CPB (Certified Professional Biller) Certification Practice Exam

In the context of healthcare billing, what is the term for covering members who are sicker than the general population?

1. Adverse Reaction

2. Allowable Charge

3. Allowed Charge

4. Adverse Selection

The correct answer is: Adverse Selection

The correct term for covering members who are sicker than the general population is indeed "Adverse Selection." This concept refers to a situation where an insurance provider ends up with a disproportionately high number of high-risk individuals in a group. In the context of healthcare, it indicates that individuals who are more likely to require medical care are the ones who opt to enroll, which can lead to increased costs for the insurer. Adverse selection can challenge the insurance system's sustainability, as it may result in higher claim costs that are not balanced out by premiums collected from healthier members. Insurers typically attempt to mitigate adverse selection through risk assessment processes and underwriting to ensure a balanced risk pool of enrollees. Understanding this term is crucial for those involved in healthcare billing and insurance, as it underscores the importance of examining patient demographics and risk factors when designing insurance plans and setting premium rates.