Free AHIP AHM-520 Practice Exam with Questions & Answers | Set: 7

Cash receipt, but not cash disbursement, is an important component of cash-basis accounting

Most companies use a pure cash-basis accounting system

Cash-basis accounting records revenue according to the realization principle and expenses according to the matching principle

Health insurance companies and health plans that fall under the jurisdiction of state insurance commissioners must report some items on a cash basis for statutory reporting purposes

A health plan typically can expect much higher profit levels from using retrospective experience rating rather than prospective experience rating a health plan using prospective experience rating is more likely than a

Health plan using retrospective experience rating to have to pay an experience rating dividend if a group's experience has been better than expected during the rating period

The premium determined under retrospective experience rating is usually higher than the premium under prospective experience rating

Most states require HMOs to use retrospective experience rating rather than prospective experience rating

This arrangement prevents Harp from purchasing stop-loss coverage for its health plan

The amount that Harp pays the administrator to provide the ASO services is not subject to state premium taxes

The administrator is responsible for paying claims from its own assets if Harp's account is insufficient

The charges for the ASO services must be stated as a percentage of the amount of claims paid for medical expenses incurred by Harp's covered employees and their dependents

Apply equally to self-funded and fully funded groups

Require a health plan to cover certain conditions or treatments or to pay a specified level of benefits for certain conditions or treatments

Have no impact on a health plan's underwriting and rating decisions

Typically decrease a health plan's risk because the health plan may need to delay premium rate decreases or may be prevented from increasing premium rates