MHA 708 EXAM B: Healthcare Policy Practice Exam Louisiana
State University Shreveport (LSUS) - Master of Health
Administration (MHA) Questions with Correct Answers and
Explanations in Italics - 148 Questions
Section 1: U.S. Healthcare System Structure and Governance (Questions 1-15)
1 A state Medicaid director is considering a waiver to expand coverage to adults with incomes up to 138% of the
federal poverty level, but the state legislature opposes expansion. Under the current U.S. federalist structure,
which of the following is the most accurate description of the legal and policy constraint facing the director?
A) The director can unilaterally implement expansion using state funds, as Medicaid is a state-administered
program.
B) The director cannot expand without legislative approval because the state must match federal funds and the
legislature controls appropriations.
C) The federal government can mandate expansion under the Commerce Clause, overriding state legislative
opposition.
D) The director may implement expansion only if the state governor issues an executive order, bypassing the
legislature.
Answer: B
Rationale: Medicaid is a joint federal-state program; states are not required to expand, but if they do, they must
comply with federal rules and provide state matching funds. State legislatures control appropriations, so the
director cannot proceed without legislative approval. Option A is wrong because state funds require legislative
appropriation. Option C is incorrect since the Supreme Court ruled in NFIB v. Sebelius that the federal government
cannot threaten loss of existing Medicaid funding to compel expansion. Option D is false because executive orders
cannot appropriate funds.
2 A large nonprofit health system is restructuring its board of trustees to improve community accountability.
Which governance model would most directly align board composition with the IRS requirements for
tax-exempt hospitals under the Affordable Care Act?
A) A board composed entirely of physicians and hospital executives to ensure clinical expertise.
B) A board with a majority of independent members who have no financial ties to the health system, plus a
community health needs assessment committee.
C) A board that includes elected local government officials to represent the public interest.
D) A board that rotates membership annually among major donors to ensure fundraising alignment.
Answer: B
Rationale: Under ACA Section 501(r), tax-exempt hospitals must conduct community health needs assessments and
adopt implementation strategies. The IRS requires that the board have a majority of independent members to avoid
conflicts of interest. Option A fails independence requirements. Option C is not required by IRS rules. Option D
violates independence and conflicts of interest principles.
3 In the context of U.S. healthcare governance, which of the following best describes the primary function of the
Centers for Medicare & Medicaid Services (CMS) in relation to private insurance markets?
A) CMS directly regulates all private insurance premiums and benefit designs through the Health Insurance
Portability and Accountability Act.
,B) CMS sets minimum standards for private insurance plans sold on the federally facilitated marketplace and
oversees rate review, but does not directly set premiums.
C) CMS has no authority over private insurance; its role is limited to administering Medicare and Medicaid.
D) CMS preempts state insurance regulation for all plans offered by employers with more than 50 employees.
Answer: B
Rationale: CMS oversees the federally facilitated marketplace (HealthCare.gov), sets standards for qualified health
plans, and reviews insurer rate increases for reasonableness under the Affordable Care Act. However, it does not
directly set premiums. Option A is incorrect because HIPAA primarily addresses portability and privacy, not rate
regulation. Option C is false because CMS also regulates private plans through the marketplace. Option D is
incorrect because the Employee Retirement Income Security Act (ERISA) preempts state regulation for
self-insured employer plans, but CMS does not preempt state regulation for fully insured plans.
4 A hospital system is considering converting from a nonprofit to a for-profit entity. Which of the following
governance-related consequences is most likely to occur?
A) The board of directors will be replaced by a single owner or shareholders, eliminating community
representation.
B) The hospital will lose eligibility for tax-exempt bond financing and may face increased scrutiny from state
attorneys general regarding the use of charitable assets.
C) The hospital will no longer be required to provide emergency care under the Emergency Medical Treatment
and Active Labor Act (EMTALA).
D) The hospital will be required to distribute profits to shareholders, which will reduce funds available for
uncompensated care.
Answer: B
Rationale: Conversion from nonprofit to for-profit often involves the sale of assets, and state attorneys general
review the transaction to ensure charitable assets are used for public benefit. Nonprofits benefit from tax-exempt
bond financing, which for-profits cannot access. Option A is incorrect because for-profit hospitals can have boards
and may have community representation. Option C is false; EMTALA applies to all hospitals with emergency
departments regardless of tax status. Option D is plausible but not a governance consequence; profit distribution is
a financial, not governance, issue.
