NHA Medical Billing & Coding (CBCS) — All Questions

The 'allowed amount' on a claim is:

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

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.$1,000, the full allowed amount
• b.$300, which is 20% of the billed charge
• c.$500, the difference between billed and allowed
• d.$200, which is 20% of the $1,000 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.$800
• b.$500
• c.$560✓
• d.$160

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

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 maximum the plan will ever pay
• b.A percentage of every bill paid by the plan
• c.The provider's billed charge
• d.The amount a patient must pay out of pocket each benefit period before the plan begins to 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.The hospital's total operating budget
• b.Relative value units reflecting physician work, practice expense, and malpractice cost, adjusted geographically✓
• c.The patient's income level
• d.A flat fee for every service regardless of complexity

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

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

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

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.Only when the patient meets the deductible
• c.Based on the hospital's DRG weight
• d.A fixed amount per enrolled member per month regardless of the number of services used✓

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

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

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.$400
• c.$2,000
• d.$1,200

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.The difference between the provider's charge and the payer's allowed amount✓
• b.The full amount that insurance already paid
• c.Only the copayment
• 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.The retention period for medical records
• c.Categorizing outstanding balances by how long they have been unpaid, such as 30, 60, or 90 days✓
• d.How long a provider has been in practice

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 payer's internal notes
• c.The diagnosis codes without any charges
• d.The provider's home address only

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.$200, which is 80% of the $250 allowed amount✓
• b.$50, which is the coinsurance owed by the patient
• 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.

A prospective payment system (PPS) reimburses providers by:

• a.Paying a percentage of the patient's annual household income
• b.Paying a predetermined, fixed amount for a service or episode set in advance of care✓
• c.Reimbursing the provider's full billed charges only after the service has actually been rendered
• d.Basing payment on the number of staff a facility employs

A PPS pays a fixed, predetermined amount rather than actual costs or full charges. Medicare's inpatient (DRG) and outpatient (APC) systems are examples. It contrasts with retrospective, cost-based reimbursement paid after the fact.CMS

Under the Medicare Inpatient Prospective Payment System (IPPS), hospital payment for a stay is based primarily on:

• a.The number of days multiplied by the hospital's billed charges
• b.The patient's out-of-pocket maximum for the year
• c.The individual CPT code for each item furnished
• d.The MS-DRG assigned to the discharge✓

IPPS pays a set rate per discharge determined by the MS-DRG, which reflects the diagnoses, procedures, and severity. Each MS-DRG carries a relative weight multiplied by the hospital base rate. It creates an incentive for efficient inpatient care.CMS

A hospital's Medicare base payment rate is $6,000 and a discharge is grouped to an MS-DRG with a relative weight of 1.5. Ignoring other adjustments, the DRG payment is:

• a.$6,000
• b.$4,000
• c.$7,500
• d.$9,000✓

DRG payment equals the relative weight times the base rate, so 1.5 x $6,000 = $9,000. The fixed per-discharge amount does not change with the number of individual services. This rewards efficient inpatient resource use.CMS

The Medicare Outpatient Prospective Payment System (OPPS) reimburses hospital outpatient services using:

• a.The Resource-Based Relative Value Scale for physician work only
• b.Ambulatory Payment Classifications (APCs)✓
• c.A straight percentage of the hospital's chargemaster amount
• d.Medicare Severity Diagnosis-Related Groups (MS-DRGs)

OPPS groups clinically similar outpatient services into APCs, each carrying a payment rate. A single outpatient encounter may map to multiple APCs. It is the outpatient facility counterpart to the inpatient DRG system.CMS

The three relative value unit (RVU) components used in the Medicare Physician Fee Schedule are physician work, malpractice, and:

• a.The patient's annual deductible
• b.Practice expense✓
• c.The hospital inpatient base rate
• d.The geographic conversion factor

Each service has work, practice expense, and malpractice (professional liability) RVUs. Each component is adjusted by a geographic index, summed, and multiplied by the conversion factor. This ties payment to the resources a service requires.

