AHM-520 by AHIP Actual Free Exam Q&As

Question 1

Three general strategies that health plans use for controlling types of risk are risk avoidance, risk transfer, and risk acceptance. The following statements are about these strategies. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

A. A health plan would most likely transfer some or all of its utilization risk if it pays a provider a rate that is based on the number of plan enrollees that choose the provider as their primary care provider (PCP). B. A health plan is seldom able to transfer any of the risk that utilization rates will be higher than expected and that its cost of providing healthcare will exceed the revenues it receives. C. If a risk is a pure risk from the point of view of a health plan, then the health plan most likely will attempt to avoid the risk. D. Generally, the smaller the likely benefits of accepting a risk, and the lower the costs of avoiding that risk, the greater the likelihood that a health plan will elect to avoid the risk.

Discussion 0

Correct Answer: B Vote an answer

Question 2

A health plan that capitates a provider group typically provides or offers to provide stop-loss coverage to that provider group.

A. False B. True

Discussion 0

Correct Answer: B Vote an answer

Question 3

Users of the Fulcrum Health Plan financial information include:
The independent auditors who review Fulcrum's financial statements Fulcrum's controller (comptroller) Fulcrum's plan members The providers that deliver healthcare services to Fulcrum plan members Fulcrum's competitors
Of these users, the ones that most likely can correctly be classified as external users with a direct financial interest in Fulcrum are the
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A. Controller and the competitors only B. Independent auditors, the plan members, the providers, and the C. Plan members and the providers only D. Competitors only E. Independent auditors, the controller, and the providers only

Discussion 0

Correct Answer: A Vote an answer

Question 4

The Titanium health plan's product has a unit price of $120 PMPM and a unit variable cost of $80 PMPM. Titanium has $100,000 in fixed costs per month. This information indicates that, for its product, Titanium's

A. Break-even point is 2,500 members B. Unit contribution margin is $200 C. Break-even point is 500 members D. Unit contribution margin is $80

Discussion 0

Correct Answer: A Vote an answer

Question 5

Health plans have access to a variety of funding sources depending on whether they are operated as for-profit or not-for-profit organizations. The Verde Health Plan is a for-profit
health plan and the Noir Health Plan is a not-for-profit health plan. From the answer choices below, select the response that correctly identifies whether funds from debt markets and equity markets are available to Verde and Noir:

A. Funds from Debt Markets: available to Verde and Noir Funds from Equity Markets: available to Verde and Noir B. Funds from Debt Markets: available to Verde only Funds from Equity Markets: available to Noir only C. Funds from Debt Markets: available to Verde and Noir Funds from Equity Markets: available to Verde only D. Funds from Debt Markets: available to Noir only Funds from Equity Markets: available to Verde only

Discussion 0

Correct Answer: C Vote an answer

Question 6

A health plan can use a SWOT (strengths, weaknesses, opportunities, and threats) analysis to analyze its relationships with the major providers in each market in which it conducts business.

A. False B. True

Discussion 0

Correct Answer: B Vote an answer

Question 7

The provider contract that Dr. Timothy Meyer, a pediatrician, has with the Cardigan health plan states that Cardigan will compensate him under a capitation arrangement. However, the contract also includes a typical low enrollment guarantee provision. Statements that can correctly be made about this arrangement include that the low enrollment guarantee provision most likely:

A. Both A and B B. A only C. Specifies that Cardigan will pay Dr. Meyer under an arrangement other than capitation until a specified number of children covered by the plan use him as their PCP D. B only E. Neither A nor B F. Causes Dr. Meyer's capitation contract with Cardigan to transfer more risk to him than the contract otherwise would transfer

Discussion 0

Correct Answer: A Vote an answer

Question 8

Experience rating and manual rating are two rating methods that the Cheshire health plan uses to determine its premium rates. One difference between these two methods is that, under experience rating, Cheshire

A. charges each group in the same class the same premium whereas, under manual rating, Cheshire charges lower premiums to groups that have experienced lower utilization rates B. can use group demographics to help determine the rate for a block of business, whereas, under manual rating, Cheshire cannot use group demographics when determining the rate for a block of business C. Uses a purchaser's actual experience to estimate the group's expected experience, whereas, under manual rating, Cheshire uses its own average experience-and sometimes the experience of other plans-to estimate the group's expected experience D. can establish rates for groups that have no previous plan experience, whereas, under manual rating, Cheshire cannot establish rates for groups with no previous plan experience

Discussion 0

Correct Answer: C Vote an answer

Question 9

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The following information relates to the Hardcastle Health Plan for the month of June:
Incurred claims (paid and IBNR) equal $100,000
Earned premiums equal $120,000
Paid claims, excluding IBNR, equal $80,000
Total health plan expenses equal $300,000
This information indicates that Hardcastle's medical loss ratio (MLR) for the month of June was approximately equal to:

A. 67% B. 40% C. 120% D. 83%

Discussion 0

Correct Answer: D Vote an answer

Question 10

The following information was presented on one of the financial statements prepared by the Rouge Health Plan as of December 31, 1998:

Rouge's current ratio at the end of 1998 was approximately equal to:

A. 1.31 B. 0.84 C. 1.06 D. 1.19

Discussion 0

Correct Answer: D Vote an answer

Question 11

The Savanna health plan used a risk analysis technique which defines the key assumptions of Savanna's strategic financial plan in terms of mathematical formulas that can be correlated to each other or analyzed independently. This technique allowed Savanna to simulate probable future events on a computer and produce a distribution of possible outcomes. This risk analysis technique, which can be used to predict Savanna's distribution of expected claims, is known as

A. Debt covenant modeling B. Optimistic, most likely, pessimistic scenario modeling C. A Monte Carlo simulation D. A hurdle rate simulation

Discussion 0

Correct Answer: C Vote an answer

Question 12

Many clinicians are concerned about the development of practice guidelines that seek to define appropriate healthcare services that should be provided to a patient who has been diagnosed with a specific condition. To avoid the risk associated with using such guidelines, health plans should advise clinicians that the existence of such a guideline:
1.Establishes standards of care to be routinely utilized with all patients presenting a specific condition
2.Preempts a physician's judgment when assessing the specific factors related to a patient's condition

A. 2 only B. 1 only C. Both 1 and 2 D. Neither 1 nor 2

Discussion 0

Correct Answer: D Vote an answer

Question 13

The Danube Health Plan's planning activities include tactical planning, which is primarily concerned with

A. Identifying the markets in which Danube should concentrate its marketing efforts B. Establishing standards of performance for Danube's cost centers C. Forecasting Danube's premium income D. Planning for the short-term, day-to-day activities of Danube

Discussion 0

Correct Answer: D Vote an answer

Question 14

A financial analyst wants to learn the following information about the
Forest health plan for a given financial period:

A. The cash needs of Forest during the period B. B and C only C. A and D only D. A, B, C, and D E. Forest's beginning-of-period cash balance F. Forest's end-of-period cash balance From Forest's cash budget, the analyst most likely can obtain information about G. Forest's minimum cash balance H. A, B, and C only

Discussion 0

Correct Answer: E Vote an answer

AHIP Health Plan Finance and Risk Management - AHM-520 Exam Practice Test