CSAF MARKING TIPS 2025/2026 QUESTIONS WITH
ANSWERS GRADED A+
✔✔Volume Variance - ✔✔A volume variance determines the difference between
budgeted and actual units of service provided.
✔✔Efficiency Variance - ✔✔An efficiency variance determines the financial impact of a
difference between the budgeted labor hours per unit of service and the actual labor
used per unit of service.
✔✔The wage variance is determined by: - ✔✔The "difference in the budgeted and
actual average wage per hour" times the "actual paid hours."
✔✔efficiency variance - ✔✔The variance in the "labor hours per unit of service" times
the "actual units of service" times the "budgeted average wage rate."
✔✔When a hospital's actual patient census is greater than budgeted, the management
views this as favorable. Generally, the effect on the actual expenses being less than the
budgeted amounts is: - ✔✔Also favorable
✔✔Which of the following is NOT a type of expense variance? - ✔✔Stepped Variable
✔✔Third Party Payers - ✔✔1. Governmental Payers
2. Medicare
Federal government program
Provides coverage for elderly and permanently disabled individuals
3. Medicaid
State and federal government program
Provides coverage for economically
disadvantaged individuals
4. Commercial Insurance
Provides coverage for groups and individuals
5. Preferred Provider Organizations
,Provides coverage for groups and individuals
Seeks to obtain favorable pricing by limiting providers
6. Health Maintenance Organizations ("HMO")
Provides coverage for groups and individuals
Accepts responsibility for providing all services
✔✔Fee-for-Service - ✔✔Fee-for-service is billing by health providers for each service
performed in specific amounts. Amounts may be a percentage of list charges. There is a
set amount for each service per the contract.
✔✔Per Diem Rate - ✔✔The per diem rate covers all inpatient services utilized while the
beneficiary is in the hospital. It is common to develop more than one per diem rate,
depending on the type of service provided.
For example, it is common to have a different rate for medical and surgical patients. Or,
it is possible to negotiate one rate for the first two days of admission and then a lower
rate for the remainder of the stay. This recognizes that the majority of resources are
consumed in the first 48 hours of a hospital stay.
✔✔Case Rate - ✔✔Medicare reimbursement introduced the concept of a case rate
where preadmission testing and inpatient services are reimbursed based on the
diagnostic grouping into which the case falls. There is a fixed dollar amount of
reimbursement associated with each diagnosis-related group (DRG) regardless of
resources consumed.
Many commercial carriers have adopted this methodology, negotiating flat amounts for
certain types of cases. More recently, payers have been negotiating global case rates
for certain cases (for example, open heart surgeries) that include professional fees and
home care services, as well as preadmission and inpatient services
✔✔Capitation - ✔✔Capitation (often referred to as global payment risk) accounting
involves a predetermined amount paid per enrollee per period without regard to the
amount, type, or frequency of service rendered to the enrollee. The provider is paid for
each enrollee assigned to them rather than being paid for the service used by the
patient. The provider recognizes capitation payments as other operating revenue and
not patient service revenue.
,✔✔Which of the following is not one of the current trends moving away from the fee for
service delivery payment system: - ✔✔MIPS Comprehensive Care for Joint
Replacement (CJR) Accountable Care Organizations (ACO) Resource Based Relative
Value System (RBRVS)
ANSWER: RBRVS
✔✔Types of Healthcare Providers - ✔✔A long-term care facility is an establishment that
houses chronically ill, usually elderly patients, and provides long-term skilled nursing
care or intermediate care, rehabilitation, and other services. They are also called skilled
nursing facilities or nursing homes.
A durable medical equipment (DME) supplier is an entity engaged in providing
equipment to patients needing assistance in a home setting following an illness or
injury. The equipment is most often rented and used for a specified length of time. The
type of DME that is required for a particular patient varies and is determined by a
physician, who will write a prescription for the equipment, similar to a drug prescription,
which is then filled by an authorized DME supplier. DME may include but is not limited
to the following: iron lungs, oxygen tents, hospital beds, wheelchairs, blood-testing
strips and blood glucose monitors for diabetics, potty chairs, canes, lifts, and other
similar equipment.
A home health agency (HHA) is a public or private agency or organization that is
primarily engaged in providing skilled nursing services and other therapeutic services in
a patient's home. Medicare certification for a home health agency can be granted if the
agency provides skilled nursing services and at least one additional therapeutic service,
usually physical or occupational therapy.
A hospice agency is a public or private agency or organization that is primarily engaged
in providing care to a patient who has been diagnosed by a physician with a disease
that can no longer be treated or cured. Hospice care neither hastens nor postpones
death and is focused on the belief that quality of life is as important as length of life.