Geographic Practice Cost Indices (GPCIs) are applied in the Medicare Physician Fee Schedule to:

• a.Convert a diagnosis code directly into a procedure code
• b.Determine a hospital's inpatient DRG weight
• c.Set the patient's coinsurance percentage
• d.Adjust each RVU for local cost-of-practice differences✓

GPCIs adjust the work, practice expense, and malpractice RVUs to reflect local cost differences before the conversion factor is applied. This is why the same service can pay differently across regions. It keeps payment aligned with local practice costs.CMS

In the Medicare Physician Fee Schedule, the conversion factor is best described as:

• a.The percentage a patient owes after meeting the deductible
• b.The allowed amount remaining after the copayment is subtracted
• c.The code that identifies the rendering provider on a claim
• d.A dollar multiplier that converts RVUs into a payment amount✓

The conversion factor is a single dollar figure, updated periodically, that translates geographically adjusted RVUs into an actual payment. Payment equals adjusted RVUs times the conversion factor. It scales the relative values into real dollars.CMS

A service has a total geographically adjusted RVU of 2.0 and the conversion factor is $33.00. The approximate fee-schedule payment is:

• a.$35.00
• b.$66.00✓
• c.$330.00
• d.$16.50

Payment equals adjusted RVUs times the conversion factor, so 2.0 x $33.00 = $66.00. The conversion factor is the dollar multiplier applied after RVUs are adjusted geographically. This is the core Medicare physician payment calculation.CMS

For a covered Medicare Part B service after the annual deductible is met, Medicare generally pays what share of the approved amount?

• a.80 percent, leaving the beneficiary responsible for 20 percent✓
• b.100 percent, with no patient responsibility
• c.50 percent, splitting the cost evenly with the patient
• d.20 percent, leaving the beneficiary responsible for 80 percent

After the annual Part B deductible is met, Medicare pays 80 percent of the approved amount and the beneficiary owes 20 percent coinsurance. Secondary coverage or a Medigap policy may cover that 20 percent. This 80/20 split is a defining feature of Part B.CMS

A Medicare Part B service has an approved amount of $300 and the patient has already met the annual deductible. The patient's 20% coinsurance is:

• a.$300
• b.$60✓
• c.$30
• d.$240

Coinsurance is 20 percent of the approved amount, so 0.20 x $300 = $60. Medicare pays the remaining 80 percent, which is $240. Coinsurance is always calculated on the approved (allowed) amount, not the billed charge.CMS

A participating (PAR) provider with Medicare agrees to:

• a.Bill patients the full charge and collect any remaining balance directly from them
• b.Accept assignment on all claims and take the approved amount as payment in full✓
• c.Set fees above the Medicare limiting charge
• d.Refuse to treat any Medicare beneficiaries

A PAR provider always accepts Medicare assignment, meaning the approved amount is payment in full, and may bill only the deductible and coinsurance. A nonPAR provider may choose not to accept assignment and is subject to the limiting charge. PAR status generally yields a higher fee schedule and faster payment.CMS

The Medicare 'limiting charge' for a nonparticipating provider who does not accept assignment is:

• a.Exactly the same as the participating provider approved amount
• b.Twice the provider's billed charge
• c.115 percent of the reduced nonparticipating fee schedule amount✓
• d.150 percent of the provider's usual billed charge

The nonPAR fee schedule is 95 percent of the PAR amount, and the limiting charge caps billing at 115 percent of that reduced amount. This limits how much a nonassigned provider may collect from the patient. Charging above the limiting charge violates Medicare rules.CMS

A nonparticipating Medicare provider's reduced fee schedule amount for a service is $80. The most the provider may bill under the limiting charge is:

• a.$120.00
• b.$80.00
• c.$96.00
• d.$92.00✓

The limiting charge is 115 percent of the reduced nonPAR amount, so 1.15 x $80 = $92.00. The patient may be billed up to this ceiling when assignment is not accepted. Exceeding the limiting charge is prohibited.CMS

