CSFS Course 3
Cost Containment and Vendor Selection
Networks, repricing, utilisation and case management, pharmacy, and the practical business of choosing and holding vendors accountable.
140 practice questions · page 2 of 3, questions 51–100 · answers and explanations included · updated September 2026
50 questions on this page 2 of 3, each with the answer and the reasoning behind it. Read straight through, or quiz yourself on them and the ones you miss stay in rotation until you get them right.
- 51
Approximately what percentage of American adults are considered sedentary, and which demographic groups tend to have higher rates of sedentary behavior?
- •10%-15% are sedentary, with rates roughly equal across all demographic groups
- •25%-30% are sedentary, with men having significantly higher rates than women across all ethnicities
- •25%-30% are sedentary, with women and certain minority groups (Hispanic and non-Hispanic Black adults) having higher rates
- •40%-50% are sedentary, with men and non-Hispanic White adults having the highest rates
Show answer
25%-30% are sedentary, with women and certain minority groups (Hispanic and non-Hispanic Black adults) having higher rates
The course states that approximately 25%-30% of American adults are sedentary, and women and certain minority groups, especially Hispanic and non-Hispanic Black adults, tend to have higher rates of sedentary behavior compared to men and other ethnicities.
- 52
In a behavior modification program, how is obesity classified for purposes of determining the appropriate intervention pathway?
- •A nurse-administered questionnaire classifies obesity into three tiers: mild, moderate, and severe for escalating interventions
- •The disease management company classifies obesity as either medically related (subject to management) or not medically related, with each pathway receiving different treatment
- •The EAP classifies all obesity as a behavioral issue requiring counseling regardless of medical causation
- •The employer's HR department determines whether obesity qualifies for plan benefits based on BMI thresholds alone
Show answer
The disease management company classifies obesity as either medically related (subject to management) or not medically related, with each pathway receiving different treatment
The course specifies that the disease management company classifies obesity into (a) medically related subject to management or (b) not medically related. This distinction determines the intervention pathway, unlike other targeted behaviors that have simpler identification methods.
- 53
Which of the following correctly lists all the targeted behaviors in a typical behavior modification program?
- •Substance misuse (drug and alcohol only), tobacco use, and sedentary lifestyle
- •Substance misuse (drug, alcohol, tobacco, unhealthy eating/obesity) and sedentary lifestyle
- •Substance misuse, sedentary lifestyle, stress-related disorders, and chronic disease non-compliance
- •Tobacco use, dietary problems, sedentary lifestyle, and workplace safety violations
Show answer
Substance misuse (drug, alcohol, tobacco, unhealthy eating/obesity) and sedentary lifestyle
The course identifies two main targeted behavior categories: (1) substance misuse, which includes drug misuse (legal and illegal), alcohol misuse, tobacco (all forms), and unhealthy eating and obesity; and (2) sedentary lifestyle.
- 54
A behavior modification program identifies illegal drug use through random drug testing, but how does the program approach identification of legal drug misuse versus alcohol misuse?
- •Both are identified through nurse-administered questionnaires and employee self-referral to the EAP
- •Both legal drug and alcohol misuse are identified through random drug testing and self-referral programs
- •Legal drug misuse is identified through a nurse-administered questionnaire, while alcohol misuse is identified through prior healthcare claims and notations in personnel files
- •Legal drug misuse is identified through pharmacy claims data, while alcohol misuse requires a physician diagnosis
Show answer
Legal drug misuse is identified through a nurse-administered questionnaire, while alcohol misuse is identified through prior healthcare claims and notations in personnel files
The course specifies distinct identification methods: legal drugs are identified via a nurse-administered questionnaire, while alcohol is identified from prior healthcare claims and notations in the personnel file. This reflects the different evidence trails each type of misuse leaves.
- 55
What is the role of the Employee Assistance Program (EAP) in the behavior modification component of a cost-containment program?
- •Each covered person with a behavior needing modification is offered assistance from either the EAP (where available) or a similar counseling organization, and the program should be a plan benefit
- •The EAP identifies targeted behaviors through mandatory screenings and then refers members to external disease management companies for treatment
- •The EAP replaces all other behavior modification programs and is the sole required intervention for all plan participants
- •The EAP serves exclusively as the identification mechanism and does not provide any counseling or modification services
Show answer
Each covered person with a behavior needing modification is offered assistance from either the EAP (where available) or a similar counseling organization, and the program should be a plan benefit
The course states that each covered person with a behavior needing modification will be offered assistance from either an EAP (where available) or a similar type of counseling organization, and that the behavior modification program should be a plan benefit.
- 56
A self-funded employer is evaluating whether to invest in a voluntary weight management program. The plan actuary asks for evidence that the program would reduce claims costs. Based on the course material, which argument best justifies the investment from a cost-containment perspective?
- •Obesity is classified as a disability under ADA, requiring the employer to fund treatment programs as a reasonable accommodation
- •Obesity-related conditions including coronary heart disease, gallstones, osteoarthritis, hypertension, and diabetes are preventable through weight management, and approximately 70% of healthcare dollars are directly attributable to human behaviors
- •Weight management programs are mandated by the ACA for all large group plans, so the employer has no choice but to implement one regardless of ROI
- •Weight management programs qualify for tax credits under ERISA Section 502, offsetting the full cost of implementation within the first plan year
Show answer
Obesity-related conditions including coronary heart disease, gallstones, osteoarthritis, hypertension, and diabetes are preventable through weight management, and approximately 70% of healthcare dollars are directly attributable to human behaviors
The course establishes that voluntary weight management prevents excess coronary heart disease, gallstones, osteoarthritis, hypertension, and diabetes, and notes that up to 70% of healthcare dollars are attributable to human behaviors — making behavioral programs a strong cost-containment investment.
