Determine Whether the Following Statement Is True or False: Although

question 2

Multiple Choice

Determine whether the following statement is true or false: Although most-favored-nation (MFN) clauses in contracts between health plans and healthcare providers are not per se illegal, they should be reviewed under the rule of reason analysis for antitrust purposes.

• A) True, because the Federal Trade Commission (FTC) ruled that MFN clauses are not per se illegal and the FTC encourages health plans to include them in provider contracts.
• B) True, because although MFN clauses are not per se illegal, they violate antitrust laws if they have a predatory purpose and an anticompetitive effect.
• C) False, because MFN clauses involve decisions by providers concerning the level of fees to charge, and thus they are per se illegal.
• D) False, because MFN clauses are not per se illegal, and thus they are exempt from antitrust laws and regulation by the FTC.

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Definitions:

Inventories

Items such as raw materials, work-in-progress, and finished goods that a company holds for sale in the ordinary course of business.

Net Operating Income

The total profit of a company after operating expenses are subtracted from total revenue but before deducting taxes and interest.

Absorption

The process in cost accounting of allocating all manufacturing costs, both fixed and variable, to individual units of production.

Variable Costing

A costing method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, used for internal decision-making processes.