'Accepting assignment' on a Medicare claim means the provider agrees to:

• a.Waive the patient's deductible entirely
• b.Transfer the account to a collection agency
• c.Assign the patient to a particular specialist
• d.Accept the approved amount as payment in full✓

Accepting assignment means the approved amount is payment in full; Medicare pays its 80 percent directly to the provider and the patient owes the 20 percent coinsurance. The provider cannot balance-bill above the approved amount. This differs from a nonassigned claim subject to the limiting charge.CMS

When a provider's billed charge is LOWER than the payer's allowed amount, the payer generally reimburses based on:

• a.The lower billed charge, since payers pay the lesser amount✓
• b.An average of the billed and allowed amounts
• c.The patient's remaining deductible balance
• d.The higher allowed amount, to make up the difference for the provider

Payers reimburse the lesser of the billed charge or the contracted allowed amount. If a provider bills below the allowed amount, the lower charge caps the payment. This is why fees are generally set at or above expected allowed amounts.

A payer that reimburses using 'usual, customary, and reasonable' (UCR) charges sets the allowed amount by:

• a.Charging the patient the entire billed amount
• b.Comparing the provider's fee to prevailing charges in the area✓
• c.Multiplying RVUs by a hospital inpatient base rate
• d.Using one flat national fee for every service regardless of area

UCR considers the provider's usual fee, the customary range of fees in the area, and whether the charge is reasonable for the circumstances. It is an older methodology largely replaced by fixed fee schedules. Amounts above UCR may become patient responsibility on some plans.

A hospital's charge description master (chargemaster or CDM) is:

• a.The payer's remittance advice for a claim
• b.A list of the patient's active diagnoses
• c.The internal schedule of employee wages, benefits, and bonuses
• d.A master list of billable items and their standard charges✓

The chargemaster is the facility's comprehensive list of billable items, services, and their standard gross charges used to generate claims. These gross charges are usually higher than negotiated allowed amounts. Keeping it accurate and current is essential for correct billing.

'Charge capture' in the revenue cycle refers to:

• a.Collecting the patient's copayment at check-in
• b.Recording all billable services a patient received✓
• c.Posting the insurance payment to the account
• d.Writing off an uncollectible patient balance

Charge capture ensures every documented, billable service is entered so it appears on the claim. Missed charges mean lost revenue that is hard to recover later. Accurate charge capture links documentation to the codes billed.

Which activity occurs at the FRONT end of the revenue cycle, before the patient is seen?

• a.Insurance eligibility verification and registration✓
• b.Posting a remittance advice to the account
• c.Following up on aged accounts receivable
• d.Appealing a denied claim with medical records

Front-end tasks include scheduling, registration, eligibility verification, and prior authorization, all completed before or at the visit. Back-end tasks include claim submission, payment posting, and collections. Strong front-end work prevents many later denials.

The 'days in accounts receivable (A/R)' metric measures:

• a.How long a patient waits for an appointment
• b.The number of days a medical record must be retained
• c.The average number of days it takes to collect payment after billing✓
• d.The number of days remaining before the timely-filing limit expires

Days in A/R estimates how quickly a practice converts billing into cash; a lower number signals faster collections. It is a core revenue-cycle key performance indicator. Rising A/R days can indicate billing or follow-up problems.

The 'net collection rate' for a practice measures:

• a.The percentage of claims denied on first submission
• b.The share of the collectible amount actually collected✓
• c.The proportion of patients who carry insurance
• d.The ratio of chargemaster prices to competitor prices

Net collection rate compares actual payments to the amount the practice was entitled to collect after contractual adjustments. A low rate reveals revenue lost to bad debt, missed follow-up, or write-offs. It gauges how well a practice collects what it is owed.

