CMAA Financial Management and Accounting 5 — Questions and Answers
Question 1: Which financial practice helps prevent embezzlement in a medical office?
- Having one staff member handle all financial transactions
- Using separation of duties so no single employee controls all steps of a transaction (Correct answer)
- Allowing petty cash to be managed without receipts
- Posting payments only at month-end
Correct answer: Using separation of duties so no single employee controls all steps of a transaction
Separation of duties divides financial tasks among multiple employees, reducing the opportunity for any one person to commit fraud undetected.
Question 2: A medical office uses the accrual accounting method. When is revenue recognized?
- When cash is received from the patient or insurer
- When the service is rendered, regardless of payment receipt (Correct answer)
- When the claim is submitted to the payer
- When the explanation of benefits is received
Correct answer: When the service is rendered, regardless of payment receipt
Under accrual accounting, revenue is recorded when the service is provided, not when payment is actually received.
Question 3: What does the term 'credit balance' mean on a patient's account?
- The patient owes money for services rendered
- The practice owes money back to the patient due to an overpayment (Correct answer)
- The insurance has not yet paid the claim
- The account has been sent to collections
Correct answer: The practice owes money back to the patient due to an overpayment
A credit balance indicates the patient (or insurer) has paid more than was owed, and the practice must issue a refund.
Question 4: Which document itemizes every service, procedure code, diagnosis code, and charge for a patient visit?
- Superbill (encounter form) (Correct answer)
- Remittance advice
- Aging report
- Ledger card
Correct answer: Superbill (encounter form)
The superbill (encounter form) captures all clinical and billing details from a visit and serves as the source document for claim submission.
Question 5: An insurance payment posts to the wrong patient account. What is the correct action?
- Leave it and adjust the balance at year-end
- Process a reversal and repost the payment to the correct account (Correct answer)
- Issue a refund check to the insurance company immediately
- Delete the payment and re-enter it without documentation
Correct answer: Process a reversal and repost the payment to the correct account
A reversal corrects the misposted payment by removing it from the wrong account and reapplying it to the correct one, maintaining an accurate audit trail.
Question 6: Which federal act requires medical practices to safeguard patients' financial and health information from unauthorized disclosure?
- OSHA
- HIPAA (Correct answer)
- FMLA
- COBRA
Correct answer: HIPAA
HIPAA's Privacy and Security Rules require covered entities to protect patients' individually identifiable health and financial information.
Question 7: A practice's accounts receivable (A/R) days outstanding is 65 days. What does this indicate?
- The practice collects payment faster than average
- On average, it takes 65 days to collect payment after a service is rendered (Correct answer)
- The practice has 65 unpaid claims
- Insurance pays within 65 hours of claim submission
Correct answer: On average, it takes 65 days to collect payment after a service is rendered
A/R days outstanding measures the average number of days it takes to collect payment; 65 days is above the industry benchmark of 30–45 days and may signal billing inefficiencies.
CMAA Financial Management and Accounting 5
Which financial practice helps prevent embezzlement in a medical office?