A Contract with Which of the Following Payment Terms Can

question 54

Multiple Choice

A contract with which of the following payment terms can result in an increased financial risk to the provider?

• A) capitation
• B) percentage of premiums
• C) fee-for-service
• D) discounted fee-for-service

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Definitions:

Break-even Sales

The amount of revenue from sales required to cover all fixed and variable costs of operating a business, resulting in no net profit or loss.

Variable Costs

Costs that change in proportion to the activity of a business.

Property Taxes

Taxes levied by local governments based on the assessed value of property, including land and buildings owned.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering the fixed costs.