A high 'first-pass resolution rate' (clean-claim rate) indicates that:

• a.Most claims are denied and later appealed
• b.Patients rarely pay their portion of the bill
• c.The practice writes off the majority of balances
• d.Most claims are paid on the first submission✓

First-pass resolution measures claims paid the first time without correction or resubmission. A high rate reflects clean claims, good scrubbing, and accurate front-end data. It shortens the time to payment and lowers administrative cost.

Tracking a practice's claim 'denial rate' is important because it:

• a.Replaces the need for a chargemaster
• b.Determines the Medicare conversion factor that is used to set fees
• c.Signals coding or eligibility problems that reduce revenue✓
• d.Sets each patient's copay amount

The denial rate highlights systemic issues that can be fixed, such as missing authorizations or coding errors. Monitoring and categorizing denials guides process improvement. Reducing denials directly protects revenue and cash flow.

On an electronic remittance, a group code of 'CO' (Contractual Obligation) indicates an amount that:

• a.Is the patient's responsibility to pay
• b.Must be refunded to Medicare immediately
• c.A contractual write-off not billable to the patient✓
• d.Represents the provider's full original billed charge

CO amounts are contractual adjustments the participating provider agreed to write off and may not bill to the patient. The 'PR' group code, by contrast, marks patient responsibility. Posting these correctly prevents improper patient billing.

On a remittance advice, an adjustment with the group code 'PR' means the amount is:

• a.An incentive bonus paid to the provider
• b.The patient's responsibility to pay✓
• c.A payer data-entry error to be ignored
• d.A contractual write-off absorbed by the provider

PR (patient responsibility) amounts move to the patient or a secondary payer, unlike CO amounts that are written off. Reading group codes correctly ensures the right party is billed. Misposting PR as CO would understate collectible revenue.

Claim Adjustment Reason Codes (CARCs) on a remittance advice are used to:

• a.Identify the rendering provider who is listed on the claim
• b.List the patient's active diagnoses
• c.Set the payer's timely-filing deadline
• d.Explain why a paid amount differs from the billed charge✓

CARCs give the specific reason for each payment adjustment or denial. Remittance Advice Remark Codes (RARCs) add supplemental explanation. Together they guide payment posting and any needed follow-up or appeal.

The HIPAA electronic remittance advice transaction a payer sends to report claim payments and adjustments is the:

• a.835✓
• b.276
• c.270
• d.837P

The 835 is the electronic remittance advice, which can auto-post payments and adjustments. The 837 is the claim, the 270 is an eligibility inquiry, and the 276 checks claim status. Using the 835 streamlines payment posting.HIPAA

An Explanation of Benefits (EOB) differs from a remittance advice (RA) mainly in that the EOB is:

• a.Sent to the patient rather than the provider✓
• b.Used to order laboratory tests
• c.A binding contract guaranteeing future care
• d.Identical to the patient's insurance ID card

Both documents explain how a claim was adjudicated, but the EOB is directed to the patient and the RA to the provider. Neither is a bill by itself. Comparing them helps reconcile what the patient owes.

A capitation contract pays $15 per member per month and a provider has 400 enrolled members. The monthly capitation payment is:

• a.$6,000✓
• b.$4,000
• c.$60,000
• d.$15

Capitation pays per member per month regardless of services used, so $15 x 400 = $6,000 for the month. The provider receives this whether or not each member seeks care. It shifts utilization risk to the provider.

A key financial feature of capitation for the provider is that it:

• a.Guarantees higher revenue for each additional service performed
• b.Shifts financial risk to the provider regardless of care used✓
• c.Requires the patient to pay for every visit
• d.Removes any need to actually see patients

Under capitation the provider assumes financial risk, earning the same per-member fee regardless of volume. This rewards preventive, efficient care and penalizes overutilization. It contrasts sharply with fee-for-service, which pays per service.