5 Which of the following best explains why the United States relies on a mixed public-private system for health
insurance rather than a single-payer system?
A) Constitutional constraints prevent the federal government from establishing a single-payer system because
healthcare is not enumerated as a federal power.
B) Historical path dependence, political opposition from private insurers and employers, and ideological
preference for market-based solutions have sustained a multi-payer system.
C) The U.S. Supreme Court ruled in NFIB v. Sebelius that a single-payer system would violate the Tenth
Amendment.
D) The American public has consistently rejected single-payer in referenda, making it politically infeasible.
Answer: B
Rationale: The U.S. system evolved through employer-sponsored insurance after WWII wage controls, and private
insurance companies became entrenched. Political opposition from stakeholders and ideological commitment to
market competition have blocked single-payer proposals. Option A is incorrect; Congress has power under the
Commerce Clause and taxing power to enact a single-payer system. Option C is false; NFIB v. Sebelius dealt with
the individual mandate, not single-payer. Option D is inaccurate because there have been no national referenda on
single-payer.
,6 A state is considering creating a public option health insurance plan to compete with private insurers on its
marketplace. Which governance and regulatory challenge is most critical for the state to address?
A) Ensuring the public option is exempt from state insurance solvency requirements to reduce costs.
B) Negotiating provider reimbursement rates low enough to undercut private plans while maintaining provider
participation.
C) Obtaining a waiver from the Employee Retirement Income Security Act (ERISA) to regulate self-insured
employer plans.
D) Securing federal approval to use Medicaid funds to subsidize the public option.
Answer: B
Rationale: A public option's success depends on its ability to offer lower premiums while attracting a broad provider
network. If rates are too low, providers may refuse to participate, limiting access. Option A is incorrect; exempting
the public option from solvency requirements would create financial risk. Option C is false; states cannot waive
ERISA for self-insured plans. Option D is not necessarily required; a public option can be funded through
premiums and state subsidies without Medicaid funds.
7 In the governance of academic medical centers (AMCs), which of the following conflicts of interest is most
commonly addressed through structural separation?
A) Physicians referring patients to their own private practices.
B) The tension between clinical revenue generation and the educational mission.
C) Pharmaceutical companies providing gifts to prescribing physicians.
D) Researchers holding equity in companies that sponsor their clinical trials.
Answer: B
Rationale: AMCs often create separate legal entities or distinct financial accounting for clinical operations versus
education and research to prevent cross-subsidization and ensure that clinical revenue pressures do not compromise
educational quality. Option A is addressed by Stark Law and anti-kickback statutes, not structural separation.
Option C is addressed by institutional policies and Sunshine Act reporting. Option D is managed through conflict
of interest committees and disclosure.
8 A county health department is designing a governance structure for a new community health center funded by
federal grants. Which of the following models would best ensure accountability to both federal requirements
and local community needs?
A) A governing board appointed solely by the county board of supervisors.
B) A governing board with a majority of members who are users of the health center's services, as required by
federal grant conditions.
C) A governing board composed of local physicians and hospital administrators to ensure professional oversight.
D) A governing board elected by the general public in a countywide election.
Answer: B
Rationale: Federal Health Center Program requirements (Section 330 of the Public Health Service Act) mandate that
at least 51% of the board be users of the health center. This ensures community input and accountability. Option A
may not meet federal requirements. Option C lacks consumer representation. Option D is impractical and not
required; federal rules specify user majority, not general election.
9 Which of the following best describes the role of the states in regulating private health insurance under the
McCarran-Ferguson Act?
A) States have primary authority to regulate insurance, and federal laws are generally construed to not preempt
state insurance regulation unless the federal law specifically relates to insurance.
, B) The federal government has exclusive authority over health insurance regulation, and states can only regulate
in areas where the federal government has explicitly delegated authority.
C) States may regulate insurance only if they adopt model laws developed by the National Association of
Insurance Commissioners (NAIC).
D) The McCarran-Ferguson Act exempts health insurance from all federal antitrust laws, leaving enforcement
solely to states.
Answer: A
Rationale: The McCarran-Ferguson Act (1945) reserves insurance regulation to the states and provides that federal
laws will not preempt state insurance laws unless the federal law specifically relates to the business of insurance.
However, the Act does not grant states exclusive authority; federal laws that specifically regulate insurance (e.g.,
HIPAA, ACA) can preempt state law. Option B is incorrect because states have primary, not delegated, authority.
