Certified Professional in Healthcare Management
(CPHM™) Exam Prep 2026 Updated Practice
Questions – Comprehensive Healthcare Management
Review Detailed Explanations – Verified Answers –
Complete Success Workbook
SECTION 1: U.S. HEALTHCARE SYSTEMS
Question 1
Which of the following best describes the primary difference between Medicare
and Medicaid?
A) Medicare is state-administered; Medicaid is federally administered
B) Medicare is federally administered for elderly and disabled; Medicaid is
jointly funded by federal and state governments for low-income individuals
C) Medicare covers only inpatient care; Medicaid covers only outpatient care
D) Medicare is funded by states; Medicaid is funded by private insurance
Rationale: Medicare is a federal program primarily for individuals aged 65 and
older and certain younger people with disabilities. Medicaid is a joint federal and
state program that provides health coverage to low-income individuals and
families. Understanding this distinction is fundamental to navigating the U.S.
healthcare system.
Question 2
The Affordable Care Act (ACA) of 2010 introduced which of the following key
provisions?
A) Elimination of all private health insurance
B) Establishment of health insurance marketplaces and expansion of
Medicaid eligibility
C) Creation of a single-payer healthcare system
D) Elimination of all employer-sponsored insurance
,Rationale: The ACA established health insurance marketplaces (exchanges)
where individuals could purchase insurance and expanded Medicaid eligibility to
more low-income adults. It did not eliminate private insurance or create a single-
payer system.
Question 3
A healthcare organization is transitioning from fee-for-service to value-based
care . Which of the following best describes this shift?
A) Moving from quality-based to volume-based reimbursement
B) Moving from paying for the quantity of services to paying for the quality
and outcomes of care
C) Moving from outpatient to inpatient care
D) Moving from public to private insurance
Rationale: Value-based care shifts reimbursement from the volume of services
provided (fee-for-service) to the quality and outcomes of care. This model
incentivizes efficiency, coordination, and patient outcomes.
Question 4
ERISA (Employee Retirement Income Security Act) primarily regulates:
A) Medicare reimbursement rates
B) Employer-sponsored health plans and retirement benefits
C) Medicaid eligibility requirements
D) Hospital accreditation standards
Rationale: ERISA sets minimum standards for employer-sponsored health
plans and retirement benefits. It preempts state laws that relate to employee benefit
plans, making it a critical framework for understanding employer-based coverage.
Question 5
A Health Maintenance Organization (HMO) is characterized by:
,A) Unlimited out-of-network coverage
B) A managed care model requiring members to use in-network providers
and obtain referrals for specialists
C) No restrictions on provider choice
D) Coverage only for emergency services
Rationale: An HMO is a managed care organization that requires members to use
in-network providers and typically requires referrals from a primary care
physician for specialist care. This model controls costs through coordinated care.
Question 6
Medicare Part A covers:
A) Physician services and outpatient care
B) Hospital inpatient care, skilled nursing facility care, and hospice
C) Prescription drugs
D) Dental and vision services
Rationale: Medicare Part A covers inpatient hospital stays, skilled nursing
facility care, hospice, and some home health care. Part B covers physician
services and outpatient care. Part D covers prescription drugs.
Question 7
Which of the following is a key characteristic of the U.S. healthcare system
compared to other developed nations?
A) Universal coverage for all citizens
B) A predominantly private, employer-based insurance system with
significant public programs
C) Government-operated healthcare facilities exclusively
D) No private health insurance options
Rationale: The U.S. healthcare system is characterized by a mix of public and
private financing, with most non-elderly Americans receiving coverage
through employer-sponsored insurance. Public programs (Medicare, Medicaid,
CHIP) cover vulnerable populations.
, Question 8
A Preferred Provider Organization (PPO) differs from an HMO in that a PPO:
A) Requires referrals for all specialist visits
B) Allows members to see out-of-network providers at a higher cost
C) Has no deductibles
D) Only covers preventive services
Rationale: A PPO allows members to see out-of-network providers but at
a higher cost (higher deductibles, co-insurance). HMOs generally do not cover
out-of-network care except in emergencies.
Question 9
The Centers for Medicare & Medicaid Services (CMS) is responsible for:
A) Licensing all healthcare providers
B) Administering Medicare, Medicaid, and the Children's Health Insurance
Program (CHIP)
C) Accrediting hospitals
D) Setting medical school curricula
Rationale: CMS is the federal agency that administers Medicare, Medicaid, and
CHIP. It also establishes quality standards and reimbursement policies that
significantly influence healthcare delivery.
