- (Topic 1)
The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series ofadjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
The basic formula for Caribou's income statement is

1. A. Cash Inflows – Cash Outflows = Net Cash Inflow (Outflow)
2. B. Revenues – Expenses = Net Income (Net Loss)
3. C. Sources of Funds – Uses of Funds = Net Change in Cash
4. D. Assets = Liabilities + Owners' Equity

Correct Answer: B

- (Topic 1)
The Challenger Group is a type of management services organization (MSO) that purchases the assets of physician practices, provides practice management andadministrative support servicesto participating providers, and offers physicians a long- term contract and an equity position in Challenger. This information indicates that Challenger is a type of health plan

1. A. Known as
2. B. An integrated delivery system (IDS)
3. C. Amedical foundation
4. D. Aprovider-sponsored organization (PSO)
5. E. Aphysician practice management (PPM) company

Correct Answer: D

- (Topic 2)
Assume that the Lambda, Mesa, and Novella health plans are equal in every way except that the health plans have obtained equal amounts of net cash inflows from different sources, as shown below:
HealthPlan Source LambdaFinancing activities MesaInvesting activities NovellaOperating activities
From the following answer choices, select the response which indicates the health plan that would most likely be the most attractive to a potential plan sponsor, to a potential creditor, and to a potential investor.

1. A. Potential Plan Sponsor = Lambda Potential Creditor = Mesa Potential Investor = Novella
2. B. Potential Plan Sponsor = Lambda Potential Creditor = Novella Potential Investor = Mesa
3. C. Potential Plan Sponsor = Novella Potential Creditor = Lambda Potential Investor = Mesa
4. D. Potential Plan Sponsor = Novella Potential Creditor = Novella Potential Investor = Novella

Correct Answer: D

- (Topic 2)
Advantages to a company that elects to self-fund and to administer all aspects of its healthcare benefit plan include:

1. A. Eliminating state premium taxes
2. B. Avoiding state-mandated benefit requirements
3. C. Improving its cash flow position
4. D. All of the above

Correct Answer: D

- (Topic 1)
The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
Caribou is engaged in an operating activity when it

1. A. Purchases or sells assets of the health plan
2. B. Disposes of a subsidiary
3. C. Repays funds loaned by its creditors
4. D. Pays expenses associated with the healthcare services provided to its members

Correct Answer: D