract prevents the provider from charging patients the difference between billed charges and the payer's allowed amount.
Question 5: Under a Point-of-Service (POS) plan, a member who sees an out-of-network provider without a referral will typically:
- Have the claim denied entirely
- Pay higher cost-sharing compared to in-network care (Correct answer)
- Pay the same cost-sharing as in-network care
- Be required to pay the full billed amount
Correct answer: Pay higher cost-sharing compared to in-network care
POS plans allow out-of-network use but impose higher deductibles, coinsurance, or copays compared to in-network care.
Question 6: A global period associated with a surgical procedure means that:
- All services worldwide are covered under one fee
- Pre- and post-operative care is bundled into the surgical fee (Correct answer)
- The patient pays a single global copay
- The insurer pays a global capitation rate
Correct answer: Pre- and post-operative care is bundled into the surgical fee
A surgical global period bundles routine pre-operative and post-operative visits into the single surgical reimbursement, preventing separate billing.
Question 7: Which document defines the specific benefits, limitations, and exclusions of a group health insurance policy issued to an employer?
- Certificate of Insurance
- Summary Plan Description (Correct answer)
- Explanation of Benefits
- Provider Participation Agreement
Correct answer: Summary Plan Description
The Summary Plan Description (SPD) is a legally required document that details the benefits, rights, and obligations under an employer-sponsored health plan.
AAPC Insurance Policies & Contracts 3
A provider who signs a participation agreement with Medicare must accept assignment, which means they agree to: