Complete Third Party Payers Practice Test 2026

Financial risk is at play when a private insurance plan participates in CMS payment schemes. If payments from CMS don’t cover the plan’s costs, the insurer has to absorb the shortfall, meaning the plan is bearing the potential losses and uncertainty about future expenses. That’s why this situation is described as the plan assuming risk. A deficit describes the result of costs exceeding revenue, but the concept being tested is the insurer’s exposure to potential losses—the risk. Liability would imply a legal obligation, and profit is the opposite of what occurs when costs aren’t fully covered.