CSLB General Building (B) — All Questions

The 'allowed amount' on a claim is:

• a.The provider's full billed charge
• b.The maximum amount a payer will pay for a covered service under the contract or fee schedule✓
• c.The patient's annual deductible
• d.The amount written off as bad debt

The allowed amount is the contracted or fee-schedule maximum the payer recognizes as payment for a covered service. It is often lower than the provider's billed charge, and the difference for a participating provider is a contractual write-off. Patient responsibility, such as coinsurance, is calculated from the allowed amount, not the billed charge.CMS

A patient has a $1,500 medical bill, an allowed amount of $1,000, has already met the deductible, and has a 20% coinsurance. How much is the patient's coinsurance responsibility?

• a.$300, which is 20% of the billed charge
• b.$500, the difference between billed and allowed
• c.$200, which is 20% of the $1,000 allowed amount✓
• d.$1,000, the full allowed amount

Coinsurance is calculated on the allowed amount, not the provider's billed charge, so 20% of $1,000 equals $200. The $500 difference between the $1,500 charge and the $1,000 allowed amount is a contractual adjustment for a participating provider. The payer would pay the remaining $800 of the allowed amount.

A patient with a $500 remaining deductible receives a service with an allowed amount of $800 and 20% coinsurance after the deductible. What is the total patient responsibility?

• a.$560✓
• b.$500
• c.$160
• d.$800

The patient first pays the $500 deductible, leaving $300 of the allowed amount subject to coinsurance. Twenty percent of that $300 is $60, so total patient responsibility is $500 plus $60, which equals $560. The payer would pay the remaining $240.

A copayment (copay) is best described as:

• a.A percentage of the allowed amount paid by the patient
• b.The amount the patient must pay before insurance begins to pay
• c.The provider's contractual write-off
• d.A fixed dollar amount the patient pays for a covered service, such as an office visit✓

A copay is a set flat fee the patient pays at the time of service, such as $30 for an office visit, regardless of the total charge. It differs from coinsurance, which is a percentage, and from the deductible, which must be met before the plan pays. Copays are typically collected at check-in.

A deductible is:

• a.The amount a patient must pay out of pocket each benefit period before the plan begins to pay✓
• b.A percentage of every bill paid by the plan
• c.The provider's billed charge
• d.The maximum the plan will ever pay

The deductible is the fixed amount the insured must pay for covered services each benefit period before the insurer starts sharing costs. After the deductible is met, the patient typically owes only copays or coinsurance up to the out-of-pocket maximum. Verifying the remaining deductible helps the practice collect the correct amount.

The Resource-Based Relative Value Scale (RBRVS) determines physician payment based on:

• a.A flat fee for every service regardless of complexity
• b.Relative value units reflecting physician work, practice expense, and malpractice cost, adjusted geographically✓
• c.The patient's income level
• d.The hospital's total operating budget

RBRVS assigns each service relative value units for physician work, practice expense, and professional liability, which are adjusted by geographic indices and multiplied by a conversion factor to set payment. This system underlies the Medicare Physician Fee Schedule. It ties reimbursement to the resources required rather than to historical charges.

In the Medicare Physician Fee Schedule, the payment for a service is calculated by:

• a.Multiplying the billed charge by the deductible
• b.Adding the copay to the coinsurance
• c.Multiplying the total relative value units by a conversion factor (after geographic adjustment)✓
• d.Dividing the allowed amount by the number of diagnoses

Medicare payment equals the sum of geographically adjusted relative value units multiplied by a national conversion factor expressed in dollars. The conversion factor translates the relative values into an actual payment amount. Understanding this formula clarifies why identical services can pay differently across regions.

Diagnosis-Related Groups (DRGs) are used mainly to determine reimbursement for:

• a.Physician office visits
• b.Outpatient laboratory tests
• c.Retail prescription drugs
• d.Inpatient hospital stays, by grouping cases with similar clinical characteristics and resource use✓

DRGs classify inpatient admissions into groups that are expected to consume similar hospital resources, and each group carries a fixed payment weight. This prospective payment method pays a set amount per admission rather than per service. It creates an incentive for efficient inpatient care.

Ambulatory Payment Classifications (APCs) are the basis for Medicare payment in the:

• a.Hospital outpatient prospective payment system✓
• b.Inpatient DRG system
• c.Physician fee schedule
• d.Retail pharmacy benefit

APCs group outpatient hospital services that are clinically similar and require comparable resources, assigning a payment rate to each group under the outpatient prospective payment system. Multiple APCs can apply to a single outpatient visit. This is the outpatient facility counterpart to the inpatient DRG system.

