©Jason McConnel 2025 ALL RIGHTS RESERVED.
CHFP Module 1 Certification Test Exam
Questions With Correct Answers A+
Is a pre-determined amount that the patient pays before the insurer begins to pay for services -
Answer✔deductible
a percentage of the insurance payment amount that is paid by the patient, along with the amount
paid by the insurer. - Answer✔coinsurance
a flat amount that the patient pays at each time of service - Answer✔copayment
payment also includes amounts for services that are not included in the patient's benefit design
and amounts for services balance billed by out-of-network providers. Payments typically does
not include premium sharing by the patient. - Answer✔Out-of-pocket payment
The amount payable out of pocket for healthcare services, which may includes deductibles,
copayments, coinsurance, amounts payable by the patient for services that are not included in the
patient's benefit design, and amounts "balance billed" by out-of-network providers. Health
insurance premiums constitute a separate category of healthcare costs for patients, independent
of healthcare utilization. - Answer✔Cost (to the patient)
The expense (direct and indirect) incurred to deliver healthcare services to patients. -
Answer✔Costs (to the provider)
The amount payable to the provider (or reimbursable to the patient) for services rendered. -
Answer✔Cost (to the health plan/insurer)
The expense related to provided health benefits (premiums or claims paid) - Answer✔Cost (to
the employer)
The dollar amount a provider sets for services rendered before negotiating any discounts. The
charge can be different from the amount paid. - Answer✔Charge
The total amount a provider expects to be paid by health plans/payers and patients for healthcare
services. - Answer✔Price
An organization that negotiates or sets rates for provider services, collects revenue through
premium payments or tax dollars, processes provider claims for service, and pays provider
claims using collected premium or tax revenues. - Answer✔Health Plan/Payer
An entity, organization, or individual that furnishes a healthcare service. - Answer✔Provider
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, ©Jason McConnel 2025 ALL RIGHTS RESERVED.
Occurs when a healthcare provider bills a patient for charges (other than copayments,
coinsurance or any amounts that may remain on the patient's annual deductible) that exceed the
health plan's payment for a covered service. In-network providers are contractually prohibited
from balance billing health plan members, but balance billing by out-of-network providers is
common. - Answer✔Balance Billing
In healthcare, readily available information on the price of healthcare services that, together with
other information, helps define the value of those services and enables patients and other care
purchasers to identify, compare and choose providers that offer the desired level of value -
Answer✔Price Transparency
The quality of a healthcare service in relation to the total price paid for the service by care
purchasers. - Answer✔Value
the flow of money between the patient, the insurer, and the provider of healthcare services -
Answer✔Revenue Cycle
function between a healthcare facility or physician and an insurer is one of the most important
resource management challenges in today's healthcare industry. - Answer✔Billing and
Collection
An older term used to describe payment by an insurer to a healthcare facility or physician. This
term is used because a physician or healthcare facility provider render services to a patient and
then submits claims a claim to an insurer. The healthcare facility or physician waits for
processing of that claim by the insurer, and ultimately recieves payment, a determination of
payment or a denial by the insurer. Today it is more common to use the term payment. -
Answer✔Reimbursement
The price set by a healthcare facility or physician for their services is referred to as -
Answer✔Charges or Billed Charges
The charges by a healthcare facility or physician represent the retail price and are usually
compiled in a price listing known as - Answer✔Chargemaster
a charge-based payment mechanism in which a provider is paid either list price (full charges) or
a percentage of charges (full charges less a discount) for the specific services rendered. -
Answer✔Fee-for-service
What does fee for service payment provides? - Answer✔more units of service in order to receive
more payments.
Why do Healthcare Facilities set Retail prices significantly above rates actually paid by
commercial insurers or the government? - Answer✔1. Access to Contracted Payment Rates.
-Rare not all insurers participate in provider networks that give them access to contracted
payment rates. Some auto insurers, liability insurers or companies providing travel insurance to
visitors from abroad still pay a provider's full charges.
