Certified Revenue Cycle Representative (CRCR) Practice Exam

Which option illustrates the function of indemnity insurance?

1. Providing a fixed payment for any type of service

2. Covering services after deductibles are met, based on agreed fees

3. Complying only with government regulations for payments

4. Allowing only for preventive care visits

The correct answer is: Covering services after deductibles are met, based on agreed fees

Indemnity insurance is designed to provide coverage for health care services by allowing the insured to receive care from any provider, with the insurer compensating a portion of the costs incurred. This type of insurance typically requires individuals to pay for services upfront and then submit a claim to the insurance company, which reimburses them based on a predetermined agreement relating to the fees for those services. The option that illustrates this function accurately is the one that states that it covers services after deductibles are met, based on agreed fees. This emphasizes the core functionality of indemnity insurance, where the insured is responsible for costs up to a specified deductible, and once that is met, the insurance company reimburses based on the agreed terms. It showcases the flexibility of indemnity insurance in allowing policyholders to choose providers while still applying a structured reimbursement process, which often operates on a fee-for-service model. The other options do not encapsulate the nature of indemnity insurance effectively. For example, providing a fixed payment for any type of service would suggest a more rigid reimbursement policy than what indemnity insurance allows. Compliance solely with government regulations does not highlight the nature of personal choice in provider selection inherent in indemnity plans. Likewise, limiting coverage to preventive care visits overlooks the broader scope