CMC Financial Management & Budgeting 5 — Questions and Answers
Question 1: Which cardiac reimbursement mechanism adjusts Medicare DRG payments upward for hospitals that treat a disproportionate share of low-income patients?
- Indirect medical education (IME) adjustment
- Disproportionate share hospital (DSH) payment (Correct answer)
- Outlier payment
- Wage index adjustment
Correct answer: Disproportionate share hospital (DSH) payment
DSH payments compensate hospitals that serve a large proportion of Medicaid and low-income Medicare patients who may be costlier to treat.
Question 2: A cardiac line manager is reviewing a flexible budget. What distinguishes a flexible budget from a static budget?
- A flexible budget is revised only once per fiscal year
- A flexible budget adjusts expense benchmarks based on actual volume achieved (Correct answer)
- A flexible budget includes capital expenditures in the operating budget
- A flexible budget eliminates fixed cost categories
Correct answer: A flexible budget adjusts expense benchmarks based on actual volume achieved
A flexible budget recalculates expected costs at the actual activity level, making variances more meaningful by separating volume effects from efficiency effects.
Question 3: A cardiac center is experiencing a high rate of claim denials related to prior authorization. The MOST effective financial management response is to:
- Increase the charge capture rate to offset denied revenue
- Establish a systematic prior authorization process before scheduled procedures (Correct answer)
- Shift those payers to self-pay billing
- Reduce procedure volume with that payer
Correct answer: Establish a systematic prior authorization process before scheduled procedures
Proactive prior authorization workflows prevent denials at the source, protecting revenue before services are rendered.
Question 4: When conducting a capital budget request for a new cardiac CT scanner, which element demonstrates the financial return the hospital will receive from the investment?
- Vendor financing terms
- Equipment warranty period
- Projected return on investment (ROI) analysis (Correct answer)
- Manufacturer's suggested retail price
Correct answer: Projected return on investment (ROI) analysis
ROI analysis quantifies the financial benefit of the investment relative to its cost, which is the core justification in a capital budget request.
Question 5: A cardiac program's cost per adjusted discharge has increased 9% year over year. Which operational data point would be MOST useful in determining the cause?
- Patient satisfaction scores by unit
- Case mix index and supply expense per case (Correct answer)
- Physician credentialing turnaround time
- Number of new cardiac hires this year
Correct answer: Case mix index and supply expense per case
Case mix index reflects patient acuity, and supply expense per case reveals resource utilization — together they explain cost per discharge changes.
Question 6: A cardiac manager who is over budget on disposable supplies but under budget on implantables at the end of Q2 should FIRST:
- Request an overall budget increase from administration
- Analyze whether the case mix changed to include fewer implantable procedures (Correct answer)
- Transfer the implantable surplus to cover disposable overages permanently
- Report the variance as favorable overall and take no action
Correct answer: Analyze whether the case mix changed to include fewer implantable procedures
A shift in case mix (e.g., fewer device implants, more catheterizations) would logically explain higher disposables and lower implantable spend simultaneously.
Question 7: Under the Medicare Shared Savings Program (MSSP) for cardiac patients in an ACO, what financial incentive drives care coordination?
- Hospitals receive bonus payments per additional inpatient cardiac admission
- ACOs share in savings when they reduce total cost of care below benchmarks while meeting quality thresholds (Correct answer)
- Physicians receive fee-for-service bonuses for ordering more diagnostic tests
- Hospitals are penalized only for 30-day readmissions, with no savings opportunity
Correct answer: ACOs share in savings when they reduce total cost of care below benchmarks while meeting quality thresholds
MSSP ACOs earn a share of Medicare savings generated when they keep total spending below the benchmark while achieving quality performance standards.
CMC Financial Management & Budgeting 5
Which cardiac reimbursement mechanism adjusts Medicare DRG payments upward for hospitals that treat a disproportionate share of low-income patients?