✔✔Identifying the Costs of Managed Care Contracts - ✔✔The costs for any managed
care plan fall into two categories: medical benefits costs and administrative costs,
including reinsurance premiums. The first step in analyzing a proposed contract is to
clearly identify which costs are covered by the contract.
✔✔Which type of payment method is intended to cover all inpatient services utilized for
each procedure (e.g., joint replacement) while the beneficiary is in the hospital? - ✔✔It
is common to develop more than one per diem rate, depending on the type of service
provided and the volume of resources consumed. For example, there can be a different
rate for medical and surgical patients. Or, it is possible to negotiate one rate for the first
two days of admission and then a lower rate for the remainder of the stay.
, ✔✔Quantifying Anticipated Revenues and Costs - ✔✔Healthcare providers should
develop different modeling tools depending on the reimbursement method proposed in
the contract. However, in any proposed contract, the provider should quantify the
anticipated revenues as well as the cost of providing the proposed services at the
projected utilization levels.
✔✔Analyzing the Financial Impact - ✔✔In analyzing the financial impact of a contract,
the provider should consider whether it will result in additional business or will convert
existing business to a new reimbursement methodology. In the former, only incremental
or marginal costs would be considered, as long as excess capacity exists. The contract
would be considered profitable as long as the proposed rates exceed the marginal cost
of providing the service.
If the contract will not bring additional business or if the provider has no excess
capacity, it becomes important to analyze what the cost structure would be with and
without the business covered by the contract. All overhead or fixed costs that would be
eliminated if the contract were lost or added to provide sufficient capacity for the
projected volume increase would be considered in the total cost to determine
profitability.
✔✔Fee-for-Service Contracts - ✔✔Fee-for-service contracts are fairly easy to evaluate;
the proposed discount would be compared to the contribution margin for the related
services at the expected utilization levels.
If the contract proposes a fee schedule, the analysis would require cost estimates for
each scheduled rate. It is likely that some of the procedures will have a positive
contribution margin and others will have a negative contribution margin. In this case, it
will be necessary to consider the projected volumes for each procedure to determine
the aggregate revenue and cost in order to assess the potential financial impact of the
contract.
If the contract proposes a case rate, the provider should develop a corresponding case
cost, using historical treatment protocols for similar cases. Again, the costs included in
the analysis would depend on the incremental business the contract would provide.
Case costs can also be used to estimate per diem cost, using historical lengths-of-stay
for similar cases.
✔✔Which one of the following options is a managed care product that is easy to
evaluate? - ✔✔Fee-for-service
ANSWERS GRADED A+
✔✔Volume Variance - ✔✔A volume variance determines the difference between
budgeted and actual units of service provided.
✔✔Efficiency Variance - ✔✔An efficiency variance determines the financial impact of a
difference between the budgeted labor hours per unit of service and the actual labor
used per unit of service.
✔✔The wage variance is determined by: - ✔✔The "difference in the budgeted and
actual average wage per hour" times the "actual paid hours."
✔✔efficiency variance - ✔✔The variance in the "labor hours per unit of service" times
the "actual units of service" times the "budgeted average wage rate."
✔✔When a hospital's actual patient census is greater than budgeted, the management
views this as favorable. Generally, the effect on the actual expenses being less than the
budgeted amounts is: - ✔✔Also favorable
✔✔Which of the following is NOT a type of expense variance? - ✔✔Stepped Variable
✔✔Third Party Payers - ✔✔1. Governmental Payers
2. Medicare
Federal government program
Provides coverage for elderly and permanently disabled individuals
3. Medicaid
State and federal government program
Provides coverage for economically
disadvantaged individuals
4. Commercial Insurance
Provides coverage for groups and individuals
5. Preferred Provider Organizations
,Provides coverage for groups and individuals
Seeks to obtain favorable pricing by limiting providers
6. Health Maintenance Organizations ("HMO")
Provides coverage for groups and individuals
Accepts responsibility for providing all services
✔✔Fee-for-Service - ✔✔Fee-for-service is billing by health providers for each service
performed in specific amounts. Amounts may be a percentage of list charges. There is a
set amount for each service per the contract.
✔✔Per Diem Rate - ✔✔The per diem rate covers all inpatient services utilized while the
beneficiary is in the hospital. It is common to develop more than one per diem rate,
depending on the type of service provided.
For example, it is common to have a different rate for medical and surgical patients. Or,
it is possible to negotiate one rate for the first two days of admission and then a lower
rate for the remainder of the stay. This recognizes that the majority of resources are
consumed in the first 48 hours of a hospital stay.
✔✔Case Rate - ✔✔Medicare reimbursement introduced the concept of a case rate
where preadmission testing and inpatient services are reimbursed based on the
diagnostic grouping into which the case falls. There is a fixed dollar amount of
reimbursement associated with each diagnosis-related group (DRG) regardless of
resources consumed.
