CHSA CHSA Healthcare Finance & Reimbursement 1 — Questions and Answers
Question 1: Under Medicare's Inpatient Prospective Payment System (IPPS), what is the primary basis for determining hospital reimbursement?
- Actual cost of services provided
- Diagnosis-Related Groups (DRGs) (Correct answer)
- Number of hospital days used
- Number of procedures performed
Correct answer: Diagnosis-Related Groups (DRGs)
Medicare IPPS pays hospitals a predetermined, fixed amount based on the patient's Diagnosis-Related Group (DRG), regardless of the actual cost of services rendered.
Question 2: Which financial statement shows a healthcare organization's revenues, expenses, and net income over a specific time period?
- Balance Sheet
- Statement of Operations (Income Statement) (Correct answer)
- Cash Flow Statement
- Statement of Changes in Net Assets
Correct answer: Statement of Operations (Income Statement)
The Statement of Operations (equivalent to an income statement) reports revenues earned and expenses incurred during a specific accounting period, showing the organization's operational financial performance.
Question 3: A hospital's net patient revenue is calculated by taking gross charges and subtracting what?
- Operating expenses
- Contractual adjustments, bad debt, and charity care (Correct answer)
- Capital depreciation costs
- Administrative overhead allocations
Correct answer: Contractual adjustments, bad debt, and charity care
Net patient revenue equals gross patient service revenue minus contractual adjustments (payer discounts), provision for bad debt, and charity care write-offs.
Question 4: What does Case Mix Index (CMI) measure in hospital financial management?
- The percentage of patients covered by different payer types
- The average relative weight of all DRGs for a hospital's Medicare patients (Correct answer)
- The ratio of inpatient to outpatient revenue
- The hospital's market share in its service area
Correct answer: The average relative weight of all DRGs for a hospital's Medicare patients
CMI is the average DRG relative weight across all Medicare inpatient cases, reflecting the complexity and resource intensity of the patient population served.
Question 5: Under the Stark Law (Physician Self-Referral Law), what is prohibited without meeting a specific exception?
- Physicians billing Medicare for services provided in their own office
- Physicians referring Medicare/Medicaid patients to entities where they have a financial relationship (Correct answer)
- Physicians accepting gifts from pharmaceutical representatives
- Physicians contracting with multiple insurance payers simultaneously
Correct answer: Physicians referring Medicare/Medicaid patients to entities where they have a financial relationship
The Stark Law prohibits physicians from referring Medicare/Medicaid patients to entities with which the physician or immediate family member has a financial relationship, unless a specific exception applies.
Question 6: What is the primary purpose of a healthcare organization's days cash on hand metric?
- Measuring how quickly the organization collects payments from payers
- Indicating how many days the organization can operate using only its available cash (Correct answer)
- Tracking the average number of days accounts receivable remain unpaid
- Measuring the ratio of current assets to current liabilities
Correct answer: Indicating how many days the organization can operate using only its available cash
Days cash on hand measures financial liquidity by calculating how many days of average operating expenses can be covered by current cash and investments without new revenue.
CHSA CHSA Healthcare Finance & Reimbursement 1
Under Medicare's Inpatient Prospective Payment System (IPPS), what is the primary basis for determining hospital reimbursement?