- 57
What is the expected cost increase when a plan participant is diagnosed with a chronic condition, and approximately what proportion of participants typically have at least one chronic condition?
- •Costs double uniformly across all demographics, with approximately half of participants having at least one chronic condition
- •Costs increase between 100% and 500%, with approximately 20% of participants diagnosed with at least one chronic condition
- •Costs increase between 50% and 150%, with approximately one-quarter of participants diagnosed with at least one chronic condition
- •Costs increase between 80% and 300% depending on age, sex, and condition profile, with approximately one-third of participants diagnosed with at least one chronic condition
Show answer
Costs increase between 80% and 300% depending on age, sex, and condition profile, with approximately one-third of participants diagnosed with at least one chronic condition
The course states that approximately one-third of plan participants are typically diagnosed with at least one chronic condition, and a diagnosis leads to an expected cost increase ranging between 80% and 300%, depending on age, sex, and the profile of the chronic condition.
- 58
Disease management programs typically begin by reviewing a database to identify patients with chronic diseases. Which patient attitude does the course identify as needing modification through protocol development?
- •The assumption that disease management programs will eliminate the need for any personal health responsibility
- •The belief that medical treatment has no limits and that they have a right to any care without regard to its real value or cost
- •The belief that preventive care is unnecessary because chronic diseases are always treatable after onset
- •The expectation that all providers should use the most advanced and expensive technology available
Show answer
The belief that medical treatment has no limits and that they have a right to any care without regard to its real value or cost
The course identifies several patient attitudes needing modification, including the beliefs that medical treatment has no limits, that they have a right to any care without regard to its real value or cost, that they can use the healthcare system to replace other social support mechanisms, and that they can rely on the system for comfort and convenience unrelated to medical needs.
- 59
Which provider attitudes does the course identify as creating a need for disease management protocols?
- •Desire to minimize patient contact time, preference for generic treatments, resistance to new technology, and focus on cost reduction
- •Fear of malpractice lawsuits, preference for surgical over conservative treatment, resistance to peer review, and desire for higher reimbursement
- •Ready availability of advanced risk-free technology, desire to satisfy patient expectations, fear of malpractice lawsuits, and desire to practice leading-edge medicine
- •Ready availability of advanced technology, resistance to evidence-based guidelines, preference for specialist referrals, and desire to minimize documentation
Show answer
Ready availability of advanced risk-free technology, desire to satisfy patient expectations, fear of malpractice lawsuits, and desire to practice leading-edge medicine
The course identifies four specific provider attitudes: the ready availability of advanced technology that is virtually risk free, the desire to satisfy patient expectations, the fear of medical malpractice lawsuits, and the professional desire to practice leading-edge medicine.
- 60
Population health management helps modify patient and provider attitudes by performing several functions. Which of the following is NOT one of those functions?
- •Helping clinicians determine the most appropriate diagnostic and therapeutic interventions for a given case
- •Permitting measurement of clinical performance and outcomes by supplying best-practices benchmarks
- •Screening proposed clinical interventions for medical appropriateness
- •Setting mandatory cost thresholds that providers must not exceed for any given treatment
Show answer
Setting mandatory cost thresholds that providers must not exceed for any given treatment
The course lists population health management functions including screening for medical appropriateness, providing rationale for care decisions, interpreting clinical data, helping clinicians determine appropriate interventions, measuring performance with benchmarks, and providing reference notes. Setting mandatory cost thresholds is not listed.
- 61
A medical management vendor proposes a disease management program to a self-funded employer. The vendor claims the program will target the conditions responsible for the greatest cost differential between chronically ill and healthy populations. If costs for chronic participants are at least twice those of the healthy population, which program design factor most determines whether the intervention will produce meaningful savings?
- •Whether the employer increases deductibles specifically for chronic condition-related claims to discourage overutilization
- •Whether the program includes clear medical protocols, effective communication among treating providers, and a database review process to identify patients who are poorly managing their chronic conditions
- •Whether the program mandates participation for all employees diagnosed with any chronic condition, regardless of severity or treatment compliance
- •Whether the program restricts participants to in-network providers only, eliminating out-of-network claims for chronic conditions entirely
Show answer
Whether the program includes clear medical protocols, effective communication among treating providers, and a database review process to identify patients who are poorly managing their chronic conditions
Disease management programs succeed through clear medical protocols, communication among providers, and database reviews to identify poorly managed patients. The course notes chronic conditions increase costs 80-300%, making the quality of the intervention design — not just targeting the right conditions — the key to meaningful savings.
- 62
A self-funded employer is drafting plan language to cover virtual care services. The benefits attorney advises distinguishing between clinical remote services and broader digital health support. Under HRSA's framework referenced in the course, which services fall within the broader category but outside the narrower clinical definition?
- •Patient and professional health-related education, public health initiatives, and health administration — these fall under telehealth but not telemedicine, which is limited to clinical applications
- •Pharmacy benefit management and claims processing — these digital services are the primary distinction between the two categories
- •Remote patient monitoring and virtual appointments — these are administrative functions excluded from both telehealth and telemedicine definitions
- •Store-and-forward imaging and streaming consultations — these are classified as telemedicine but explicitly excluded from telehealth under HRSA guidelines
Show answer
Patient and professional health-related education, public health initiatives, and health administration — these fall under telehealth but not telemedicine, which is limited to clinical applications
Telemedicine covers clinical technology applications, while telehealth is broader — encompassing long-distance clinical care plus health education, public health, and health administration. Plan language should account for this distinction when defining covered virtual services.
