MHA 706 Midterm- Lord Exam
Questions and Answers Graded A+
Proprietorships & Partnerships: Pros & Cons - Correct answer-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 - Correct answer-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 - Correct answer-Exempt from taxes. Goal is to improve
community.
For-profit Organizations - Correct answer-(Investor Owned) Goal is to maximize
shareholder return. Owe taxes.
Agency Problem - Correct answer-the possibility of conflict of interest between the
stockholders and management of a firm.
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,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) - Correct answer-
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) - Correct answer-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 - Correct answer-
Medicare parts A, B & C.
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, Medicare Part A (aka Hospital Insurance or HI) - Correct answer-Provides hospital
insurance automatically at age 65 (if FICA qualified) at no fee but may have
deductible & co-pay.
Medicare Part B - Correct answer-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) - Correct answer-•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
Medicare—Part D Prescription Drug Coverage - Correct answer-a United States
federal-government program to subsidize the costs of prescription drugs and
prescription drug insurance premiums for Medicare beneficiaries.
Impact of the Affordable Care Act (what the bill changed about the healthcare
environment) - Correct answer-Created new standards, individual mandates,
exchanges, and Medicaid expansion.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Questions and Answers Graded A+
Proprietorships & Partnerships: Pros & Cons - Correct answer-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 - Correct answer-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 - Correct answer-Exempt from taxes. Goal is to improve
community.
For-profit Organizations - Correct answer-(Investor Owned) Goal is to maximize
shareholder return. Owe taxes.
Agency Problem - Correct answer-the possibility of conflict of interest between the
stockholders and management of a firm.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,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) - Correct answer-
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) - Correct answer-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 - Correct answer-
Medicare parts A, B & C.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Medicare Part A (aka Hospital Insurance or HI) - Correct answer-Provides hospital
insurance automatically at age 65 (if FICA qualified) at no fee but may have
deductible & co-pay.
Medicare Part B - Correct answer-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) - Correct answer-•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
Medicare—Part D Prescription Drug Coverage - Correct answer-a United States
federal-government program to subsidize the costs of prescription drugs and
prescription drug insurance premiums for Medicare beneficiaries.
Impact of the Affordable Care Act (what the bill changed about the healthcare
environment) - Correct answer-Created new standards, individual mandates,
exchanges, and Medicaid expansion.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
