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Ace the AHIP AHM-520 Exam: Ultimate Preparation Guide

Questions 41

The following statements illustrate the use of different rating methods by health plans:

  • The Dover health plan established rates for small groups by using a rating method which requires that the average premium in each group cannot be more than 120% of the average premium for any other group. Under this method, all members of each group pay the same premium, which is based on the experience of the group.
  • Under the rating method used by the Rolling Hills health plan, the health plan calculates the ratio of a group's experience to the group's historical manual rate. Rolling Hills then multiplies this ratio by the group's future manual rate. Rolling Hills cannot consider the group's experience in determining premium rates.

From the following answer choices, select the response that correctly indicates the rating methods used by Dover and Rolling Hills.

Options:

A.

Dover = modified community rating

Rolling Hills = factored rating

B.

Dover = modified community rating

Rolling Hills = adjusted community rating (ACR)

C.

Dover = community rating by class (CRC)

Rolling Hills = factored rating

D.

Dover = community rating by class (CRC)

Rolling Hills = adjusted community rating (ACR)

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Questions 42

The McGwire Health Plan is a for-profit health plan that issues stock. Events that will cause the owners' equity account of McGwire to change include

Options:

A.

McGwire's retention of net income

B.

McGwire's payment of cash dividends on the stock it issued

C.

McGwire's purchase of treasury stock

D.

All of the above

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Questions 43

The purest form of a self-funded benefit plan is one in which the employer pays benefits from current revenue, administers all aspects of the plan, and bears the risk that actual benefit payments will exceed the expected amount of payments. A decision to use this kind of self-funding is generally considered most desirable when certain conditions are present. These conditions most likely include that the benefit plan

Options:

A.

Is a contributory plan

B.

Is subject to collective bargaining

C.

Is unable to secure discounts from the physicians who provide medical services to the plan members

D.

Has a relatively high frequency of low severity claims

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Questions 44

With regard to a health plan's underwriting of groups, it can correctly be stated that, generally, a

Options:

A.

Health plan will require that contributory healthcare plans have a participation level of between 50% and 70%

B.

Health plan will decline to cover a group that has been formed for the sole purpose of obtaining healthcare coverage

C.

Health plan's underwriters will not examine the age spread of the entire group being underwritten

D.

Health plan would expect a group with a large proportion of young females to have lower healthcare costs than does a similar group with a large proportion of young males

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Questions 45

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

Options:

A.

True

B.

False

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Questions 46

One true statement about the rate ratios used by a health plan is that the

Options:

A.

End result of a typical family rate ratio is that the health plan's family rate is subsidized by its single premium rate

B.

health plan cannot arbitrarily increase or decrease its rate ratio for a rate category

C.

rate ratios used by the health plan most likely have been established by government regulations

D.

health plan should determine its rate ratios by considering family size alone rather than competitive factors such as the ratios that competitors are using

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Questions 47

Kevin Olin applied for individual healthcare coverage from the Mercury health plan. Before issuing the policy, Mercury's underwriters attached a rider that excludes from coverage any loss that results from Mr. Olin's chronic knee problem. This information indicates that Mr. Olin's policy includes

Options:

A.

a moral hazard rider

B.

an essential plan rider

C.

an impairment rider

D.

an insurable interest rider

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Questions 48

Mandated benefit laws are state or federal laws that require health plans to arrange for the financing and delivery of particular benefits. Within a market, the implementation of mandated benefit laws is likely to cause __________.

Options:

A.

A reduction in the number of self-funded healthcare plans

B.

An increase in the cost to the health plans

C.

A reduction in the size of the provider panels of health plans

D.

A reduction in the uniformity among the healthcare plans of competing health plans

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Questions 49

Most organizations that obtain group healthcare coverage can be classified as one of three types of groups: employer-employee groups, multiple employer groups, and professional associations. One true statement about these types of groups is that

Options:

A.

Anti selection risk is higher for both multiple-employer groups and professional associations than it is for an employer-employee group

B.

Private employers typically present a higher underwriting risk to health plans than do public employers

C.

Individual members of a multiple-employer group or a professional association typically are required to obtain healthcare coverage through the group or association

D.

I health plan is prohibited, when evaluating the risks represented by a professional association, from considering the industry experience of the agent or broker that sells a group plan to the association

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Questions 50

State A, which requires guaranteed issue of at least two mandated healthcare plans, has established a typical health coverage reinsurance program for small employer groups. One true statement about this reinsurance program is that it most likely

Options:

A.

is administered by a commercial reinsurance company that operates in State A

B.

allows a small employer carrier operating in State A to reinsure either an entire small group or specific individuals within the group

C.

has, for the coverage on a plan, a base premium, which is multiplied by a factor of 2 in the case of reinsurance on entire groups or a factor of 3 for reinsurance on individuals

D.

prohibits a small employer carrier operating in State A from placing individuals enrolled in small groups in a reinsurance pool

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Exam Code: AHM-520
Exam Name: Health Plan Finance and Risk Management
Last Update: Jun 23, 2024
Questions: 215

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