Certified Revenue Cycle Representative (CRCR) Practice Exam

Which of the following best defines indemnity insurance?

1. A policy that pays a fixed amount for each service

2. A plan requiring primary care referrals for specialist visits

3. A form of insurance providing full coverage with no limit

4. An insurance framework offering coverage with negotiated limits

The correct answer is: An insurance framework offering coverage with negotiated limits

Indemnity insurance is best defined as an insurance framework that offers coverage with negotiated limits. This type of insurance typically allows policyholders to choose their healthcare providers and does not require them to get referrals for specialists, offering a more flexible approach to healthcare. The negotiated limits aspect highlights that while the insurance covers certain medical expenses, there is typically a maximum amount that the insurance will pay per service or condition, as well as other conditions defined within the policy. In contrast, the other options describe characteristics that are not aligned with indemnity insurance. For instance, a fixed amount for each service refers more to a fee-for-service model, which does not capture the full essence of indemnity insurance. Primary care referrals suggest a managed care plan or health maintenance organization (HMO) structure, which again does not apply to indemnity policies. Lastly, the notion of full coverage with no limit is inaccurate for indemnity insurance since it generally comes with certain limits and conditions that must be considered. By understanding these distinctions, it's clear why the correct answer focuses on negotiated limits within the insurance coverage framework.