A 'bundled' (episode-of-care) payment reimburses:

• a.A fixed monthly fee per enrolled member
• b.Each individual service or item separately
• c.Only the physician's office visits during the year
• d.A single amount covering all services for one episode✓

A bundled payment covers an entire episode across providers with one payment, encouraging coordination and efficiency. Providers share the payment and any savings or losses. It differs from fee-for-service and from monthly capitation.

Value-based (pay-for-performance) reimbursement ties a portion of payment to:

• a.The quality and outcomes of care, not service volume✓
• b.The sheer number of separate claims that are submitted
• c.The number of items in the chargemaster
• d.The provider's total years in practice

Value-based models reward measurable quality, outcomes, and efficiency, moving away from volume-driven fee-for-service. Providers may earn bonuses or face penalties based on performance. The goal is better care at lower cost.

An Accountable Care Organization (ACO) is a group of providers that:

• a.Shares responsibility for the cost and quality of care✓
• b.Sells insurance policies directly to patients
• c.Processes and forwards electronic claims as a clearinghouse
• d.Sets the national Medicare conversion factor

An ACO coordinates care for an assigned population and may share in savings when it meets cost and quality targets. It is a value-based arrangement rather than an insurer or clearinghouse. Shared accountability aligns incentives toward efficiency.

A 'per diem' reimbursement arrangement pays a facility:

• a.A percentage of the physician's professional fee
• b.An amount based solely on the patient's deductible
• c.One flat fee for the entire admission regardless of length of stay
• d.A fixed amount for each day the patient is hospitalized✓

Per diem pays a set rate for each inpatient day, so total payment scales with length of stay. It differs from a DRG, which pays one amount per discharge, and from fee-for-service. Payers use per diem in some facility contracts.

When a patient has primary and secondary insurance, the secondary payer generally:

• a.Pays first, before the primary payer processes the claim
• b.Refuses to process the claim at all
• c.Automatically pays the full billed charge
• d.Considers the balance after the primary pays✓

The primary payer adjudicates first, and the secondary then considers remaining patient responsibility within its own rules and allowed amount. Coordination of benefits prevents total payment above the allowed charge. Correct order avoids denials and overpayment.

When a patient has both Medicaid and other coverage, Medicaid is generally:

• a.Always the primary payer on every claim
• b.Prohibited from paying anything at all
• c.The payer of last resort✓
• d.Responsible for the full billed charge first

By law Medicaid pays last, so all other liable payers are billed before Medicaid. Billing Medicaid before other coverage causes denials or recoupment. This 'payer of last resort' rule protects Medicaid funds.CMS

For an employed Medicare beneficiary age 65 or older who is covered by a large employer's group health plan, the primary payer is usually:

• a.The patient, who must pay the full amount first
• b.The employer group health plan, with Medicare paying secondary✓
• c.Medicare, which always pays first for beneficiaries over 65
• d.Medicaid, acting as the payer of last resort

Under the Medicare Secondary Payer 'working aged' rule, a large-employer group health plan is primary and Medicare is secondary. Billing Medicare first in this situation is improper. Verifying other coverage prevents MSP errors.CMS

A claim has an allowed amount of $200. The primary payer paid $120 and applied $80 to patient coinsurance. If the secondary plan also allows $200 and covers coinsurance, the secondary generally pays up to:

• a.$200, paying the full allowed amount a second time
• b.$80, the remaining patient responsibility✓
• c.$0, because a primary payer already paid something
• d.$120, exactly matching the primary payment

The secondary considers the $80 left as patient responsibility, subject to its own rules, so combined payments do not exceed the allowed amount. This is how coordination of benefits prevents overpayment. The patient may owe nothing if the secondary covers the balance.

The main purpose of coordination of benefits is to:

• a.Ensure total payments do not exceed the allowed charge✓
• b.Increase the provider's contracted fee schedule
• c.Let the patient select any diagnosis they prefer
• d.Guarantee the provider is paid twice for one service

Coordination of benefits establishes payment order and limits total reimbursement to the allowed amount. It prevents duplicate payment when a patient has more than one policy. Accurate COB reduces overpayments and refunds.

