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Ace the AHIP AHM-520 Exam: Ultimate Preparation Guide

Questions 11

Juan Ramirez, a licensed social worker, and Dr. Laura Lui, a licensed psychiatrist, are under contract to the Peninsula Health Plan. Peninsula has contracted with CMS to provide services to Medicare and Medicaid beneficiaries. Both Mr. Ramirez and Dr. Lui provide the same type of counseling services to Peninsula's enrollees. With respect to amendments made to the Balanced Budget Act (BBA) of 1997 that impact provider reimbursement, the amount by which Peninsula will reimburse Mr. Ramirez will be equal to:

Options:

A.

50% of Dr. Lui's reimbursement

B.

75% of Dr. Lui's reimbursement

C.

90% of Dr. Lui's reimbursement

D.

100% of Dr. Lui's reimbursement

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Questions 12

The following statements are about rate ratios used by health plans. Select the answer choice containing the correct statement:

Options:

A.

While rate ratios consider family size, they are most often based on competitive factors, such as the ratios being used by competitors and the ratios that plan sponsors are requesting.

B.

If the rate ratio for a couple rate category is 2.0, then the single premium is divided by 2.0 to derive the couple rate category premium.

C.

A rate ratio can only be increased if the health plan has obtained regulatory approval.

D.

The effect of a typical family rate ratio is that a family rate is somewhat higher than it otherwise should be, and the single rate is somewhat lower that it otherwise should be.

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Questions 13

The goal of the investment department at the Wayfarer Health Plan is to maximize investment return. The investment department executes investments on time and at a low cost. However, these transactions often result in low returns or risks that are deemed too high for Wayfarer. With regard to effectiveness and efficiency, it is correct to say that Wayfarer’s investment department is:

Options:

A.

both effective and efficient

B.

efficient, but not effective

C.

effective, but not efficient

D.

neither effective nor efficient

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Questions 14

Julio Benini is eligible to receive healthcare coverage through a health plan that is under contract to his employer. Mr. Benini is seeking coverage for the following individuals:

  • Elena Benini, his wife
  • Maria Benini, his 18-year-old unmarried daughter
  • Johann Benini, his 80-year-old father who relies on Julio for support and maintenance

The health plan most likely would consider that the definition of a dependent, for purposes of healthcare coverage, applies to:

Options:

A.

Elena, Maria, and Johann

B.

Elena and Maria only

C.

Elena only

D.

Maria only

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Questions 15

In a fee-for-service (FFS) reimbursement method, providers are paid per treatment or per service that they provide. One typical benefit of FFS reimbursement is that it:

Options:

A.

Is highly effective in preventing excessive services that take the form of churning, unbundling, and upcoding

B.

Provides physicians who attempt to control costs with a higher rate of compensation than is provided to physicians who make the effort to control costs

C.

Is relatively easy to initiate, especially in markets where managed care penetration is low

D.

Guards against the practice of defensive medicine

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Questions 16

One difference between the internal and external analysis of a health plan's financial information is that

Options:

A.

Internal analysis of the health plan can be more detailed and more specific than can external analysis

B.

Internal analysts are more likely than external analysts to want comparative financial data about the health plan

C.

Only internal analysts use trend analysis to analyze the health plan's financial statements

D.

Only internal analysts typically conduct the financial analysis of the health plan themselves

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Questions 17

A health plan may experience negative working capital whenever healthcare expenses generated by plan members exceed the premium income the health plan receives.

Ways in which a health plan can manage the volatility in claims payments, and therefore reduce the risk of negative working capital, include:

1. Accurately estimating incurred but not reported (IBNR) claims

2. Using capitation contracts for provider reimbursement

Options:

A.

Both 1 and 2

B.

1 only

C.

2 only

D.

Neither 1 nor 2

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Questions 18

For a given healthcare product, the Magnolia Health Plan has a premium of $80 PMPM and a unit variable cost of $30 PMPM. Fixed costs for this product are $30,000 per month. Magnolia can correctly calculate the break-even point for this product to be:

Options:

A.

274 members

B.

375 members

C.

600 members

D.

1,000 members

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Questions 19

In order to achieve its goal of improved customer service, the Evergreen Health Plan will add three new customer service representatives to its existing staff, install a new switching station, and install additional phone lines. In this situation, the cost that would be classified as a sunk cost, rather than a differential cost, is the expense associated with:

Options:

A.

Adding new customer service representatives

B.

Maintaining the existing staff

C.

Installing a new switching station

D.

Installing additional phone lines

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Questions 20

Contingency risks, or C-risks, are general categories of risk that have a direct bearing on both the cash flow and solvency of a health plan. One of these C-risks, pricing risk (C-2 risk), is typically the most important risk a health plan faces. Pricing risk is crucial to a health plan’s solvency because:

Options:

A.

A sizable portion of any health plan’s assets are held in long-term investments and any shift in interest rates can significantly impact a health plan’s ability to pay medical benefits

B.

A health plan relies heavily on the sound judgment of its management, and poor management decisions can result in financial losses for the health plan

C.

A situation in which actual expenses exceed the amounts budgeted for those expenses may result in the health plan failing to retain assets sufficient to cover current obligations

D.

A sizable portion of the total expenses and liabilities faced by a health plan come from contractual obligations to pay future medical costs, and the exact amounts of those costs are not known at the time a product’s premium is established

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Exam Code: AHM-520
Exam Name: Health Plan Finance and Risk Management
Last Update: Jun 17, 2024
Questions: 215

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