AHM-520 | The Replace Guide To AHM-520 Vce

NEW QUESTION 1

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

• 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

Answer: B

NEW QUESTION 2

The Poplar Company and a Blue Cross/Blue Shield organization have contracted to provide a typical fully funded health plan for Poplar's employees. One true statement about this health plan for Poplar's employees is that

• A. Poplar bears the entire financial risk if, during a given period, the dollar amount of services rendered to Poplar plan members exceeds the dollar amount of premiums collected for this health plan
• B. Poplar and the Blue Cross/Blue Shield organization share the financial risk of paying for claims under Poplar's health plan
• C. The Blue Cross/Blue Shield organization, upon acceptance of a premium, becomes the group plan sponsor for Poplar's health plan
• D. The Blue Cross/Blue Shield organization, upon acceptance of a premium, bears the entire financial risk of paying for the administrative expenses associated with health plan operations

Answer: D

NEW QUESTION 3

The following statements are about pure risk and speculative risk—two kinds of risk that both businesses and individuals experience. Select the answer choice containing the correct statement.

• A. Healthcare coverage is designed to help plan members avoid pure risk, not speculative risk.
• B. Only pure risk involves the possibility of gain.
• C. An example of speculative risk is the possibility that an individual will contract a serious illness.
• D. Only speculative risk contains an element of uncertainty.

Answer: A

NEW QUESTION 4

The Landau health plan will switch from using top-down budgeting to using bottom-up budgeting. One potential advantage to Landau of making this switch is that, compared to top-down budgeting, bottom-up budgeting is more likely to

• A. Require little time or labor to complete
• B. Enable Landau to incorporate key changes in regulatory requirements on a timely basis
• C. Reflect top management's intentions for Landau
• D. Reflect the realities of day-to-day operations

Answer: B

NEW QUESTION 5

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:

• A. Elena, Maria, and Johann
• B. Elena and Maria only
• C. Elena only
• D. Maria only

Answer: B

NEW QUESTION 6

The Chamber Health Plan reimburses primary care physicians on a monthly basis by using a simple capitation method. Chamber assumes an annual utilization rate of three visits per year. The FFS rate per office visit is $75, and all plan members are required to make a $10 copayment for each office visit. This information indicates that the capitation rate that Chamber calculates per member per month (PMPM) is equal to:

• A. $6.25
• B. $16.25
• C. $18.75
• D. $21.25

Answer: B

NEW QUESTION 7

The Fiesta Health Plan prices its products in such a way that the rates for its products are reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor of 0.6 to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that Murdock's experience rate is $180 PMPM. Fiesta would correctly calculate that its blended rate PMPM for Murdock should be Fiesta's retention charge plus

• A. $152
• B. $188
• C. $192
• D. $228

Answer: B

NEW QUESTION 8

With regard to the financial statements prepared by health plans, it can correctly be stated that

• A. both for-profit, publicly owned health plans and not-for-profit health plans are required by law to provide all interested parties with an annual report
• B. a health plan's annual report typically includes an independent auditor's report and notes to the financial statements
• C. any health plan that owns more than 20% of the stock of a subsidiary company must compile the financial statements for the health plan's annual report on a consolidated basis
• D. a health plan typically must prepare the financial statements included in its annual report according to SAP

Answer: B

NEW QUESTION 9

The following transactions occurred at the Lane Health Plan:
✑ Transaction 1 — Lane recorded a $25,000 premium prior to receiving the payment
✑ Transaction 2 — Lane purchased $500 in office expenses on account, but did not record the expense until it received the bill a month later
✑ Transaction 3 — Fire destroyed one of Lane’s facilities; Lane waited until the facility was rebuilt before assessing and recording the amount of loss
✑ Transaction 4 — Lane sold an investment on which it realized a $14,000 gain; Lane recorded the gain only after the sale was completed.
Of these transactions, the one that is consistent with the accounting principle of conservatism is:

• A. Transaction 1
• B. Transaction 2
• C. Transaction 3
• D. Transaction 4

Answer: D

NEW QUESTION 10

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

• 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 planthemselves

Answer: A

NEW QUESTION 11

A health plan can use segment margins to evaluate the profitability of its profit centers. One characteristic of a segment margin is that this margin

• A. Is the portion of the contribution margin that remains after a segment has covered its direct fixed costs
• B. Incorporates only the costs attributable to a segment, but it does not incorporate revenues
• C. Considers only a segment's costs that fluctuate in direct proportion to changes in thesegment's level of operating activity
• D. Evaluates the profit center's effective use of assets employed to earn a profit

Answer: A

NEW QUESTION 12

The process of converting the present value of a specified amount of money to its future value is known as

• A. Capital budgeting
• B. Compounding
• C. Capital rationing
• D. Discounting

Answer: B

NEW QUESTION 13

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:

• 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

Answer: B

NEW QUESTION 14

The Swann Health Plan excludes mental health coverage from its basic health benefit plan. Coverage for mental health is provided by a specialty health plan called a managed behavioral health organization (MBHO). This arrangement recognizes the fact that distinct administrative and clinical expertise is required to effectively manage mental health services. This information indicates that Swann manages mental health services through the use of a:

• A. Formulary
• B. Risk pod
• C. Carve-out
• D. Case rate

Answer: C

NEW QUESTION 15

The physicians who work for the Sunrise Health Plan, a staff model HMO, are paid a salary that is not augmented with another type of incentive plan. Compared to the use of a traditional reimbursement method, Sunrise's use of a salary reimbursement method is more likely to

• A. Encourage Sunrise's physicians to perform services that are not medically necessary
• B. Completely eliminate service risk for Sunrise's physicians
• C. Decrease Sunrise's liability for any negligent acts of the physicians in the plan's network of providers
• D. Help stabilize expenses for Sunrise

Answer: D

NEW QUESTION 16

The following statements are about risk management in health plans. Select the answer choice containing the correct response.

• A. Risk management is especially important to health plans because the Employee Retirement Income Security Act of 1974 (ERISA) allows plan members to recover punitive damages from healthcare plans.
• B. With regard to the relative risk for health plan structures based upon the degree of influence and relationships that health plans maintain with their providers, preferred provider organizations (PPOs) typically have a higher risk than do group HMOs and staff HMOs.
• C. Although there are clear risks associated with the provision of healthcare services and coverage decisions surrounding that care, the bulk of risk in health plans is associated with a health plan's benefit administration and contracting activities.
• D. A health plan generally structures its risk management process around loss reduction techniques and loss transfer techniques.

Answer: D

NEW QUESTION 17

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

Answer: D

NEW QUESTION 18
......