2. Percent-of-Charge Contracts
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, ©Jason McConnel 2025 ALL RIGHTS RESERVED.
-In markets with little competition, percent-of-charge contracts are still common. The higher the
price, the higher the percent-of-charge payment, unless the contract limits a provider's annual
price increases.
3. Outlier Provisions
-Some insurance contacts contain an outlier provision that entitles providers to an additional
payment (a lump-sum payment or a percentage of actual charges above a threshold) for
particularly sick and high-cost patients.
What is the use and benefits of Cost Based Payments? - Answer✔The only use of this method
today is in a limited set of small, rural healthcare facilities known as critical access hospitals.
This mechanism has rarely been used for physicians. Cost-based payment calls for the insurer to
pay the healthcare provider based on the costs of providing services, with a nominal allowance
for margin.
What is the Medicare program began with a payment mechanism to healthcare facilities that has
since been nearly eliminated from the healthcare industry — - Answer✔Cost based Payment
Which of the following would benefit the most from a cost-based payment method? -
Answer✔The healthcare provider
That's right! Let's understand how.
The payment mechanism is advantageous for healthcare providers, as there is a higher likelihood
that all costs will be paid, and there is no incentive to be efficient in providing care, since costs
will be reimbursed by the insurer. The rapid escalation of healthcare costs in the U.S. after the
start of cost-based payment in Medicare and Medicaid programs led to the implementation of the
Prospective Payment System (PPS) of paying acute care healthcare providers for inpatient
services in 1983 and outpatient services in 2000. Since then, CMS has introduced prospective
payment systems for most other types of institutional healthcare providers
Cost-Based payment decreased need for providers to be efficient.
Mountainside Health Plan is evaluating its payment of hospitals in its current service area. It is
looking to reduce its costs per patient and stabilize its overall payments to hospitals. Which of
the following payment methods would be least effective for the health plan to meet these
objectives? - Answer✔Cost-based payment
You selected the correct answer. Cost-based payment is the least predictable model for a health
plan and has the greatest risk of increased cost because it is dependent on the hospital's ability to
manage operating costs.
The table below shows the methods ranked from most predictable to least predictable.
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, ©Jason McConnel 2025 ALL RIGHTS RESERVED.
What are the 5 main types of prospective payments used in today's healthcare market? -
Answer✔1. DRG healthcare provider
2. Per Procedure
3. Case rate - healthcare provider or physician
4. Per diem - healthcare provider
5. Bundled payment - healthcare provider, physicians and post-acute providers
A payment based on the patient's diagnosis is known as a - Answer✔(DRG) Diagnosis Related
Group
What is the most widely used in payments to healthcare providers. - Answer✔(DRG)'s
is a classification of a disease or injury into one of approximately 750 different categories.
The amount paid is a flat rate per discharge and is adjusted based on:
Relative severity of the patient's condition
Resources used to treat the condition as determined by the DRG for that condition -
Answer✔(DRG)
defines the increase or decrease adjustment to the payment. - Answer✔Relative weight
(each DRG is assigned relative weight)
The average level of severity of conditions of patients in a healthcare provider during a specified
period is known as - Answer✔case mix index
A _________ pays a specified fee for each procedure performed on a patient in a healthcare
provider or ambulatory care facility, or by a physician. - Answer✔Health plan
What 2 payment approaches are used in the per-procedure payment plan? - Answer✔(APC)
Ambulatory Payment Classification and Resource Based Relative Value Scale (RBRVS)
What payment approach is similar to the inpatient DRG in that the amount paid is based on the
specific procedure or service provided to the patient? - Answer✔(APC) Ambulatory Payment
Classification
What payment approach is the physician payment per procedure or service, varies based on the
amount of resources (usually time and effort) needed by the physician. - Answer✔Resource
Based Relative Value Scale (RBRVS)
__________ at 100% of the per-procedure fee - Answer✔Primary procedure
_________ at 50% of the normal per-procedure fee - Answer✔Secondary procedure
_________ 25% of the normal per-procedure fee - Answer✔Third and Subsequent procedure
4|Page
CHFP Module 1 Certification Test Exam