- 63
According to HRSA's definition referenced in the course, telehealth encompasses which of the following?
- •Electronic health records management, insurance claims processing, and provider credentialing through digital platforms
- •Long-distance clinical healthcare, patient and professional health-related education, public health, and health administration using electronic information and telecommunications technologies
- •Only direct clinical patient care delivered via real-time video consultations between patients and physicians
- •Remote monitoring of chronic conditions and virtual pharmacy services, excluding health education and administration
Show answer
Long-distance clinical healthcare, patient and professional health-related education, public health, and health administration using electronic information and telecommunications technologies
The HRSA definition cited in the course defines telehealth as the use of electronic information and telecommunications technologies to support and promote long-distance clinical healthcare, patient and professional health-related education, public health, and health administration.
- 64
A self-funded employer wants to integrate telehealth tools into its disease management program for diabetic employees. The population health vendor recommends devices that collect and transmit data to care coordinators. Which combination of telehealth capabilities would create the most effective closed-loop monitoring system for this population?
- •Blood glucose monitors transmitting readings to care coordinators, automated reminders for medication adherence, and activity trackers monitoring exercise patterns — all feeding into the disease management database
- •Real-time video monitoring of all meals, GPS tracking of pharmacy visits, and wearable devices that automatically adjust medication dosages
- •Surgical robots for remote diabetic foot procedures, electronic prescription pads for insulin orders, and MRI machines for vascular imaging
- •Virtual pharmacy dispensing systems, remote lab testing equipment, and automated insulin pump calibration devices
Show answer
Blood glucose monitors transmitting readings to care coordinators, automated reminders for medication adherence, and activity trackers monitoring exercise patterns — all feeding into the disease management database
The course identifies blood glucose monitors, activity trackers, automated reminders, and biometric monitors as telehealth devices that collect and transmit health information to manage chronic conditions. Integrating these into a disease management program creates a closed-loop system for monitoring diabetic populations.
- 65
The nurse/doctor advice hotline does not practice medicine. How does the service manage legal liability while still helping callers make healthcare decisions?
- •It limits all interactions to general wellness information and refuses to address any specific symptoms or medical concerns
- •It provides formal diagnoses only through licensed physicians and requires callers to sign liability waivers before receiving advice
- •It records all calls and obtains verbal consent from the caller's primary care physician before providing any guidance
- •It takes callers through a series of questions and then the caller makes decisions; if there is any doubt, the service recommends a higher level of evaluation
Show answer
It takes callers through a series of questions and then the caller makes decisions; if there is any doubt, the service recommends a higher level of evaluation
The course explains that the advice hotline does not practice medicine by taking the caller through a series of questions, after which the caller makes decisions. If there is any doubt, the service recommends a higher level of evaluation. It reduces costs not by restricting coverage but by helping manage how the patient selects care.
- 66
A nurse on a 24/7 advice hotline receives a call from a plan participant describing moderate but worsening abdominal pain with no fever or vomiting. The algorithm places this between the third and fourth levels of the urgency ladder. What does this mean for the recommended action, and how does the hotline reduce costs without restricting coverage?
- •The caller should be transferred to a physician for a telemedicine diagnosis; the hotline reduces costs by replacing in-person visits with virtual consultations
- •The caller should proceed directly to the emergency room; the hotline reduces costs by pre-authorizing the visit and negotiating a discounted rate with the facility
- •The caller should speak to their doctor as soon as possible or see them at the nearest opportunity; the hotline reduces costs not by restricting coverage but by helping patients select the most appropriate level of care
- •The caller should wait 24 hours and try home remedies; the hotline reduces costs by deferring non-emergency care to avoid after-hours provider charges
Show answer
The caller should speak to their doctor as soon as possible or see them at the nearest opportunity; the hotline reduces costs not by restricting coverage but by helping patients select the most appropriate level of care
The urgency ladder runs from 911 (highest) through ER, speak to doctor ASAP, see doctor when convenient, and watch/wait (lowest). The hotline's cost-containment value comes not from restricting coverage but from helping patients select the right level of care — avoiding unnecessary ER visits while ensuring appropriate urgency.
- 67
What legal risk does anyone acting as a practitioner on an advice hotline face, and what documentation requirement applies?
- •They are exempt from malpractice liability under telemedicine safe harbor provisions, but must document the caller's insurance information
- •They face liability only if the caller follows the advice and suffers harm, and documentation is required only for calls lasting more than 15 minutes
- •They face limited liability as long as they follow approved protocols, and only calls resulting in emergency referrals must be documented
- •They face the same liability as physicians, and the advice line computer systems require the on-call person to document everything that happens during the call
Show answer
They face the same liability as physicians, and the advice line computer systems require the on-call person to document everything that happens during the call
The course states that statutes do not prohibit diagnosing and suggesting solutions, but anyone acting as a practitioner faces the same liability as physicians. Additionally, advice line computer systems require the person on-call to document everything that happens during the call.
- 68
How do advice protocols work in a nurse/doctor advice hotline?