Many commercial carriers have adopted this methodology, negotiating flat amounts for
certain types of cases. More recently, payers have been negotiating global case rates
for certain cases (for example, open heart surgeries) that include professional fees and
home care services, as well as preadmission and inpatient services
✔✔Capitation - ✔✔Capitation (often referred to as global payment risk) accounting
involves a predetermined amount paid per enrollee per period without regard to the
amount, type, or frequency of service rendered to the enrollee. The provider is paid for
each enrollee assigned to them rather than being paid for the service used by the
patient. The provider recognizes capitation payments as other operating revenue and
not patient service revenue.
,✔✔Which of the following is not one of the current trends moving away from the fee for
service delivery payment system: - ✔✔MIPS Comprehensive Care for Joint
Replacement (CJR) Accountable Care Organizations (ACO) Resource Based Relative
Value System (RBRVS)
ANSWER: RBRVS
✔✔Types of Healthcare Providers - ✔✔A long-term care facility is an establishment that
houses chronically ill, usually elderly patients, and provides long-term skilled nursing
care or intermediate care, rehabilitation, and other services. They are also called skilled
nursing facilities or nursing homes.
A durable medical equipment (DME) supplier is an entity engaged in providing
equipment to patients needing assistance in a home setting following an illness or
injury. The equipment is most often rented and used for a specified length of time. The
type of DME that is required for a particular patient varies and is determined by a
physician, who will write a prescription for the equipment, similar to a drug prescription,
which is then filled by an authorized DME supplier. DME may include but is not limited
to the following: iron lungs, oxygen tents, hospital beds, wheelchairs, blood-testing
strips and blood glucose monitors for diabetics, potty chairs, canes, lifts, and other
similar equipment.
A home health agency (HHA) is a public or private agency or organization that is
primarily engaged in providing skilled nursing services and other therapeutic services in
a patient's home. Medicare certification for a home health agency can be granted if the
agency provides skilled nursing services and at least one additional therapeutic service,
usually physical or occupational therapy.
A hospice agency is a public or private agency or organization that is primarily engaged
in providing care to a patient who has been diagnosed by a physician with a disease
that can no longer be treated or cured. Hospice care neither hastens nor postpones
death and is focused on the belief that quality of life is as important as length of life.
✔✔Identifying the Costs of Managed Care Contracts - ✔✔The costs for any managed
care plan fall into two categories: medical benefits costs and administrative costs,
including reinsurance premiums. The first step in analyzing a proposed contract is to
clearly identify which costs are covered by the contract.
✔✔Which type of payment method is intended to cover all inpatient services utilized for
each procedure (e.g., joint replacement) while the beneficiary is in the hospital? - ✔✔It
is common to develop more than one per diem rate, depending on the type of service
provided and the volume of resources consumed. For example, there can be a different
rate for medical and surgical patients. Or, it is possible to negotiate one rate for the first
two days of admission and then a lower rate for the remainder of the stay.
, ✔✔Quantifying Anticipated Revenues and Costs - ✔✔Healthcare providers should
develop different modeling tools depending on the reimbursement method proposed in
the contract. However, in any proposed contract, the provider should quantify the
anticipated revenues as well as the cost of providing the proposed services at the
projected utilization levels.
✔✔Analyzing the Financial Impact - ✔✔In analyzing the financial impact of a contract,
the provider should consider whether it will result in additional business or will convert
existing business to a new reimbursement methodology. In the former, only incremental
or marginal costs would be considered, as long as excess capacity exists. The contract
would be considered profitable as long as the proposed rates exceed the marginal cost
of providing the service.
If the contract will not bring additional business or if the provider has no excess
capacity, it becomes important to analyze what the cost structure would be with and
without the business covered by the contract. All overhead or fixed costs that would be
eliminated if the contract were lost or added to provide sufficient capacity for the
projected volume increase would be considered in the total cost to determine
profitability.
✔✔Fee-for-Service Contracts - ✔✔Fee-for-service contracts are fairly easy to evaluate;
the proposed discount would be compared to the contribution margin for the related
services at the expected utilization levels.
If the contract proposes a fee schedule, the analysis would require cost estimates for
each scheduled rate. It is likely that some of the procedures will have a positive
contribution margin and others will have a negative contribution margin. In this case, it
will be necessary to consider the projected volumes for each procedure to determine
the aggregate revenue and cost in order to assess the potential financial impact of the
contract.
If the contract proposes a case rate, the provider should develop a corresponding case
cost, using historical treatment protocols for similar cases. Again, the costs included in
the analysis would depend on the incremental business the contract would provide.
Case costs can also be used to estimate per diem cost, using historical lengths-of-stay
for similar cases.
✔✔Which one of the following options is a managed care product that is easy to
evaluate? - ✔✔Fee-for-service