Option C is false; NAIC models are not mandatory. Option D is incorrect; the Act provides limited antitrust
exemption, but not for all activities (e.g., boycotts, coercion, intimidation are not exempt).
10 A health system is evaluating whether to integrate a physician practice through employment rather than an
independent practice association (IPA). From a governance perspective, which of the following is the most
significant advantage of the employment model?
A) Physicians retain full clinical autonomy and decision-making authority.
B) The health system can directly control physician schedules, productivity targets, and clinical protocols.
C) The health system avoids liability for physician malpractice under the corporate practice of medicine doctrine.
D) Physicians are eligible for federal loan repayment programs available only to employed providers.
Answer: B
Rationale: Employment gives the health system hierarchical authority over physicians, enabling alignment of
incentives, standardization of care, and operational efficiency. Option A is incorrect; employed physicians typically
have less autonomy than independent ones. Option C is false; health systems can be vicariously liable for employed
physicians. Option D is not a governance advantage; it is a financial incentive that may also apply to some
independent contractors.
11 A state legislature is considering a bill to establish a single-payer healthcare system. Which of the following is
the most significant constitutional and structural barrier to implementing such a system at the state level under
current U.S. law?
A) The Employee Retirement Income Security Act (ERISA) preempts state laws that relate to employee benefit
plans, including self-insured employer health plans, limiting the state's ability to mandate coverage or funding
mechanisms.
B) The Commerce Clause prohibits states from regulating health insurance that is sold across state lines, as it is
exclusively a federal matter.
C) The Anti-Kickback Statute prevents states from negotiating drug prices directly with manufacturers, making
cost containment impossible.
D) The Medicaid program requires states to maintain a fee-for-service model, prohibiting the use of capitated
payments under a single-payer system.
Answer: A
Rationale: ERISA preempts state laws that 'relate to' employee benefit plans, which has been interpreted broadly to
include state health reform efforts that impose requirements on employer-sponsored plans. This preemption is a
major barrier for state single-payer initiatives because self-insured plans cover a large portion of the population and
cannot be directly regulated by states. The Commerce Clause generally allows states to regulate insurance under
the McCarran-Ferguson Act, so B is incorrect. The Anti-Kickback Statute does not directly prevent state drug price
negotiation (C is false). Medicaid allows capitated payments through managed care, so D is incorrect.
State University Shreveport (LSUS) - Master of Health
Administration (MHA) Questions with Correct Answers and
Explanations in Italics - 148 Questions
Section 1: U.S. Healthcare System Structure and Governance (Questions 1-15)
1 A state Medicaid director is considering a waiver to expand coverage to adults with incomes up to 138% of the
federal poverty level, but the state legislature opposes expansion. Under the current U.S. federalist structure,
which of the following is the most accurate description of the legal and policy constraint facing the director?
A) The director can unilaterally implement expansion using state funds, as Medicaid is a state-administered
program.
B) The director cannot expand without legislative approval because the state must match federal funds and the
legislature controls appropriations.
C) The federal government can mandate expansion under the Commerce Clause, overriding state legislative
opposition.
D) The director may implement expansion only if the state governor issues an executive order, bypassing the
legislature.
Answer: B
Rationale: Medicaid is a joint federal-state program; states are not required to expand, but if they do, they must
comply with federal rules and provide state matching funds. State legislatures control appropriations, so the
director cannot proceed without legislative approval. Option A is wrong because state funds require legislative
appropriation. Option C is incorrect since the Supreme Court ruled in NFIB v. Sebelius that the federal government
cannot threaten loss of existing Medicaid funding to compel expansion. Option D is false because executive orders
cannot appropriate funds.
2 A large nonprofit health system is restructuring its board of trustees to improve community accountability.
Which governance model would most directly align board composition with the IRS requirements for
tax-exempt hospitals under the Affordable Care Act?
A) A board composed entirely of physicians and hospital executives to ensure clinical expertise.
B) A board with a majority of independent members who have no financial ties to the health system, plus a
community health needs assessment committee.
C) A board that includes elected local government officials to represent the public interest.
D) A board that rotates membership annually among major donors to ensure fundraising alignment.
Answer: B
Rationale: Under ACA Section 501(r), tax-exempt hospitals must conduct community health needs assessments and
adopt implementation strategies. The IRS requires that the board have a majority of independent members to avoid
conflicts of interest. Option A fails independence requirements. Option C is not required by IRS rules. Option D
violates independence and conflicts of interest principles.