Question 10
Accountable Care Organizations (ACOs) are designed to:
A) Increase the volume of services provided
B) Coordinate care and share savings among providers who meet quality and
cost targets
C) Eliminate primary care physicians
D) Reduce patient choice of providers
(CPHM™) Exam Prep 2026 Updated Practice
Questions – Comprehensive Healthcare Management
Review Detailed Explanations – Verified Answers –
Complete Success Workbook
SECTION 1: U.S. HEALTHCARE SYSTEMS
Question 1
Which of the following best describes the primary difference between Medicare
and Medicaid?
A) Medicare is state-administered; Medicaid is federally administered
B) Medicare is federally administered for elderly and disabled; Medicaid is
jointly funded by federal and state governments for low-income individuals
C) Medicare covers only inpatient care; Medicaid covers only outpatient care
D) Medicare is funded by states; Medicaid is funded by private insurance
Rationale: Medicare is a federal program primarily for individuals aged 65 and
older and certain younger people with disabilities. Medicaid is a joint federal and
state program that provides health coverage to low-income individuals and
families. Understanding this distinction is fundamental to navigating the U.S.
healthcare system.
Question 2
The Affordable Care Act (ACA) of 2010 introduced which of the following key
provisions?
A) Elimination of all private health insurance
B) Establishment of health insurance marketplaces and expansion of
Medicaid eligibility
C) Creation of a single-payer healthcare system
D) Elimination of all employer-sponsored insurance
,Rationale: The ACA established health insurance marketplaces (exchanges)
where individuals could purchase insurance and expanded Medicaid eligibility to
more low-income adults. It did not eliminate private insurance or create a single-
payer system.
Question 3
A healthcare organization is transitioning from fee-for-service to value-based
care . Which of the following best describes this shift?
A) Moving from quality-based to volume-based reimbursement
B) Moving from paying for the quantity of services to paying for the quality
and outcomes of care
C) Moving from outpatient to inpatient care
D) Moving from public to private insurance
Rationale: Value-based care shifts reimbursement from the volume of services
provided (fee-for-service) to the quality and outcomes of care. This model
incentivizes efficiency, coordination, and patient outcomes.
Question 4
ERISA (Employee Retirement Income Security Act) primarily regulates:
A) Medicare reimbursement rates
B) Employer-sponsored health plans and retirement benefits
C) Medicaid eligibility requirements
D) Hospital accreditation standards
Rationale: ERISA sets minimum standards for employer-sponsored health
plans and retirement benefits. It preempts state laws that relate to employee benefit
plans, making it a critical framework for understanding employer-based coverage.
Question 5
A Health Maintenance Organization (HMO) is characterized by:
,A) Unlimited out-of-network coverage
B) A managed care model requiring members to use in-network providers
and obtain referrals for specialists
C) No restrictions on provider choice
D) Coverage only for emergency services
Rationale: An HMO is a managed care organization that requires members to use
in-network providers and typically requires referrals from a primary care
physician for specialist care. This model controls costs through coordinated care.
Question 6
Medicare Part A covers:
A) Physician services and outpatient care
B) Hospital inpatient care, skilled nursing facility care, and hospice
C) Prescription drugs
D) Dental and vision services
Rationale: Medicare Part A covers inpatient hospital stays, skilled nursing
facility care, hospice, and some home health care. Part B covers physician
services and outpatient care. Part D covers prescription drugs.
Question 7
Which of the following is a key characteristic of the U.S. healthcare system
compared to other developed nations?
A) Universal coverage for all citizens
B) A predominantly private, employer-based insurance system with
significant public programs
C) Government-operated healthcare facilities exclusively
D) No private health insurance options
Rationale: The U.S. healthcare system is characterized by a mix of public and
private financing, with most non-elderly Americans receiving coverage
through employer-sponsored insurance. Public programs (Medicare, Medicaid,
CHIP) cover vulnerable populations.
, Question 8
A Preferred Provider Organization (PPO) differs from an HMO in that a PPO:
A) Requires referrals for all specialist visits
B) Allows members to see out-of-network providers at a higher cost
C) Has no deductibles
D) Only covers preventive services
Rationale: A PPO allows members to see out-of-network providers but at
a higher cost (higher deductibles, co-insurance). HMOs generally do not cover
out-of-network care except in emergencies.
Question 9
The Centers for Medicare & Medicaid Services (CMS) is responsible for:
A) Licensing all healthcare providers
B) Administering Medicare, Medicaid, and the Children's Health Insurance
Program (CHIP)
C) Accrediting hospitals
D) Setting medical school curricula
Rationale: CMS is the federal agency that administers Medicare, Medicaid, and
CHIP. It also establishes quality standards and reimbursement policies that
significantly influence healthcare delivery.
Question 10
Accountable Care Organizations (ACOs) are designed to:
A) Increase the volume of services provided
B) Coordinate care and share savings among providers who meet quality and
cost targets
C) Eliminate primary care physicians
D) Reduce patient choice of providers
