Page | 1
CSAF 2025 BRAND NEW ACTUAL
EXAM WITH QUESTIONS AND
ANSWERS.
Analyzing the Financial Impact - correct answer -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.
Quantifying Anticipated Revenues and Costs - correct answer -
Fee-for-Service Contract
, Page | 2
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.
Capitation Contract - correct answer -Total service provided adds
up to more than insurance limit, patient may be billed. In
capitation contracts, the revenue is independent of the expense. It
is still possible to model a capitation contract for profitability, using
projected utilization levels for the proposed enrolled population,
internal cost data, and the proposed capitation rate for the
population.
Capitation Contract Example - correct answer -Facility Inpatient:
308. Cost per Visit: 1,100. Net per Member per Month (PMPM):
28.23.
Skilled Nursing: 6. Cost per Visit: 220. Net per Member per Month
(PMPM): 0.11.
, Page | 3
Facility Outpatient: 403. Cost per Visit: 225. Net per Member per
Month (PMPM): 7.56.
Outpatient Diagnostic: 196. Cost per Visit: 200. Net per Member
per Month (PMPM): 3.27.
Outpatient Surgery: 63. Cost per Visit: 1,350. Net per Member per
Month (PMPM): 7.09.
Emergency Room: 144. Cost per Visit: 240. Copay: 50.00. Net
per Member per Month (PMPM): 2.25.
Total Cost PMPM: 48.54
Annual Utilization Per 1000 Enrollees: Expected occurrences per
year for every 1,000 enrollees, per actuarial calculations based on
historical usage for this population.
Cost Per Visit: Based on the hospital's cost accounting system,
including incremental costs that will be incurred to provide
capacity for this service.
Copay: Per the terms of the contract, each emergency visit
requires a copay of $50.00.
Net Per Member Per Month (PMPM): The net cost per member
per month is calculated as follows: (a x (b - c)/1000)/12
Which one of the following options is a managed care product that
is easy to evaluate? - correct answer -Fee-for-Service. This option
otherwise known as a discount charge is generally the easiest
reimbursement method to model. The analyst need only compare
the proposed discount rate to the contribution margin for the
, Page | 4
related services at the expected utilization levels. If the contract
proposes a fee schedule, the analysis would require cost
estimates for each scheduled rate.
Healthcare providers should develop different modeling tools
depending on ____________. - correct answer -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.
Risk-Sharing Arrangements - correct answer -Risk-Sharing
Arrangements
Managed care arrangements have required providers to assume
more of the economic risks that accompany healthcare delivery.
With the exception of fee-for-service contracts, which are
becoming much less prevalent, the provider receives a set
reimbursement amount, regardless of the services performed.
In a per diem contract, the hospital is at risk for shorter, more
resource intensive inpatient stays. Where case rates have been
negotiated, the hospital is at risk for higher acuity admissions that
are more costly. In both of these examples, physician practice
patterns can significantly impact the profitability of the institutional
provider.
Because of this interrelationship, health plans are creating
contracts that provide incentives for the physicians and
CSAF 2025 BRAND NEW ACTUAL
EXAM WITH QUESTIONS AND
ANSWERS.
Analyzing the Financial Impact - correct answer -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.
Quantifying Anticipated Revenues and Costs - correct answer -
Fee-for-Service Contract
, Page | 2
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.
Capitation Contract - correct answer -Total service provided adds
up to more than insurance limit, patient may be billed. In
capitation contracts, the revenue is independent of the expense. It
is still possible to model a capitation contract for profitability, using
projected utilization levels for the proposed enrolled population,
internal cost data, and the proposed capitation rate for the
population.
Capitation Contract Example - correct answer -Facility Inpatient:
308. Cost per Visit: 1,100. Net per Member per Month (PMPM):
28.23.
Skilled Nursing: 6. Cost per Visit: 220. Net per Member per Month
(PMPM): 0.11.
, Page | 3
Facility Outpatient: 403. Cost per Visit: 225. Net per Member per
Month (PMPM): 7.56.
Outpatient Diagnostic: 196. Cost per Visit: 200. Net per Member
per Month (PMPM): 3.27.
Outpatient Surgery: 63. Cost per Visit: 1,350. Net per Member per
Month (PMPM): 7.09.
Emergency Room: 144. Cost per Visit: 240. Copay: 50.00. Net
per Member per Month (PMPM): 2.25.
Total Cost PMPM: 48.54
Annual Utilization Per 1000 Enrollees: Expected occurrences per
year for every 1,000 enrollees, per actuarial calculations based on
historical usage for this population.
Cost Per Visit: Based on the hospital's cost accounting system,
including incremental costs that will be incurred to provide
capacity for this service.
Copay: Per the terms of the contract, each emergency visit
requires a copay of $50.00.
Net Per Member Per Month (PMPM): The net cost per member
per month is calculated as follows: (a x (b - c)/1000)/12
Which one of the following options is a managed care product that
is easy to evaluate? - correct answer -Fee-for-Service. This option
otherwise known as a discount charge is generally the easiest
reimbursement method to model. The analyst need only compare
the proposed discount rate to the contribution margin for the
, Page | 4
related services at the expected utilization levels. If the contract
proposes a fee schedule, the analysis would require cost
estimates for each scheduled rate.
Healthcare providers should develop different modeling tools
depending on ____________. - correct answer -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.
Risk-Sharing Arrangements - correct answer -Risk-Sharing
Arrangements
Managed care arrangements have required providers to assume
more of the economic risks that accompany healthcare delivery.
With the exception of fee-for-service contracts, which are
becoming much less prevalent, the provider receives a set
reimbursement amount, regardless of the services performed.
In a per diem contract, the hospital is at risk for shorter, more
resource intensive inpatient stays. Where case rates have been
negotiated, the hospital is at risk for higher acuity admissions that
are more costly. In both of these examples, physician practice
patterns can significantly impact the profitability of the institutional
provider.
Because of this interrelationship, health plans are creating
contracts that provide incentives for the physicians and