3 In the context of U.S. healthcare governance, which of the following best describes the primary function of the
Centers for Medicare & Medicaid Services (CMS) in relation to private insurance markets?
A) CMS directly regulates all private insurance premiums and benefit designs through the Health Insurance
Portability and Accountability Act.
,B) CMS sets minimum standards for private insurance plans sold on the federally facilitated marketplace and
oversees rate review, but does not directly set premiums.
C) CMS has no authority over private insurance; its role is limited to administering Medicare and Medicaid.
D) CMS preempts state insurance regulation for all plans offered by employers with more than 50 employees.
Answer: B
Rationale: CMS oversees the federally facilitated marketplace (HealthCare.gov), sets standards for qualified health
plans, and reviews insurer rate increases for reasonableness under the Affordable Care Act. However, it does not
directly set premiums. Option A is incorrect because HIPAA primarily addresses portability and privacy, not rate
regulation. Option C is false because CMS also regulates private plans through the marketplace. Option D is
incorrect because the Employee Retirement Income Security Act (ERISA) preempts state regulation for
self-insured employer plans, but CMS does not preempt state regulation for fully insured plans.
4 A hospital system is considering converting from a nonprofit to a for-profit entity. Which of the following
governance-related consequences is most likely to occur?
A) The board of directors will be replaced by a single owner or shareholders, eliminating community
representation.
B) The hospital will lose eligibility for tax-exempt bond financing and may face increased scrutiny from state
attorneys general regarding the use of charitable assets.
C) The hospital will no longer be required to provide emergency care under the Emergency Medical Treatment
and Active Labor Act (EMTALA).
D) The hospital will be required to distribute profits to shareholders, which will reduce funds available for
uncompensated care.
Answer: B
Rationale: Conversion from nonprofit to for-profit often involves the sale of assets, and state attorneys general
review the transaction to ensure charitable assets are used for public benefit. Nonprofits benefit from tax-exempt
bond financing, which for-profits cannot access. Option A is incorrect because for-profit hospitals can have boards
and may have community representation. Option C is false; EMTALA applies to all hospitals with emergency
departments regardless of tax status. Option D is plausible but not a governance consequence; profit distribution is
a financial, not governance, issue.
5 Which of the following best explains why the United States relies on a mixed public-private system for health
insurance rather than a single-payer system?
A) Constitutional constraints prevent the federal government from establishing a single-payer system because
healthcare is not enumerated as a federal power.
B) Historical path dependence, political opposition from private insurers and employers, and ideological
preference for market-based solutions have sustained a multi-payer system.
C) The U.S. Supreme Court ruled in NFIB v. Sebelius that a single-payer system would violate the Tenth
Amendment.
D) The American public has consistently rejected single-payer in referenda, making it politically infeasible.
Answer: B
Rationale: The U.S. system evolved through employer-sponsored insurance after WWII wage controls, and private
insurance companies became entrenched. Political opposition from stakeholders and ideological commitment to
market competition have blocked single-payer proposals. Option A is incorrect; Congress has power under the
Commerce Clause and taxing power to enact a single-payer system. Option C is false; NFIB v. Sebelius dealt with
the individual mandate, not single-payer. Option D is inaccurate because there have been no national referenda on
single-payer.
,6 A state is considering creating a public option health insurance plan to compete with private insurers on its
marketplace. Which governance and regulatory challenge is most critical for the state to address?
A) Ensuring the public option is exempt from state insurance solvency requirements to reduce costs.
B) Negotiating provider reimbursement rates low enough to undercut private plans while maintaining provider
participation.
C) Obtaining a waiver from the Employee Retirement Income Security Act (ERISA) to regulate self-insured
employer plans.
D) Securing federal approval to use Medicaid funds to subsidize the public option.
Answer: B
Rationale: A public option's success depends on its ability to offer lower premiums while attracting a broad provider
network. If rates are too low, providers may refuse to participate, limiting access. Option A is incorrect; exempting
the public option from solvency requirements would create financial risk. Option C is false; states cannot waive
ERISA for self-insured plans. Option D is not necessarily required; a public option can be funded through
premiums and state subsidies without Medicaid funds.
7 In the governance of academic medical centers (AMCs), which of the following conflicts of interest is most
commonly addressed through structural separation?
A) Physicians referring patients to their own private practices.
B) The tension between clinical revenue generation and the educational mission.
C) Pharmaceutical companies providing gifts to prescribing physicians.
D) Researchers holding equity in companies that sponsor their clinical trials.