- •A physician reviews each call in real time and provides scripted responses for the nurse to read verbatim to the caller
- •Nurses follow a predetermined algorithm for common ailments; as participants describe symptoms, the computer sets the pace telling the coordinator what to ask and guides advice with printouts comparing recommendations against norms
- •Nurses refer all callers to their primary care physician and provide only general wellness information from a standardized script
- •Nurses use their clinical judgment to create individualized care plans, which are then reviewed by a supervising physician before being communicated to the caller
Show answer
Nurses follow a predetermined algorithm for common ailments; as participants describe symptoms, the computer sets the pace telling the coordinator what to ask and guides advice with printouts comparing recommendations against norms
The course describes advice protocols as predetermined lines of inquiry (algorithms) for nearly all common ailments. As participants describe symptoms, nurses click computer buttons to pull up the algorithm, and the computer guides what to ask, offering new questions depending on answers.
- 69
Which of the following correctly lists all six goals of treatment triage?
- •Identify medical services needed, determine appropriate level of care, determine expected amount of care, arrange appropriate care at best cost, ensure fit between patient and treatment, and motivate the patient to follow through
- •Identify medical services needed, determine appropriate level of care, determine expected amount of care, assign a case manager, ensure provider network compliance, and motivate the patient to follow through
- •Identify medical services needed, determine appropriate level of care, verify insurance coverage, arrange appropriate care at best cost, ensure fit between patient and treatment, and document the treatment plan
- •Screen for medical appropriateness, determine appropriate level of care, determine expected amount of care, obtain pre-authorization, ensure fit between patient and treatment, and motivate the patient to follow through
Show answer
Identify medical services needed, determine appropriate level of care, determine expected amount of care, arrange appropriate care at best cost, ensure fit between patient and treatment, and motivate the patient to follow through
The course lists six specific goals of treatment triage: (1) identify the medical services needed, (2) determine appropriate level of care, (3) determine expected amount of care, (4) arrange appropriate care at the best cost, (5) ensure there is a fit between the patient and the treatment, (6) motivate the patient to follow through.
- 70
In the advice hotline model, what role does the assigned nurse serve for each family?
- •The nurse manages only disease management cases and refers all other concerns to the general hotline queue
- •The nurse provides annual wellness assessments and preventive care recommendations but does not handle claims or care coordination
- •The nurse serves as a checkpoint and guide for all benefit, claim, and care management concerns, with immediate access to the family's records, coordinating care including UR, case management, home health, and disability management
- •The nurse serves only as a triage specialist who routes calls to the appropriate physician specialist based on symptoms
Show answer
The nurse serves as a checkpoint and guide for all benefit, claim, and care management concerns, with immediate access to the family's records, coordinating care including UR, case management, home health, and disability management
The course describes one nurse assigned to each family who serves as a checkpoint and guide for all benefit, claim, and care management concerns, has immediate access to the family's records, and coordinates care including utilization review, case management, home healthcare, and disability management.
- 71
What is evidence-based medicine (EBM) and how is it used in cost containment?
- •EBM is a provider credentialing standard that requires physicians to publish their treatment outcomes before participating in managed care networks
- •EBM is a regulatory framework established by the AMA that mandates specific treatment protocols for all chronic diseases covered by employer-sponsored plans
- •EBM is a system where insurance companies determine treatment protocols based solely on cost-effectiveness studies, replacing physician clinical judgment
- •EBM is the conscientious, explicit, judicious use of modern, best peer-reviewed evidence in making care decisions, integrating clinical experience and patient values with available research, and is used by medical professionals to evaluate the medical necessity of provider treatment plans
Show answer
EBM is the conscientious, explicit, judicious use of modern, best peer-reviewed evidence in making care decisions, integrating clinical experience and patient values with available research, and is used by medical professionals to evaluate the medical necessity of provider treatment plans
The course defines EBM as the conscientious, explicit, judicious, and reasonable use of modern, best peer-reviewed evidence in making decisions about individual patient care. It integrates clinical experience and patient values with available research and is utilized by medical professionals to evaluate medical necessity of treatment plans.
- 72
According to the course, good medical criteria should always incorporate EBM standards. What three elements does EBM integrate?
- •Clinical experience, patient values, and the best available research information
- •Clinical trials, insurance reimbursement rates, and patient satisfaction surveys
- •Physician recommendations, hospital protocols, and pharmaceutical guidelines
- •Provider credentials, treatment cost data, and regulatory compliance requirements
Show answer
Clinical experience, patient values, and the best available research information
The course states that EBM integrates clinical experience and patient values with the best available research information, with the aim of increasing the use of high-quality research in clinical decision-making.
- 73
Why is it important that good medical criteria be based on sound guidelines which incorporate EBM standards, particularly in the context of cost containment?
- •Because EBM eliminates the need for utilization review entirely by establishing standardized treatment protocols that all providers must follow
- •Because EBM ensures that utilization review and medical necessity determinations are grounded in peer-reviewed evidence rather than arbitrary cost-cutting, increasing the defensibility and quality of care decisions
- •Because EBM shifts all medical decision-making authority from individual physicians to centralized review boards
- •Because federal law requires all employer-sponsored health plans to certify that their medical criteria meet EBM standards or face penalties
Show answer
Because EBM ensures that utilization review and medical necessity determinations are grounded in peer-reviewed evidence rather than arbitrary cost-cutting, increasing the defensibility and quality of care decisions
The course notes that EBM is utilized by medical professionals to evaluate the medical necessity of provider treatment plans, and that good medical criteria should always be based on sound guidelines incorporating EBM standards. This grounds cost-containment decisions in evidence rather than arbitrary measures.
- 74
Alternative medicine benefits under healthcare plans consist of four components. Which of the following correctly identifies all four?
