Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
Chapter 1- The Environment of Healthcare Finance
TRUE/FALSE
1. Healthcare is more heavily regulated than most other businesses in the United States.
ANS: T PTS: 1 REF: Introduction
2. Capitated payment plans were common before 1965.
ANS: F PTS: 1 REF: Financing Healthcare in America
3. A recent trend in healthcare is the growth of public corporations that own multiple hospitals and other
healthcare facilities.
ANS: T PTS: 1 REF: Types of Medical Businesses
4. Home healthcare services are in decline because providing services at home is not cost effective.
ANS: F PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
5. Ambulatory care refers to services provided by paramedics or emergency medical technologists while
transporting a patient to a hospital.
ANS: F PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
MULTIPLE CHOICE
1. Which of the following financial management issues differentiates healthcare from other businesses?
a. operating budgets c. third-party payers
b. need for cash flow d. accounting method
ANS: C PTS: 1 REF: Introduction
2. Which type of healthcare reimbursement system pays a fixed amount per patient?
a. Medicaid c. third-party insurance
b. capitation d. healthcare maintenance organization
ANS: B PTS: 1 REF: Introduction
3. Prior to 1930, hospitals in America received most of their funding from ____.
a. charitable donations c. patient payments
b. city governments d. physician organizations
1
, Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
ANS: A PTS: 1 REF: Financing Healthcare in America
4. Which of the following provides hospitalization insurance?
a. Medicare c. Blue Shield
b. Medicaid d. Blue Cross
ANS: D PTS: 1 REF: Financing Healthcare in America
5. What situation resulted in the rapid increase of employer-sponsored healthcare insurance during World
War II?
a. rationing c. socialism
b. wage freezes d. government mandate
ANS: B PTS: 1 REF: Financing Healthcare in America
6. When Medicare and Medicaid were established in 1965, their costs increased much more than
government planners expected. What was changed in 1982 in an attempt to keep costs down?
a. Physicians were given incentives to use fewer resources.
b. Patients were given incentives to improve their health.
c. Hospital budgets were controlled by the federal government.
d. Payments to healthcare providers were based on patients’ diagnoses.
ANS: D PTS: 1 REF: Financing Healthcare in America
7. Which type of healthcare insurance plan uses primary care clinician gatekeepers to coordinate the care
of plan participants?
a. capitation plan c. preferred provider plan
b. health maintenance organization d. fee-for-service plan
ANS: B PTS: 1 REF: Financing Healthcare in America
8. Most proprietorships form professional corporations in order to ____.
a. reduce taxes c. reduce malpractice liabilities
b. raise capital by selling shares d. reduce financial liabilities
ANS: D PTS: 1 REF: Types of Medical Businesses
9. A small, closely held corporation is owned by ____.
a. a parent corporation c. private investors
b. public stockholders d. a proprietorship
ANS: C PTS: 1 REF: Types of Medical Businesses
10. If you own stock in a publicly-held corporation that becomes bankrupt, you will ____.
a. be billed for a portion of legal costs
b. lose only the value of your stocks
c. owe a portion of the corporation’s debt
d. owe a portion of the corporation’s unpaid taxes
ANS: B PTS: 1 REF: Types of Medical Businesses
2
, Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
11. Federal tax revenues are based on a C Corporation’s ____.
a. gross revenues c. dividends
b. net revenues and profits d. profits and dividends
ANS: D PTS: 1 REF: Types of Medical Businesses
12. A not-for-profit hospital must ____.
a. be operated by a religious organization
b. adopt a corporate structure
c. have annual stockholder meetings
d. be staffed by volunteers
ANS: B PTS: 1 REF: Types of Medical Businesses
13. The emergency department of a hospital is ____.
a. an in-patient facility c. a tax-exempt facility
b. an out-patient facility d. a non-classified facility
ANS: B PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
14. The Hospital Survey and Construction Act of 1946 produced ____.
a. an increase in the availability of in-patient hospital services
b. a doubling in the number of not-for-profit hospitals
c. a decrease in hospital charges due to greater competition
d. a five-year increase in life expectancy of Americans
ANS: A PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
15. The Tax Equity and Fiscal Responsibility Act of 1982 resulted in ____.
a. fee-for-service plans for Medicare
b. preferred provider insurance plans
c. a prospective payment system for Medicare
d. for-profit hospital corporations
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
16. Home healthcare services ____.
a. have been decreasing since the 1980s
b. are less cost-effective than hospitals
c. are eligible for Medicaid and Medicare reimbursement
d. must be overseen by a physician
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
17. Nursing home costs for elderly Americans ____.
3
, Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
a. are covered by Medicare
b. are mostly covered by long-term care insurance
c. are decreasing because of improved medications
d. are mostly covered by Medicaid
ANS: D PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
18. The change that had the biggest financial impact on hospitals in the 1980s and 1990s was ____.
a. the unionization of nurses and other caregivers
b. the loss of federal tax-exemptions
c. the reimbursement based on patient diagnoses
d. federal grants for new hospitals and hospital expansions
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
19. Hospice care ____.
a. extends the life of patients
b. requires a dedicated facility
c. is for patients and their families
d. is not reimbursed by insurers or Medicare
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
20. The responsibility for medical services at most hospitals lies with ____.
a. the chief executive officer c. the board of directors
b. the chief of staff d. the board of trustees
ANS: A PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
COMPLETION
1. The legal document required in most states for expanding a hospital is a(n) ____________________.
ANS: Certificate of Need
PTS: 1 REF: Introduction
2. The original Medicare and Medicaid programs reimbursed hospitals using a(n)
____________________ system.
ANS:
cost-based
retrospective
4
Chapter 1
Chapter 1- The Environment of Healthcare Finance
TRUE/FALSE
1. Healthcare is more heavily regulated than most other businesses in the United States.
ANS: T PTS: 1 REF: Introduction
2. Capitated payment plans were common before 1965.
ANS: F PTS: 1 REF: Financing Healthcare in America
3. A recent trend in healthcare is the growth of public corporations that own multiple hospitals and other
healthcare facilities.
