C428 Financial Resource Management in Healthcare
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Free C428 Financial Resource Management in Healthcare Questions
1. Which of the following statements regarding collecting a debt from a patient's estate is true?
- Never contact the family regarding a debt immediately after a patient's death.
- The family members should not be contacted until at least 1 week after the funeral.
- The final bill should be sent to the executor of the estate.
- If your bill is not in the list of debts of the estate, it will not be paid.
- All of the above
Explanation
When collecting a debt from a deceased patient’s estate, it is important to follow respectful and legally appropriate procedures. This includes not contacting the family immediately after the death, allowing a short period after the funeral, and directing the final bill to the executor of the estate. Additionally, only debts listed in the estate will be considered for payment. These practices ensure compliance with legal standards and maintain professional conduct.
2. Under what circumstances can a creditor initiate involuntary bankruptcy proceedings against a debtor?
- If the debtor has at least 15 creditors, with two having claims over $10,000 each.
- If the debtor has 12 or more creditors, with three creditors having claims exceeding $5,000 each.
- If the debtor has fewer than 10 creditors and one creditor is owed at least $8,000.
- If the debtor has 20 or more creditors, regardless of the claim amounts.
Explanation
A creditor can initiate involuntary bankruptcy proceedings when the debtor meets certain conditions outlined in U.S. bankruptcy law. Specifically, if the debtor has 12 or more creditors, at least three creditors must hold claims exceeding $5,000 each for involuntary proceedings to be filed. This ensures that involuntary bankruptcy is used appropriately and prevents abuse by creditors attempting to force bankruptcy without sufficient justification.
3. Which of the following is false regarding Chapter 12 of the bankruptcy code?
- A family farmer under Chapter 12 must have regular annual income.
- The family farmer's gross income must be at least 50 percent farm-dependent.
- At least 50 percent of the family farmer's debt must be farm-related.
- The debt must be under a certain debt cap.
- Congress modeled Chapter 12 after Chapter 7 relief.
Explanation
Chapter 12 bankruptcy was specifically designed for family farmers and fishermen with regular annual income to reorganize their debts. It was modeled after Chapter 13, not Chapter 7, to allow for repayment plans rather than liquidation. The other statements regarding income dependence, farm-related debt, and debt caps accurately reflect the eligibility requirements for Chapter 12.
4. Which of the following best describes the primary advantage of using an accelerated method of depreciation in healthcare financial management?
- It provides a consistent expense amount each year.
- It allows for larger depreciation deductions in the early years, enhancing cash flow.
- It simplifies the accounting process by using a single rate.
- It ensures that all assets are depreciated equally over their useful life.
Explanation
The accelerated method of depreciation allows a healthcare organization to record larger depreciation expenses in the early years of an asset’s useful life. This approach enhances cash flow by reducing taxable income sooner, which can be beneficial for organizations that need funds to reinvest in operations or new equipment. It reflects the reality that many assets lose value more quickly in the initial years of use, aligning accounting treatment with asset utilization.
5. Accounts payable are obligations to __ of merchandise or of services purchased on open account
- Suppliers
- Customers
- Employees
Explanation
Accounts payable represent amounts a business owes to its suppliers for goods or services purchased on credit. These are considered current liabilities on the balance sheet because they are expected to be paid within a short period, typically 30 to 90 days. Proper management of accounts payable is crucial for maintaining good supplier relationships, ensuring uninterrupted operations, and managing cash flow effectively.
6. Which of the following best describes the accrual basis of accounting?
- Revenues are recognized only when cash is received, and expenses are recognized only when cash is paid.
- Revenues are recorded when earned, and expenses are recorded when incurred, regardless of cash transactions.
- Revenues and expenses are recorded at the end of the fiscal year, regardless of when they occur.
- Revenues are recorded based on estimates, and expenses are recorded when invoices are received.
Explanation
The accrual basis of accounting recognizes revenues when they are earned and expenses when they are incurred, regardless of when cash is received or paid. This method provides a more accurate picture of an organization’s financial position and performance by matching income with the expenses incurred to generate that income. It is widely used in healthcare financial management because it reflects the true operational results over a given period.
7. What is the False Claims Act?
- An act enforcing privacy and security of those patients for which you bill the federal government.
- An act mandating certificates for all labs performing moderate complexity tests.
- An act requiring a healthcare entity to file claims electronically to the government.
- An act that prohibits any person from knowingly presenting a false claim to the government.
Explanation
The False Claims Act is a federal law that prohibits any individual or entity from knowingly submitting false or fraudulent claims to the government for payment. In healthcare, this includes billing for services not rendered, overcharging for services, or misrepresenting procedures to obtain reimbursement. The act is designed to protect government funds from fraud and provides for significant penalties, including fines and potential imprisonment, for violations.
8. A budget is a tool used by an administrator to:
- predict occupancy rates each year
- assess fixed expenses
- manage revenue and expenses
- determine whether credit is needed.
Explanation
A budget is a financial planning tool that allows healthcare administrators to manage and control both revenues and expenses. By projecting expected income and anticipated costs over a specific period, administrators can make informed decisions about resource allocation, cost control, and financial strategy. Effective budgeting helps ensure that the organization operates within its means while achieving operational and strategic goals.
9. Which of the following statements accurately describes the eligibility criteria for filing a Chapter 12 bankruptcy petition?
- Only corporate farmers with substantial debts can file for Chapter 12 bankruptcy.
- Any individual with a regular income can file for Chapter 12 bankruptcy regardless of their occupation.
- Only family farmers with regular annual income are eligible to file a petition for relief under Chapter 12.
- Chapter 12 bankruptcy is mandatory for all farmers facing financial difficulties.
Explanation
Chapter 12 bankruptcy is specifically designed for family farmers or family fishing operations who have a regular annual income. It provides them with a legal mechanism to reorganize and manage debts while continuing operations. Eligibility is limited to these groups and is not open to all individuals or corporate entities. This targeted approach helps address the unique financial challenges faced by family-owned agricultural enterprises.
10. Which best describes a case mix?
- a number of people grouped together for insurance purposes
- reimbursement for outpatient care based on similar clinical characteristics and resources required
- a prospective payment system that reimburses hospitals for inpatient stays based on related diagnoses
- the types and categories of patients treated by a health care facility or provider
Explanation
A case mix refers to the types and categories of patients treated by a healthcare facility or provider. It reflects the variety of diagnoses, procedures, and resource needs of the patient population. Understanding the case mix is important for financial management, resource allocation, and reimbursement, as it helps healthcare organizations assess complexity, predict costs, and compare performance across facilities or services.
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