- •A network of alternative medicine providers, a benefit plan covering alternative medicine services, a mail-order service for vitamins/remedies/products, and an information service to help participants understand alternative strategies
- •A network of providers, pre-authorization requirements for all alternative treatments, a formulary of approved alternative remedies, and a patient education program
- •A provider directory, coverage limited to chiropractic and acupuncture only, discount programs for supplements, and an annual alternative medicine wellness check
- •A referral system from primary care physicians, a separate alternative medicine deductible, a mail-order pharmacy service, and outcomes tracking for alternative treatments
Show answer
A network of alternative medicine providers, a benefit plan covering alternative medicine services, a mail-order service for vitamins/remedies/products, and an information service to help participants understand alternative strategies
The course identifies four components of alternative medicine benefits: a network of alternative medicine providers, a benefit plan covering alternative medicine services (purchasable as a supplement to regular coverage), a mail-order service for vitamins/remedies/products, and an information service to help participants understand alternative strategies.
- 75
What is the key distinction between large claims management and case management?
- •Large claims management applies only to claims above a specific dollar threshold, while case management applies to all chronic disease cases regardless of cost
- •Large claims management focuses on cost negotiation with providers, while case management focuses exclusively on clinical treatment decisions
- •Large claims management is always outsourced to a specialty vendor, while case management is always performed in-house by the TPA
- •Large claims management is conducted when the member is not in, or refuses to participate with, case management; case management indicates that the member has agreed to participate in the program
Show answer
Large claims management is conducted when the member is not in, or refuses to participate with, case management; case management indicates that the member has agreed to participate in the program
The course clearly distinguishes the two: large claims management is conducted when the member is not in, or refuses to participate with, case management. Case management indicates that the member has agreed to participate in the case management program.
- 76
An employer wants to address large unforeseen claims arising from covered persons engaged in dangerous hobbies like hang-gliding. What approach does the course describe?
- •Plan amendments denying benefits for such activities are commonly found in plan language
- •Stop-loss carriers typically exclude dangerous hobby claims through a separate rider, relieving the employer of any plan design changes
- •The employer can charge higher premiums to members who engage in dangerous hobbies but cannot exclude coverage entirely
- •The employer must provide EAP counseling to discourage dangerous hobbies but cannot deny benefits under ERISA regulations
Show answer
Plan amendments denying benefits for such activities are commonly found in plan language
The course states that large unforeseeable claims can arise when a covered person is engaged in dangerous hobbies, and plan amendments denying benefits for such activities are commonly found in plan language.
- 77
Which of the following is NOT listed in the course as a potential healthcare plan amendment aimed at improving member outcomes and lowering costs?
- •Covering wellness and preventive care
- •Encouraging a living will
- •Recognizing nurse practitioners and physician assistants as providers
- •Requiring all plan participants to use only in-network providers with no out-of-network exceptions
Show answer
Requiring all plan participants to use only in-network providers with no out-of-network exceptions
The course lists several plan amendments including no duplication of coverage, encouragement of living wills, paying for alternative care, recognizing NPs/PAs as providers, covering wellness/preventive care, covering disease-specific training, stating medical review firms in the document, and carving out certain conditions. Requiring only in-network providers is not listed.
- 78
The basis of medical review (such as outside opinions on whether a procedure is experimental) should be handled how, according to the course?
- •Medical review criteria should be established solely by the stop-loss carrier and incorporated by reference into the plan
- •Medical review should be conducted ad hoc by the employer's legal counsel on a case-by-case basis without pre-established criteria
- •The basis should be predetermined and made part of the plan document, with employer choices for review firms including the TPA, the medical management company, or stated explicitly in the plan document
- •The review process should be left entirely to the discretion of the treating physician, with the plan document silent on the matter
Show answer
The basis should be predetermined and made part of the plan document, with employer choices for review firms including the TPA, the medical management company, or stated explicitly in the plan document
The course states that the basis of medical review should be predetermined and made part of the plan document. Employer choices for the review firm include: provided by TPA, provided by the medical management company, or stated explicitly in the plan document.
- 79
Why is it difficult to accurately measure the cost-effectiveness of employer-sponsored healthcare programs?
- •Because cost-effectiveness can only be measured through randomized clinical trials, which employers cannot ethically conduct
- •Because federal regulations prohibit employers from collecting the health data necessary for accurate measurement
- •Because insurance carriers refuse to share claims data with employers, making any measurement purely speculative
- •Because plans may have been in place only a few years with unique populations, it is difficult to determine the monetary basis for measurement, there is usually no test group for comparison, and extraneous factors can invalidate results
Show answer
Because plans may have been in place only a few years with unique populations, it is difficult to determine the monetary basis for measurement, there is usually no test group for comparison, and extraneous factors can invalidate results
The course identifies four reasons measurement is difficult: plans may have been in place only a few years with unique populations, it is difficult to determine the monetary basis, there is usually no test group for comparison (unlike medical testing), and extraneous factors can enter the study and invalidate results.
- 80
When measuring program cost-effectiveness, which of the following figures should employers be able to compile according to the course?
- •Average pay for days lost, cost of treatment if the condition is not prevented, disability benefit costs, medical care costs, and costs of absenteeism and turnover for medical reasons
- •Employee satisfaction scores, provider network utilization rates, claims processing turnaround times, and annual premium increases
- •Return on investment percentages, disease incidence rates, comparative market benchmarks, and actuarial projections
- •Total premiums paid, stop-loss reimbursements received, network discount savings, pharmacy rebates, and administrative fees
Show answer
Average pay for days lost, cost of treatment if the condition is not prevented, disability benefit costs, medical care costs, and costs of absenteeism and turnover for medical reasons
The course specifies that employers should compile figures showing average pay for days lost, cost of treatment of the condition if not prevented, disability benefit costs, medical care costs, and costs of absenteeism and turnover for medical reasons.