ANS: T PTS: 1 REF: Types of Medical Businesses
4. Home healthcare services are in decline because providing services at home is not cost effective.
ANS: F PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
5. Ambulatory care refers to services provided by paramedics or emergency medical technologists while
transporting a patient to a hospital.
ANS: F PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
MULTIPLE CHOICE
1. Which of the following financial management issues differentiates healthcare from other businesses?
a. operating budgets c. third-party payers
b. need for cash flow d. accounting method
ANS: C PTS: 1 REF: Introduction
2. Which type of healthcare reimbursement system pays a fixed amount per patient?
a. Medicaid c. third-party insurance
b. capitation d. healthcare maintenance organization
ANS: B PTS: 1 REF: Introduction
3. Prior to 1930, hospitals in America received most of their funding from ____.
a. charitable donations c. patient payments
b. city governments d. physician organizations
1
, Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
ANS: A PTS: 1 REF: Financing Healthcare in America
4. Which of the following provides hospitalization insurance?
a. Medicare c. Blue Shield
b. Medicaid d. Blue Cross
ANS: D PTS: 1 REF: Financing Healthcare in America
5. What situation resulted in the rapid increase of employer-sponsored healthcare insurance during World
War II?
a. rationing c. socialism
b. wage freezes d. government mandate
ANS: B PTS: 1 REF: Financing Healthcare in America
6. When Medicare and Medicaid were established in 1965, their costs increased much more than
government planners expected. What was changed in 1982 in an attempt to keep costs down?
a. Physicians were given incentives to use fewer resources.
b. Patients were given incentives to improve their health.
c. Hospital budgets were controlled by the federal government.
d. Payments to healthcare providers were based on patients’ diagnoses.
ANS: D PTS: 1 REF: Financing Healthcare in America
7. Which type of healthcare insurance plan uses primary care clinician gatekeepers to coordinate the care
of plan participants?
a. capitation plan c. preferred provider plan
b. health maintenance organization d. fee-for-service plan
ANS: B PTS: 1 REF: Financing Healthcare in America
8. Most proprietorships form professional corporations in order to ____.
a. reduce taxes c. reduce malpractice liabilities
b. raise capital by selling shares d. reduce financial liabilities
ANS: D PTS: 1 REF: Types of Medical Businesses
9. A small, closely held corporation is owned by ____.
a. a parent corporation c. private investors
b. public stockholders d. a proprietorship
ANS: C PTS: 1 REF: Types of Medical Businesses
10. If you own stock in a publicly-held corporation that becomes bankrupt, you will ____.
a. be billed for a portion of legal costs
b. lose only the value of your stocks
c. owe a portion of the corporation’s debt
d. owe a portion of the corporation’s unpaid taxes
ANS: B PTS: 1 REF: Types of Medical Businesses
2
, Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
11. Federal tax revenues are based on a C Corporation’s ____.
a. gross revenues c. dividends
b. net revenues and profits d. profits and dividends
ANS: D PTS: 1 REF: Types of Medical Businesses
12. A not-for-profit hospital must ____.
a. be operated by a religious organization
b. adopt a corporate structure
c. have annual stockholder meetings
d. be staffed by volunteers
ANS: B PTS: 1 REF: Types of Medical Businesses
13. The emergency department of a hospital is ____.
a. an in-patient facility c. a tax-exempt facility
b. an out-patient facility d. a non-classified facility
ANS: B PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
14. The Hospital Survey and Construction Act of 1946 produced ____.
a. an increase in the availability of in-patient hospital services
b. a doubling in the number of not-for-profit hospitals
c. a decrease in hospital charges due to greater competition
d. a five-year increase in life expectancy of Americans
ANS: A PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
15. The Tax Equity and Fiscal Responsibility Act of 1982 resulted in ____.
a. fee-for-service plans for Medicare
b. preferred provider insurance plans
c. a prospective payment system for Medicare
d. for-profit hospital corporations
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
16. Home healthcare services ____.
a. have been decreasing since the 1980s
b. are less cost-effective than hospitals
c. are eligible for Medicaid and Medicare reimbursement
d. must be overseen by a physician
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
17. Nursing home costs for elderly Americans ____.
3
, Test Bank For Introduction to Health Care Finance and Accounting
Chapter 1
a. are covered by Medicare
b. are mostly covered by long-term care insurance
c. are decreasing because of improved medications
d. are mostly covered by Medicaid
ANS: D PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
18. The change that had the biggest financial impact on hospitals in the 1980s and 1990s was ____.
a. the unionization of nurses and other caregivers
b. the loss of federal tax-exemptions
c. the reimbursement based on patient diagnoses
d. federal grants for new hospitals and hospital expansions
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
19. Hospice care ____.
a. extends the life of patients
b. requires a dedicated facility
c. is for patients and their families
d. is not reimbursed by insurers or Medicare
ANS: C PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
20. The responsibility for medical services at most hospitals lies with ____.
a. the chief executive officer c. the board of directors
b. the chief of staff d. the board of trustees
ANS: A PTS: 1
REF: Medical Facilities: The Evolving Process of Healthcare Delivery
COMPLETION
1. The legal document required in most states for expanding a hospital is a(n) ____________________.
ANS: Certificate of Need
PTS: 1 REF: Introduction
2. The original Medicare and Medicaid programs reimbursed hospitals using a(n)
____________________ system.
ANS:
cost-based
retrospective
4