In a family health plan, the 'family deductible' is:

• a.The same figure as each member's flat copay
• b.A fee charged only to the youngest dependent
• c.A combined threshold after which the plan pays for the family✓
• d.The amount the provider is required to write off at each visit

Many plans include both individual and family deductibles; once the family deductible is met, cost-sharing begins for all members even if some never met their individual deductible. Knowing which deductible applies helps collect the right amount. It differs from copays and coinsurance.

If a service is specifically excluded (non-covered) under the patient's plan, the patient is generally:

• a.Entitled to have the provider write off the entire charge
• b.Covered at the standard in-network rate
• c.Not responsible for any part of the payment
• d.Responsible for the full charge, since the plan pays nothing✓

A non-covered (excluded) service is not a plan benefit, so the patient owes the full amount. This differs from a covered service that is denied for other reasons. Informing the patient in advance supports collection and transparency.

The most effective time to collect a patient copayment is:

• a.When the account has already reached collections
• b.At the time of service, during check-in or checkout✓
• c.Solely after the deductible is fully satisfied
• d.Only after the claim has been denied

Copays are due at the time of service, and collecting then improves cash flow and lowers bad debt. Waiting until after billing makes collection harder and costlier. Point-of-service collection is a revenue-cycle best practice.

Collecting known patient responsibility at the point of service primarily helps the practice by:

• a.Increasing the Medicare conversion factor
• b.Eliminating the need to file any claim
• c.Reducing bad debt and the cost of billing patients later✓
• d.Raising the payer's contracted allowed amount for the services

Point-of-service collection captures money while the patient is present, cutting later statement and collection costs. Balances left to bill after the visit are harder to collect. It lowers accounts receivable and bad debt.

A patient has $200 left on the deductible. A service has an allowed amount of $700 with 20% coinsurance applied after the deductible. Total patient responsibility is:

• a.$700
• b.$140
• c.$200
• d.$300✓

The patient first pays the $200 deductible, leaving $500 of the allowed amount subject to coinsurance. Twenty percent of $500 is $100, so total responsibility is $200 + $100 = $300. The payer pays the remaining $400.

A service has an allowed amount of $450, the deductible is already met, and coinsurance is 30%. The patient owes:

• a.$135✓
• b.$150
• c.$315
• d.$450

Coinsurance is calculated on the allowed amount, so 0.30 x $450 = $135. The payer covers the remaining 70 percent, or $315. Coinsurance is always a percentage of the allowed amount, not the billed charge.

A participating provider bills $1,500 and the payer's allowed amount is $900. The contractual write-off is:

• a.$600✓
• b.$1,500
• c.$900
• d.$300

A participating provider accepts the allowed amount as payment in full, so the write-off is $1,500 - $900 = $600. That contractual adjustment cannot be billed to the patient. Only cost-sharing based on the $900 allowed amount is collectible.

Two procedures are performed in one session. The primary is allowed at $1,000 (100%) and the second is subject to a 50% multiple-procedure reduction on its $600 allowed amount. The total allowed is:

• a.$800
• b.$1,600
• c.$1,500
• d.$1,300✓

The second procedure is reduced by 50 percent, so $600 becomes $300, and the total allowed is $1,000 + $300 = $1,300. Multiple-procedure reductions apply to the lesser procedures in a session. The primary procedure is paid at full allowed amount.

A patient has reached the plan's out-of-pocket maximum for the year. For the next covered, in-network service the patient generally owes:

• a.Only the contractual write-off portion
• b.The full billed charge for the service, because the maximum resets at each visit
• c.The usual 20% coinsurance amount
• d.Nothing, since the plan then pays 100% of covered services✓

Once the out-of-pocket maximum is met, the plan pays 100 percent of covered in-network services for the rest of the benefit period. Premiums still apply but do not count toward the maximum. Verifying this helps set correct patient expectations.