- 81
When evaluating the effectiveness of healthcare cost-containment programs, why does the course acknowledge that many benefits are difficult or impossible to measure?
- •Because benefits such as feeling better and improved worker productivity cannot easily be quantified in dollar terms, yet the course states programs should still be measured in dollars where possible, recognizing that some will take years to properly measure
- •Because cost-containment vendors refuse to share proprietary outcome data, preventing employers from performing independent evaluations
- •Because HIPAA regulations prevent employers from tracking individual health outcomes, making it illegal to measure most program benefits
- •Because the only valid measurement methodology is a randomized controlled trial, which is impractical in an employer setting
Show answer
Because benefits such as feeling better and improved worker productivity cannot easily be quantified in dollar terms, yet the course states programs should still be measured in dollars where possible, recognizing that some will take years to properly measure
The course notes that many benefits are difficult or impossible to measure (e.g., feeling better, improved productivity), but states that cost-effectiveness should still be measured in dollars where possible, with the understanding that some programs will take years to properly measure.
- 82
Which of the following is NOT listed in the course as an additional factor typically considered when evaluating program effectiveness?
- •The cost of provider network contract renegotiations
- •The value of a life saved and disability avoided
- •The value of attitude change for productivity
- •The value of full productivity
Show answer
The cost of provider network contract renegotiations
The course lists additional factors including the value of full productivity, number of days and medical benefits saved, value of a life saved and disability avoided, value of attitude change for productivity, cost of high-dollar conditions, and medical costs of various types of cancer or catastrophic illness. Provider network renegotiation costs are not mentioned.
- 83
How many ways can cost-containment programs discriminate according to the course, and which categories are identified?
- •Five ways: race, gender, age, disability, and national origin
- •Seven ways: gender, disability, age, health status, religion-based discrimination, marital status, and national origin or citizenship status
- •Seven ways: race, gender, age, disability, sexual orientation, religion, and national origin
- •Six ways: gender, disability, age, health status, marital status, and genetic information
Show answer
Seven ways: gender, disability, age, health status, religion-based discrimination, marital status, and national origin or citizenship status
The course identifies seven specific ways cost-containment programs may discriminate: gender, disability, age, health status, religion-based discrimination, marital status, and national origin or citizenship status. Care should be taken that all members are treated uniformly.
- 84
Under the ADA, an employer denies a job to a qualified disabled person because accommodating that person would require a lower desktop for a wheelchair. Is this permissible?
- •No, because a lower desktop is considered a reasonable accommodation, and the ADA specifically prohibits denying a job to a qualified disabled person because that individual needs reasonable accommodation to perform the job
- •No, but only if the employer has more than 50 employees; smaller employers are exempt from workplace modification requirements
- •Yes, because the employer has the right to determine workplace furniture standards and is not required to modify physical workspace for any applicant
- •Yes, if the employer can demonstrate that the cost of the desktop modification exceeds 5% of the position's annual salary
Show answer
No, because a lower desktop is considered a reasonable accommodation, and the ADA specifically prohibits denying a job to a qualified disabled person because that individual needs reasonable accommodation to perform the job
The course states that the ADA specifically prohibits employers from denying a job to a qualified disabled person because that individual needs reasonable accommodation. A lower desktop to accommodate a wheelchair is cited as an example of reasonable accommodation.
- 85
Which of the following is specifically prohibited by the ADA as described in the course?
- •Asking an employee about the nature of a disability after a conditional job offer has been extended
- •Declining to hire an applicant who cannot perform the essential functions of a job even with reasonable accommodation
- •Denying job opportunities to an applicant because he or she is related to a disabled person for reasons of absenteeism or plan coverage requirements
- •Requiring a pre-employment physical examination that is administered equally to all applicants for the same position
Show answer
Denying job opportunities to an applicant because he or she is related to a disabled person for reasons of absenteeism or plan coverage requirements
The course lists several ADA prohibitions, including denying job opportunities to an applicant because he or she is related to a disabled person for reasons of absenteeism or plan coverage requirements. This extends protection beyond the disabled person themselves.
- 86
What are the protected ages under the Age Discrimination in Employment Act (ADEA) of 1967, as amended?
- •Ages 40 and above, though some state statutes have no age limit at all
- •Ages 40 to 70, with mandatory retirement permitted at age 70 under federal law
- •Ages 50 and above, with state statutes extending protection to ages 45 and above
- •Ages 55 and above, specifically targeting those approaching normal retirement age
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Ages 40 and above, though some state statutes have no age limit at all
The course states that the protected ages under ADEA as amended are ages 40 and above. It also notes that many states have enacted age discrimination statutes similar to the federal statute, and some state statutes have no age limit at all.
- 87
Under health status non-discrimination rules, which of the following would be considered impermissible discrimination?
- •Adopting a plan amendment that applies uniformly to all covered persons in a group and takes effect on the first day of the next plan year
- •Charging a covered person a higher premium because of their claims experience or medical history, even if the plan applies different rates to different groups
- •Classifying participants based on full-time versus part-time status for purposes of determining benefits eligibility
- •Imposing different benefit levels for participants in different geographic locations or collective bargaining units
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Charging a covered person a higher premium because of their claims experience or medical history, even if the plan applies different rates to different groups
The course states the plan will not use health factors (health status, medical condition, claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, or disability) to deny benefits or charge higher premiums. Classifications based on employment status, geography, or bargaining unit membership are permissible.
- 88
A plan denies enrollment eligibility to a covered person who was confined to a hospital when the coverage became available. Is this permissible under health status non-discrimination rules?