Questions With Correct Answers A+
Is a pre-determined amount that the patient pays before the insurer begins to pay for services -
Answer✔deductible
a percentage of the insurance payment amount that is paid by the patient, along with the amount
paid by the insurer. - Answer✔coinsurance
a flat amount that the patient pays at each time of service - Answer✔copayment
payment also includes amounts for services that are not included in the patient's benefit design
and amounts for services balance billed by out-of-network providers. Payments typically does
not include premium sharing by the patient. - Answer✔Out-of-pocket payment
The amount payable out of pocket for healthcare services, which may includes deductibles,
copayments, coinsurance, amounts payable by the patient for services that are not included in the
patient's benefit design, and amounts "balance billed" by out-of-network providers. Health
insurance premiums constitute a separate category of healthcare costs for patients, independent
of healthcare utilization. - Answer✔Cost (to the patient)
The expense (direct and indirect) incurred to deliver healthcare services to patients. -
Answer✔Costs (to the provider)
The amount payable to the provider (or reimbursable to the patient) for services rendered. -
Answer✔Cost (to the health plan/insurer)
The expense related to provided health benefits (premiums or claims paid) - Answer✔Cost (to
the employer)
The dollar amount a provider sets for services rendered before negotiating any discounts. The
charge can be different from the amount paid. - Answer✔Charge
The total amount a provider expects to be paid by health plans/payers and patients for healthcare
services. - Answer✔Price
An organization that negotiates or sets rates for provider services, collects revenue through
premium payments or tax dollars, processes provider claims for service, and pays provider
claims using collected premium or tax revenues. - Answer✔Health Plan/Payer
An entity, organization, or individual that furnishes a healthcare service. - Answer✔Provider
1|Page
, ©Jason McConnel 2025 ALL RIGHTS RESERVED.
Occurs when a healthcare provider bills a patient for charges (other than copayments,
coinsurance or any amounts that may remain on the patient's annual deductible) that exceed the
health plan's payment for a covered service. In-network providers are contractually prohibited
from balance billing health plan members, but balance billing by out-of-network providers is
common. - Answer✔Balance Billing
In healthcare, readily available information on the price of healthcare services that, together with
other information, helps define the value of those services and enables patients and other care
purchasers to identify, compare and choose providers that offer the desired level of value -
Answer✔Price Transparency
The quality of a healthcare service in relation to the total price paid for the service by care
purchasers. - Answer✔Value
the flow of money between the patient, the insurer, and the provider of healthcare services -
Answer✔Revenue Cycle
function between a healthcare facility or physician and an insurer is one of the most important
resource management challenges in today's healthcare industry. - Answer✔Billing and
Collection
An older term used to describe payment by an insurer to a healthcare facility or physician. This
term is used because a physician or healthcare facility provider render services to a patient and
then submits claims a claim to an insurer. The healthcare facility or physician waits for
processing of that claim by the insurer, and ultimately recieves payment, a determination of
payment or a denial by the insurer. Today it is more common to use the term payment. -
Answer✔Reimbursement
The price set by a healthcare facility or physician for their services is referred to as -
Answer✔Charges or Billed Charges
The charges by a healthcare facility or physician represent the retail price and are usually
compiled in a price listing known as - Answer✔Chargemaster
a charge-based payment mechanism in which a provider is paid either list price (full charges) or
a percentage of charges (full charges less a discount) for the specific services rendered. -
Answer✔Fee-for-service
What does fee for service payment provides? - Answer✔more units of service in order to receive
more payments.
Why do Healthcare Facilities set Retail prices significantly above rates actually paid by
commercial insurers or the government? - Answer✔1. Access to Contracted Payment Rates.
-Rare not all insurers participate in provider networks that give them access to contracted
payment rates. Some auto insurers, liability insurers or companies providing travel insurance to
visitors from abroad still pay a provider's full charges.
2. Percent-of-Charge Contracts
2|Page
, ©Jason McConnel 2025 ALL RIGHTS RESERVED.