An account moved to 'bad debt' differs from a 'charity' write-off in that bad debt is:

• a.The same thing as a patient copayment
• b.An amount deemed uncollectible after real collection efforts✓
• c.Always rebilled to the insurance payer
• d.A contractual adjustment that the payer requires to be written off

Bad debt is written off when the practice cannot collect despite reasonable effort, while charity (financial assistance) is granted intentionally based on documented need. Both remove a balance but for different reasons. Consistent policies govern each.

The federal Fair Debt Collection Practices Act (FDCPA) primarily regulates:

• a.How providers assign CPT procedure codes
• b.The layout of the CMS-1500 claim form
• c.The Medicare physician fee schedule amounts
• d.The conduct of third-party debt collectors✓

The FDCPA restricts abusive or deceptive practices by third-party debt collectors, which affects how overdue medical balances may be pursued. It generally targets outside collection agencies rather than the original creditor. Compliance protects patients and the practice.FDCPA

Under the Affordable Care Act, an identified overpayment from Medicare or Medicaid generally must be reported and returned within:

• a.The following calendar year only
• b.24 hours of receiving any payment
• c.60 days of identifying the overpayment✓
• d.10 years of the date of service

The ACA requires reporting and returning an identified overpayment within 60 days. Keeping a known overpayment past that window can create False Claims Act liability. Prompt refunds are a compliance necessity.CMS

A 'credit balance' on a patient account usually means that:

• a.The claim has not yet been submitted to the payer
• b.The account was overpaid and a refund or adjustment may be owed✓
• c.The patient still owes an additional amount on the account balance
• d.The provider undercharged for the service

A credit balance signals overpayment, often from a duplicate payment or combined primary and secondary payments. Credit balances must be reviewed and resolved, and Medicare uses the CMS-838 credit balance report. Ignoring them creates compliance risk.

If both primary and secondary insurers pay and the combined payment exceeds the allowed amount, the provider should:

• a.Bill the patient for the difference
• b.Refund the overpayment to the correct party✓
• c.Keep the extra amount as additional revenue
• d.Ignore it as long as the amount is small

Payments exceeding the allowed amount create a credit balance that must be refunded to the correct party. Retaining a known overpayment can trigger False Claims Act exposure. Coordination of benefits limits total payment to the allowed amount.

A 'contractual adjustment' on a participating provider's account represents:

• a.An amount the payer still owes the provider after the patient coinsurance is applied
• b.The patient's coinsurance obligation
• c.The charge above the allowed amount, written off per contract✓
• d.A penalty assessed for late filing

The contractual adjustment is the portion of the charge above the contracted allowed amount that a participating provider agrees to write off. It is not billable to the patient. Only deductible, copay, or coinsurance based on the allowed amount is collectible.

A 'predetermination of benefits' obtained from a payer is:

• a.The final remittance advice for the claim
• b.An advance estimate of what the plan will likely cover✓
• c.A demand for immediate full payment directly from the patient
• d.A binding guarantee of full payment

A predetermination estimates coverage before a service is rendered, helping set patient expectations. Unlike some prior authorizations, it is generally not a payment guarantee. Final payment still depends on eligibility and claim adjudication.

Sending patients periodic statements for balances remaining after insurance has paid is part of:

• a.The charge-capture step
• b.Front-end patient registration
• c.The back-end collections process of the revenue cycle✓
• d.Insurance eligibility verification performed during front-end registration

Patient billing and collections occur on the back end, after claims are adjudicated and payments posted. Statements show the balance the patient owes. Effective follow-up here improves cash flow and reduces bad debt.

Practices often set a 'small balance write-off' threshold because:

• a.Collecting small balances is prohibited by law
• b.Doing so increases the contracted allowed amount
• c.Payers legally require all small balances to be waived
• d.The cost of billing tiny balances can exceed the amount owed✓

Writing off very small balances under a consistent policy avoids spending more on statements than the balance is worth. The policy must be applied uniformly, not selectively. Routine waiver of cost-sharing, however, can raise compliance concerns.