- •No, the plan may not deny eligibility to enroll because a covered person was confined to a hospital when the coverage became available
- •No, unless the plan provides an alternative enrollment period within 60 days of the person's hospital discharge
- •Yes, because hospital confinement indicates a pre-existing condition that can be subject to a waiting period
- •Yes, but only if the plan applies the same hospital confinement exclusion uniformly to all covered persons
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No, the plan may not deny eligibility to enroll because a covered person was confined to a hospital when the coverage became available
The course explicitly states that the plan will not deny the eligibility of any covered person to enroll for benefits or charge a higher premium because such covered person was confined to a hospital when the coverage became available.
- 89
What does the course state about defensive medicine in the context of occupational medicine and malpractice?
- •Defensive medicine is a legitimate cost-containment strategy where physicians order only the minimum tests necessary to avoid unnecessary spending
- •Defensive medicine is prohibited under managed care programs because it conflicts with utilization review standards for medical necessity
- •Defensive medicine occurs when a physician orders tests and treatments that might be useful should a malpractice suit be brought, and it adds substantially to overall healthcare costs
- •Defensive medicine refers to the practice of requiring second opinions before any surgical procedure, which reduces both costs and liability
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Defensive medicine occurs when a physician orders tests and treatments that might be useful should a malpractice suit be brought, and it adds substantially to overall healthcare costs
The course defines defensive medicine as occurring when a physician orders tests, treatments, etc., that might be useful should a malpractice suit be brought. This practice adds substantially to the country's overall healthcare costs.
- 90
The Sherman Antitrust Act has been described by the Supreme Court as a comprehensive charter of economic liberty. Which healthcare-related exemption does the course identify regarding groups of citizens seeking to influence government policy?
- •An exemption is made for all healthcare coalitions regardless of their purpose, as healthcare is considered a public good exempt from antitrust scrutiny
- •An exemption is made for physician groups that collectively negotiate reimbursement rates, provided they do not exceed a market share threshold
- •An exemption is made only for nonprofit healthcare organizations that can demonstrate their activities reduce overall healthcare costs
- •An exemption is made where groups of citizens, even competitors, seek to influence government policy, with this exemption having its basis in the right of free speech
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An exemption is made where groups of citizens, even competitors, seek to influence government policy, with this exemption having its basis in the right of free speech
The course identifies three antitrust exemptions for healthcare activities, including one where groups of citizens, even competitors, seek to influence government policy. This exemption has its basis in the right of free speech.
- 91
Which theories of employer liability does the course identify as potential bases for managed care liability claims against employers?
- •Corporate negligence, agency theory, breach of contract, tortious interference, fraud, defamation, and COBRA violations
- •ERISA liability, corporate negligence, utilization review liability, agency theory, financial incentive problems, breach of contract, and ERISA preemption
- •ERISA liability, corporate negligence, utilization review liability, breach of warranty, respondeat superior, and intentional infliction of emotional distress
- •ERISA liability, product liability, strict liability, negligence per se, vicarious liability, and breach of fiduciary duty
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ERISA liability, corporate negligence, utilization review liability, agency theory, financial incentive problems, breach of contract, and ERISA preemption
The course lists seven specific theories of employer liability: ERISA liability, corporate negligence, utilization review liability, agency theory, financial incentive problems, breach of contract, and ERISA preemption.
- 92
Under the ERISA liability theory, what are the imprudent acts that could expose an employer as a fiduciary?
- •Failure to file Form 5500, failure to provide SPDs within 90 days, failure to offer COBRA, and failure to bond fiduciaries
- •Inadequate provider credentialing, failure to accredit the plan, not adopting outcomes management, and using a leased network
- •Poor selection of managed care providers, poor plan design, poor communication, and poor document drafting
- •Selecting the lowest-cost vendor, failing to obtain stop-loss coverage, refusing to offer a PPO option, and not conducting annual plan audits
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Poor selection of managed care providers, poor plan design, poor communication, and poor document drafting
The course states that under ERISA liability, any unfortunate managed care issue can be argued to have resulted from the imprudence of the employer as a fiduciary. The four imprudent acts listed are poor selection of managed care providers, poor plan design, poor communication, and poor document drafting.
- 93
Under agency theory, what two types of agency relationships must be considered in the context of employer liability for managed care?
- •One where the employee is the agent of the employer when seeking care, and another where the provider is the agent of the insurance company
- •One where the employer directly employs the healthcare provider, and another where the employer contracts with an independent physician group
- •One where the principal is responsible for acts of an agent done in the course of the principal's work, and another where no formal relationship exists but the appearance of agency exists and is therefore imputed
- •One where the TPA acts as agent for the employer, and another where the stop-loss carrier acts as agent for the plan participants
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One where the principal is responsible for acts of an agent done in the course of the principal's work, and another where no formal relationship exists but the appearance of agency exists and is therefore imputed
The course identifies two agency relationships: (1) the principal is responsible for acts of an agent when done in the course of the principal's work, and (2) no formal principal-agent relationship exists, but when the appearance of agency exists, the agent is therefore imputed.
- 94
What are the five primary state regulatory considerations for PPOs?
- •Certificate of authority, benefit mandates, provider contracting rules, grievance procedures, and financial reporting
- •Licensing, antitrust compliance, ERISA preemption, utilization review standards, and quality assurance requirements
- •Licensing, willing provider issue, HMO-type issues, health planning laws and regulations, and miscellaneous considerations
- •Provider credentialing, network adequacy, premium rate filing, solvency requirements, and consumer complaint resolution
Show answer
Licensing, willing provider issue, HMO-type issues, health planning laws and regulations, and miscellaneous considerations
The course lists five primary state regulatory considerations for PPOs: (1) licensing, (2) willing provider issue, (3) HMO-type issues, (4) health planning laws and regulations, and (5) miscellaneous. Additionally, ERISA considerations are noted as all-important.