Answer: B
Rationale: AMCs often create separate legal entities or distinct financial accounting for clinical operations versus
education and research to prevent cross-subsidization and ensure that clinical revenue pressures do not compromise
educational quality. Option A is addressed by Stark Law and anti-kickback statutes, not structural separation.
Option C is addressed by institutional policies and Sunshine Act reporting. Option D is managed through conflict
of interest committees and disclosure.
8 A county health department is designing a governance structure for a new community health center funded by
federal grants. Which of the following models would best ensure accountability to both federal requirements
and local community needs?
A) A governing board appointed solely by the county board of supervisors.
B) A governing board with a majority of members who are users of the health center's services, as required by
federal grant conditions.
C) A governing board composed of local physicians and hospital administrators to ensure professional oversight.
D) A governing board elected by the general public in a countywide election.
Answer: B
Rationale: Federal Health Center Program requirements (Section 330 of the Public Health Service Act) mandate that
at least 51% of the board be users of the health center. This ensures community input and accountability. Option A
may not meet federal requirements. Option C lacks consumer representation. Option D is impractical and not
required; federal rules specify user majority, not general election.
9 Which of the following best describes the role of the states in regulating private health insurance under the
McCarran-Ferguson Act?
A) States have primary authority to regulate insurance, and federal laws are generally construed to not preempt
state insurance regulation unless the federal law specifically relates to insurance.
, B) The federal government has exclusive authority over health insurance regulation, and states can only regulate
in areas where the federal government has explicitly delegated authority.
C) States may regulate insurance only if they adopt model laws developed by the National Association of
Insurance Commissioners (NAIC).
D) The McCarran-Ferguson Act exempts health insurance from all federal antitrust laws, leaving enforcement
solely to states.
Answer: A
Rationale: The McCarran-Ferguson Act (1945) reserves insurance regulation to the states and provides that federal
laws will not preempt state insurance laws unless the federal law specifically relates to the business of insurance.
However, the Act does not grant states exclusive authority; federal laws that specifically regulate insurance (e.g.,
HIPAA, ACA) can preempt state law. Option B is incorrect because states have primary, not delegated, authority.
Option C is false; NAIC models are not mandatory. Option D is incorrect; the Act provides limited antitrust
exemption, but not for all activities (e.g., boycotts, coercion, intimidation are not exempt).
10 A health system is evaluating whether to integrate a physician practice through employment rather than an
independent practice association (IPA). From a governance perspective, which of the following is the most
significant advantage of the employment model?
A) Physicians retain full clinical autonomy and decision-making authority.
B) The health system can directly control physician schedules, productivity targets, and clinical protocols.
C) The health system avoids liability for physician malpractice under the corporate practice of medicine doctrine.
D) Physicians are eligible for federal loan repayment programs available only to employed providers.
Answer: B
Rationale: Employment gives the health system hierarchical authority over physicians, enabling alignment of
incentives, standardization of care, and operational efficiency. Option A is incorrect; employed physicians typically
have less autonomy than independent ones. Option C is false; health systems can be vicariously liable for employed
physicians. Option D is not a governance advantage; it is a financial incentive that may also apply to some
independent contractors.
11 A state legislature is considering a bill to establish a single-payer healthcare system. Which of the following is
the most significant constitutional and structural barrier to implementing such a system at the state level under
current U.S. law?
A) The Employee Retirement Income Security Act (ERISA) preempts state laws that relate to employee benefit
plans, including self-insured employer health plans, limiting the state's ability to mandate coverage or funding
mechanisms.
B) The Commerce Clause prohibits states from regulating health insurance that is sold across state lines, as it is
exclusively a federal matter.
C) The Anti-Kickback Statute prevents states from negotiating drug prices directly with manufacturers, making
cost containment impossible.
D) The Medicaid program requires states to maintain a fee-for-service model, prohibiting the use of capitated
payments under a single-payer system.
Answer: A
Rationale: ERISA preempts state laws that 'relate to' employee benefit plans, which has been interpreted broadly to
include state health reform efforts that impose requirements on employer-sponsored plans. This preemption is a
major barrier for state single-payer initiatives because self-insured plans cover a large portion of the population and
cannot be directly regulated by states. The Commerce Clause generally allows states to regulate insurance under
the McCarran-Ferguson Act, so B is incorrect. The Anti-Kickback Statute does not directly prevent state drug price
negotiation (C is false). Medicaid allows capitated payments through managed care, so D is incorrect.