Routinely waiving Medicare patient copayments and deductibles without a genuine financial-hardship determination can:

• a.Have no compliance implications whatsoever
• b.Violate fraud and abuse laws by inducing use of services✓
• c.Always be required under the HIPAA Privacy Rule
• d.Increase the Medicare-approved amount for the service

Routine, blanket waiver of cost-sharing can be viewed as an unlawful inducement and can misstate the actual charge to Medicare. Case-by-case waivers based on documented hardship are permitted. Blanket waivers are a recognized fraud and abuse risk.CMS

A retrospective (cost-based) reimbursement method pays the provider:

• a.After services are delivered, based on the costs actually incurred✓
• b.A fixed amount set before any care is given
• c.A single monthly rate per enrolled member
• d.Nothing at all until the patient reaches the out-of-pocket maximum

Retrospective, cost-based payment reimburses providers after the fact for allowable costs. Prospective systems such as DRGs and APCs instead set rates in advance. The prospective model shifts more financial risk to the provider.

Billing a routine follow-up visit that falls within a surgery's global period will typically result in:

• a.An automatic increase in the assigned inpatient DRG weight
• b.A denial, since routine post-op care is already bundled✓
• c.A refund issued to the patient
• d.A separate full payment for the follow-up visit

The global surgical package includes routine postoperative care, so related follow-up visits are not paid separately during the global period. Unrelated care or a return to the operating room may be billed with an appropriate modifier. Otherwise the visit is denied as included.

In some managed-care contracts, a 'withhold' is:

• a.The patient's coinsurance amount
• b.A financial penalty charged to the patient
• c.An extra bonus automatically added to every claim
• d.Payment held back, returned only if targets are met✓

A withhold reserves part of the provider's payment, released only if cost or quality goals are achieved. It aligns provider behavior with the plan's targets in risk arrangements. Failing to meet targets can forfeit the withheld amount.

The 'paid amount' on a remittance differs from the 'allowed amount' because the paid amount:

• a.The allowed amount minus patient responsibility✓
• b.Includes the contractual write-off portion
• c.Equals the provider's full billed charge
• d.Is always larger than the allowed amount

The allowed amount is the maximum the payer recognizes, while the paid amount is what the payer actually sends after subtracting deductible, copay, and coinsurance. The remaining patient responsibility is billed to the patient or a secondary payer. Reconciling the two ensures correct posting.

If a claim is denied solely for exceeding the payer's timely-filing limit, the balance usually:

• a.Increases the provider's contracted fee schedule
• b.Must be paid in full by the patient
• c.Cannot be billed to the patient; it is a provider loss✓
• d.Is automatically reprocessed and paid

Missing the timely-filing deadline is generally the provider's error, so the amount is not patient responsibility and becomes a write-off. Tracking deadlines prevents this avoidable revenue loss. Some payers allow appeals with proof of timely submission.

Verifying eligibility and benefits before a visit supports reimbursement mainly by:

• a.Eliminating the need to submit a claim
• b.Assigning the diagnosis codes for the encounter
• c.Confirming coverage and cost-sharing before the visit✓
• d.Setting the hospital's inpatient DRG weight

Eligibility verification, often via the 270/271 transactions, confirms active coverage and reveals copays, deductibles, and authorization requirements. This front-end step reduces denials and clarifies what to collect. It protects revenue before services are rendered.

A provider bills $1,000; the allowed amount is $400; the deductible is met and coinsurance is 20%. The patient's coinsurance is:

• a.$400
• b.$120
• c.$200
• d.$80✓

Coinsurance is 20 percent of the allowed amount, so 0.20 x $400 = $80. The $600 difference between the billed charge and the allowed amount is a contractual write-off. The payer pays the remaining $320 of the allowed amount.