MHA 706 MIDTERM EXAM QUESTIONS
WITH 100% CORRECT ANSWERS L
LATEST VERSION 2025/2026.
Proprietorships & Partnerships: Pros & Cons - ANS Pros: Ease of Information, Subject to a few
regulations, no corporation income taxes.
Cons: Limited life, difficult to transfer, unlimited life, difficult to raise capital.
Corporations: Pros & Cons - ANS Pros: Unlimited life, easy transfer of ownership, limited
liability, ease of raising capital.
Cons: Cost of formation and reporting, double or triple taxes must be paid.
Non-profit Organization - ANS Exempt from taxes. Goal is to improve community.
For-profit Organizations - ANS (Investor Owned) Goal is to maximize shareholder return. Owe
taxes.
Agency Problem - ANS the possibility of conflict of interest between the stockholders and
management of a firm.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Example: Hire someone to carry out a job function, but they go out of their interests instead of
best interests of company/organization.
Third-party payor system in the US (i.e. private vs public) - ANS Private: Blue Cross Blue
Shield, Commercial Insurers, Self-Insurers. (AETNA)
Public: Medicare and Medicaid-both offer services to different levels. "Safety net" Lowest
reimbursement rates.
Reimbursement methods (fee-for-service vs. capitation) - ANS Fee for Service: payment is
tied to amount of services provided. (Decades ago) *Dental industry*
Capitation: payment is tied to the size of the covered population (number of enrollees) Payment
is based on per # per month. *Decreasing utilization* Population is healthier.
Medicare reimbursement for different types of providers - ANS Medicare parts A, B & C.
Medicare Part A (aka Hospital Insurance or HI) - ANS Provides hospital insurance
automatically at age 65 (if FICA qualified) at no fee but may have deductible & co-pay.
Medicare Part B - ANS The part of the Medicare program that pays for physician services,
outpatient hospital services, durable medical equipment, and other services and supplies.
Medicare Part C (Medicare Advantage) - ANS •Replaces and covers expenses found in Part A
and B
•Medicare private fee-for-service plans (PFFS)
•Medicare managed care plans (HMOs and PPOs)
•Medicare specialty plans
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
WITH 100% CORRECT ANSWERS L
LATEST VERSION 2025/2026.
Proprietorships & Partnerships: Pros & Cons - ANS Pros: Ease of Information, Subject to a few
regulations, no corporation income taxes.
Cons: Limited life, difficult to transfer, unlimited life, difficult to raise capital.
Corporations: Pros & Cons - ANS Pros: Unlimited life, easy transfer of ownership, limited
liability, ease of raising capital.
Cons: Cost of formation and reporting, double or triple taxes must be paid.
Non-profit Organization - ANS Exempt from taxes. Goal is to improve community.
For-profit Organizations - ANS (Investor Owned) Goal is to maximize shareholder return. Owe
taxes.
Agency Problem - ANS the possibility of conflict of interest between the stockholders and
management of a firm.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Example: Hire someone to carry out a job function, but they go out of their interests instead of
best interests of company/organization.
Third-party payor system in the US (i.e. private vs public) - ANS Private: Blue Cross Blue
Shield, Commercial Insurers, Self-Insurers. (AETNA)
Public: Medicare and Medicaid-both offer services to different levels. "Safety net" Lowest
reimbursement rates.
Reimbursement methods (fee-for-service vs. capitation) - ANS Fee for Service: payment is
tied to amount of services provided. (Decades ago) *Dental industry*
Capitation: payment is tied to the size of the covered population (number of enrollees) Payment
is based on per # per month. *Decreasing utilization* Population is healthier.
Medicare reimbursement for different types of providers - ANS Medicare parts A, B & C.
Medicare Part A (aka Hospital Insurance or HI) - ANS Provides hospital insurance
automatically at age 65 (if FICA qualified) at no fee but may have deductible & co-pay.
Medicare Part B - ANS The part of the Medicare program that pays for physician services,
outpatient hospital services, durable medical equipment, and other services and supplies.
Medicare Part C (Medicare Advantage) - ANS •Replaces and covers expenses found in Part A
and B
•Medicare private fee-for-service plans (PFFS)
•Medicare managed care plans (HMOs and PPOs)
•Medicare specialty plans
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