-In markets with little competition, percent-of-charge contracts are still common. The higher the
price, the higher the percent-of-charge payment, unless the contract limits a provider's annual
price increases.
3. Outlier Provisions
-Some insurance contacts contain an outlier provision that entitles providers to an additional
payment (a lump-sum payment or a percentage of actual charges above a threshold) for
particularly sick and high-cost patients.
What is the use and benefits of Cost Based Payments? - Answer✔The only use of this method
today is in a limited set of small, rural healthcare facilities known as critical access hospitals.
This mechanism has rarely been used for physicians. Cost-based payment calls for the insurer to
pay the healthcare provider based on the costs of providing services, with a nominal allowance
for margin.
What is the Medicare program began with a payment mechanism to healthcare facilities that has
since been nearly eliminated from the healthcare industry — - Answer✔Cost based Payment
Which of the following would benefit the most from a cost-based payment method? -
Answer✔The healthcare provider
That's right! Let's understand how.
The payment mechanism is advantageous for healthcare providers, as there is a higher likelihood
that all costs will be paid, and there is no incentive to be efficient in providing care, since costs
will be reimbursed by the insurer. The rapid escalation of healthcare costs in the U.S. after the
start of cost-based payment in Medicare and Medicaid programs led to the implementation of the
Prospective Payment System (PPS) of paying acute care healthcare providers for inpatient
services in 1983 and outpatient services in 2000. Since then, CMS has introduced prospective
payment systems for most other types of institutional healthcare providers
Cost-Based payment decreased need for providers to be efficient.
Mountainside Health Plan is evaluating its payment of hospitals in its current service area. It is
looking to reduce its costs per patient and stabilize its overall payments to hospitals. Which of
the following payment methods would be least effective for the health plan to meet these
objectives? - Answer✔Cost-based payment
You selected the correct answer. Cost-based payment is the least predictable model for a health
plan and has the greatest risk of increased cost because it is dependent on the hospital's ability to
manage operating costs.
The table below shows the methods ranked from most predictable to least predictable.
3|Page
, ©Jason McConnel 2025 ALL RIGHTS RESERVED.
What are the 5 main types of prospective payments used in today's healthcare market? -
Answer✔1. DRG healthcare provider
2. Per Procedure
3. Case rate - healthcare provider or physician
4. Per diem - healthcare provider
5. Bundled payment - healthcare provider, physicians and post-acute providers
A payment based on the patient's diagnosis is known as a - Answer✔(DRG) Diagnosis Related
Group
What is the most widely used in payments to healthcare providers. - Answer✔(DRG)'s
is a classification of a disease or injury into one of approximately 750 different categories.
The amount paid is a flat rate per discharge and is adjusted based on:
Relative severity of the patient's condition
Resources used to treat the condition as determined by the DRG for that condition -
Answer✔(DRG)
defines the increase or decrease adjustment to the payment. - Answer✔Relative weight
(each DRG is assigned relative weight)
The average level of severity of conditions of patients in a healthcare provider during a specified
period is known as - Answer✔case mix index
A _________ pays a specified fee for each procedure performed on a patient in a healthcare
provider or ambulatory care facility, or by a physician. - Answer✔Health plan
What 2 payment approaches are used in the per-procedure payment plan? - Answer✔(APC)
Ambulatory Payment Classification and Resource Based Relative Value Scale (RBRVS)
What payment approach is similar to the inpatient DRG in that the amount paid is based on the
specific procedure or service provided to the patient? - Answer✔(APC) Ambulatory Payment
Classification
What payment approach is the physician payment per procedure or service, varies based on the
amount of resources (usually time and effort) needed by the physician. - Answer✔Resource
Based Relative Value Scale (RBRVS)
__________ at 100% of the per-procedure fee - Answer✔Primary procedure
_________ at 50% of the normal per-procedure fee - Answer✔Secondary procedure
_________ 25% of the normal per-procedure fee - Answer✔Third and Subsequent procedure
4|Page