Under a capitation payment arrangement, a provider is paid:

• a.A separate fee for each individual service rendered
• b.A fixed amount per enrolled member per month regardless of the number of services used✓
• c.Only when the patient meets the deductible
• d.Based on the hospital's DRG weight

Capitation pays the provider a set amount per member per month (PMPM) to cover contracted services for each enrolled patient, whether or not the patient seeks care. This shifts financial risk to the provider and rewards efficient, preventive care. It contrasts with fee-for-service, which pays per service delivered.

In a fee-for-service reimbursement model, the provider is paid:

• a.A single monthly amount per patient
• b.Only a bundled amount for an episode of care
• c.For each individual service or procedure provided✓
• d.A fixed percentage of the hospital budget

Fee-for-service reimburses providers separately for each covered service or procedure billed. It can encourage higher service volume because payment rises with the number of services. It contrasts with capitation and bundled or value-based models that pay a set amount for a defined population or episode.

A patient's total 'out-of-pocket maximum' represents:

• a.The amount the provider writes off
• b.The plan's monthly premium
• c.The amount the payer pays the provider
• d.The most a patient will have to pay for covered services in a benefit period before the plan pays 100%✓

The out-of-pocket maximum caps the total deductible, copays, and coinsurance a patient pays in a benefit period; once reached, the plan pays 100% of covered services. Premiums generally do not count toward this maximum. Knowing the patient's remaining out-of-pocket helps set accurate expectations for patient responsibility.

A provider bills $2,000 for a service. The payer's allowed amount is $1,200, and the provider is a participating (in-network) provider. What is the contractual adjustment (write-off)?

• a.$800✓
• b.$1,200
• c.$2,000
• d.$400

A participating provider agrees to accept the payer's allowed amount as payment in full, so the difference between the $2,000 billed charge and the $1,200 allowed amount, which is $800, is written off. The patient cannot be balance-billed for that contractual adjustment. Only the deductible, copay, or coinsurance based on the $1,200 allowed amount may be collected from the patient.

Balance billing occurs when a provider bills the patient for:

• a.Only the copayment
• b.The difference between the provider's charge and the payer's allowed amount✓
• c.The full amount that insurance already paid
• d.The provider's contractual write-off

Balance billing is charging the patient the gap between the provider's full charge and the payer's allowed amount. For participating providers this practice is generally prohibited by contract, and certain federal and state protections limit surprise balance billing. The patient may still owe legitimate cost-sharing such as deductibles and coinsurance.

The 'aging' of accounts receivable in a medical practice refers to:

• a.The age of the patients being treated
• b.How long a provider has been in practice
• c.Categorizing outstanding balances by how long they have been unpaid, such as 30, 60, or 90 days✓
• d.The retention period for medical records

An accounts receivable aging report sorts unpaid balances into time buckets, such as current, 31 to 60 days, and over 90 days, to reveal collection performance. Older balances are less likely to be collected, so timely follow-up is essential. Monitoring the aging report guides collection priorities and cash-flow management.

When posting an insurance payment from a remittance advice, the biller should:

• a.Ignore the adjustment codes
• b.Post the billed charge as the payment
• c.Bill the contractual adjustment to the patient
• d.Record the payment, any contractual adjustment, and the remaining patient responsibility accurately✓

Accurate payment posting records the amount paid, applies contractual adjustments per the payer agreement, and moves the correct remaining balance to patient responsibility or secondary insurance. Errors in posting distort the accounts receivable and can cause improper patient billing. The remittance advice reason codes guide how each amount is applied.

A patient statement sent for collections should clearly show:

• a.The services, charges, insurance payments and adjustments, and the remaining amount the patient owes✓
• b.The provider's home address only
• c.The diagnosis codes without any charges
• d.The payer's internal notes

An effective patient statement itemizes the dates of service, charges, amounts paid by insurance, adjustments, and the current balance due from the patient. Clear statements reduce confusion and support timely payment. Federal debt-collection and consumer-protection rules govern how outstanding balances may be pursued.

A patient owes a $40 copay and has 20% coinsurance on an allowed amount of $250 after the copay does not apply to coinsurance. If the deductible is already met, what does the payer pay on the $250 allowed amount (coinsurance portion only)?

• a.$50, which is the coinsurance owed by the patient
• b.$200, which is 80% of the $250 allowed amount✓
• c.$250, the full allowed amount
• d.$40, the copay

When the deductible is met and coinsurance is 20%, the patient pays 20% of the allowed amount and the payer pays the remaining 80%. Eighty percent of $250 is $200, which is the payer's share of the coinsurance calculation. The $50 balance is the patient's coinsurance responsibility.