- 95
In utilization review, when the UR firm cannot certify the medical necessity of a proposed treatment but the physician believes the care is emergent, what is the physician's legal obligation and exposure?
- •The physician can refuse to provide care until the UR firm reverses its decision, as the UR firm bears sole responsibility for any adverse outcome
- •The physician is legally obligated to give the care even though the financial burden is on the patient; acquiescing to the UR firm's pressure may subject the physician to malpractice liability
- •The physician may defer to the UR firm's determination and is shielded from liability because the UR firm assumes responsibility for the denial
- •The physician must obtain a second opinion from another physician before proceeding, and liability shifts to the UR firm if the second physician concurs
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The physician is legally obligated to give the care even though the financial burden is on the patient; acquiescing to the UR firm's pressure may subject the physician to malpractice liability
The course states that where the UR firm cannot certify medical necessity but the physician believes care is emergent, the physician is legally obligated to give the care even though the financial burden falls on the patient. Acquiescing to the UR firm's pressure may subject the physician to legal liability for malpractice.
- 96
A self-funded employer is evaluating whether to use a single-stop vendor or multiple specialty vendors. Which of the following is a recognized disadvantage of the single-stop vendor approach?
- •Competitive pricing is harder to achieve because there is no vendor diversity
- •Coordinating multiple vendors increases administrative complexity
- •Integration challenges arise from incompatible data-sharing systems among vendors
- •The vendor may lack specialized expertise in certain areas compared to dedicated specialty firms
Show answer
The vendor may lack specialized expertise in certain areas compared to dedicated specialty firms
A key disadvantage of single-stop vendors is that they may not have the same depth of specialized expertise in areas like pharmacy benefit management or wellness programs as vendors that focus solely on those services.
- 97
An employer using multiple specialty vendors for its self-funded plan discovers that two vendors are providing conflicting guidance on claim adjudication procedures. According to the course material, this situation best illustrates which recognized disadvantage of the multi-vendor approach?
- •Multi-vendor arrangements always cost more than single-stop vendor arrangements
- •Potential conflicts when vendors do not effectively collaborate or have conflicting approaches can challenge consistency across plan components
- •The employer becomes heavily reliant on a single vendor for multiple services
- •The integrated systems prevent seamless data sharing between vendors
Show answer
Potential conflicts when vendors do not effectively collaborate or have conflicting approaches can challenge consistency across plan components
A recognized disadvantage of multi-stop vendors is that if vendors do not effectively collaborate or have conflicting approaches, there may be challenges in achieving consistency and alignment across various components of the health plan.
- 98
What is the key distinction between a minimal involvement agent/broker and a maximum involvement agent/broker in the context of a self-funded plan?
- •A minimal involvement broker charges a flat fee, while a maximum involvement broker charges only a percentage of plan savings
- •A minimal involvement broker handles only medical benefits, while a maximum involvement broker also handles dental and vision benefits
- •A minimal involvement broker primarily facilitates transactions and paperwork, while a maximum involvement broker provides comprehensive services including needs assessments, plan comparisons, claims advocacy, ongoing support, and education on industry trends
- •A minimal involvement broker works exclusively with fully insured plans, while a maximum involvement broker works exclusively with self-funded plans
Show answer
A minimal involvement broker primarily facilitates transactions and paperwork, while a maximum involvement broker provides comprehensive services including needs assessments, plan comparisons, claims advocacy, ongoing support, and education on industry trends
Minimal involvement brokers provide basic information, facilitate transactions, and complete paperwork. Maximum involvement brokers take a proactive approach with comprehensive needs assessments, detailed plan comparisons, claims and billing advocacy, ongoing support, and education on industry trends.
- 99
When conducting due diligence on a potential vendor for a self-funded plan, which factor addresses the vendor's ability to handle growth and integrate with the employer's existing infrastructure?
- •Financial stability and viability
- •Innovation and technology commitment
- •Reputation and track record
- •Scalability and flexibility
Show answer
Scalability and flexibility
Scalability and flexibility specifically assess the vendor's ability to scale its services, accommodate growth, handle increased volumes, and integrate with the employer's existing systems — all critical for adapting to the organization's changing needs.
- 100
Why is TPA-arranged stop-loss generally preferred over independently arranged stop-loss for a self-funded plan?
- •Independent stop-loss carriers charge significantly higher premiums than TPA-affiliated carriers in all cases
- •Only TPA-arranged stop-loss qualifies for ERISA preemption protection
- •Stop-loss is an extension of the claims-processing function, and the TPA's knowledge as a claims processor is vital to proper setting of stop-loss terms and premiums
- •TPAs are legally required to bundle stop-loss coverage with their claims processing contracts
Show answer
Stop-loss is an extension of the claims-processing function, and the TPA's knowledge as a claims processor is vital to proper setting of stop-loss terms and premiums
TPA-arranged stop-loss is preferred because stop-loss is an extension of the claims-processing function and the TPA's knowledge as a claims processor is vital to the proper and fair setting of stop-loss terms and premiums.
CSFS is the Certified Self-Funding Specialist designation. These are my own practice questions, written while studying for the exam. This site is not affiliated with, endorsed by, or connected to the organisation that administers the CSFS designation, and nothing here is official exam content or a substitute for the course material.
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