22 October, 2024

How Many Questions Of AHM-520 Actual Test

We provide real AHM-520 exam questions and answers braindumps in two formats. Download PDF & Practice Tests. Pass AHIP AHM-520 Exam quickly & easily. The AHM-520 PDF type is available for reading and printing. You can print more and practice many times. With the help of our AHIP AHM-520 dumps pdf and vce product and material, you can easily pass the AHM-520 exam.

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Total 215 questions Full Exam Access

Question 1

- (Topic 1)
Two sets of financial accounting standards are generally accepted accounting principles (GAAP) and statutory accounting practices (SAP). One true statement about these financial accounting standards is that

State laws and regulations in the United States govern the implementation of GAAP, but not the implementation of SAP

Health plans must prepare their financial statements for their external users according to applicable laws, regulations, and accounting principles, particularly GAAP

GAAP specifically focuses on the requirements of insurance regulators and policyholderinterests

The Financial Accounting Standards Board (FASB) is a private organization whose purpose is to establish and promote SAP in the United States

Question 2

- (Topic 2)
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:

$6.25

$16.25

$18.75

$21.25

Question 3

- (Topic 1)
The NAIC has developed a risk-based capital (RBC) formula for all health plans that accept risk. One true statement about the RBC formula for health plans is that it

is a set of calculations, based on information in a health plan's annual financial report, that yields a target capital requirement for the organization

fails to take into account a health plan's underwriting risk, which is the risk that the premiums the health plan receives will be insufficient to pay for the healthcare services it provides to its plan members

applies to all health plans in the United States

fails to assess the specific level of risk faced by each health plan

Question 4

- (Topic 1)
Under the doctrine of corporate negligence, a health plan and its physician administrators may be held directly liable to patients or providers for failing to investigate adequately the competence of healthcare providers whom it employs or with whom it contracts, particularly where the health plan actually provides healthcare services or restricts the patient's/enrollee's choice of physician.

True

False

Question 5

- (Topic 2)
The Nuevo health plan's capital structure consists of 30% debt and 70% equity. Nuevo's average after-tax cost of debt is 6% and its cost of equity is 12%. The following statement(s) can correctly be made about Nuevo's weighted average cost of capital (WACC):

Nuevo has a WACC of 10.2%

If Nuevo establishes its WACC as the handle rate for capital investments, then it can expect an investment to add value to the health plan only if the investment is expected to earn a return of less than Nuevo's WACC

Both A and B

A only

B only

Neither A nor B

Question 6

- (Topic 1)
The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
To prepare its cash flow statement, Caribou uses the direct method rather than the indirect method.

True

False

Question 7

- (Topic 1)
Experience rating methods can be either prospective or retrospective. With regard to these types of experience rating methods, it can correctly be stated that

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

Question 8

- (Topic 2)
Geena Falk is eligible for both Medicare and Medicaid coverage. If Ms. Falk incurs a covered expense, then:

Medicaid will be M

Falk’s primary insurer

Medicare will be M

Falk’s primary insurer

Either Medicare or Medicaid will be M

Falk’s primary insurer depending on her election

Medicare and Medicaid will each be responsible for one-half of M

Falk’s covered expense

Question 9

- (Topic 1)
The sentence below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have chosen. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan’s affiliate risk.

increases / increases

increases / reduces

reduces / increases

reduces / reduces

Question 10

- (Topic 1)
The Cardinal health plan complies with all of the provisions of HIPAA.
Cardinal has received requests for healthcare coverage from the following companies that meet the statutory definition of a small group:
✑ The Xavier Company has excellent claims experience
✑ The Youngblood Company has not previously offered group healthcare coverage to its employees
✑ The Zebulon Company has poor claims experience
According to HIPAA's provisions, Cardinal must issue a healthcare contract to

Xavier, Youngblood, and Zebulon

Xavier and Youngblood only

Xavier only

None of these companies

Question 11

- (Topic 1)
The following statements are about a health plan's pricing of a preferred provider organization (PPO) plan. Three of the statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

Typically, the first step in pricing a PPO is to develop a base indemnity claims cost, which results from adjusting the indemnity plan as though the entire eligible group of employees is enrolled in the indemnity plan.

To develop the expected claims costs for the in-network PPO plan, the health plan's actuaries adjust the base indemnity claims costs to reflect pertinent characteristics of the plan, including the specific network plan design and provider discount arrangements.

One difficulty in pricing a PPO is that the health plan's actuaries have no method of estimating which employees would be likely to select which provider groups.

After the health plan's actuaries use risk adjustment factors to adjust the existing claims costs for selection issues, the actuaries weight the in network and out-of-network costs to arrive at a composite claims cost for the PPO plan.

Question 12

- (Topic 2)
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

Unit contribution margin is $80

Unit contribution margin is $200

Break-even point is 500 members

Break-even point is 2,500 members

Question 13

- (Topic 1)
A product is often described as having a thin margin or a wide margin. With regard to the factors that help determine the size of the margin of a health plan's product, it can correctly be stated that the

greater the risk a health plan assumes in a health plan, the thinner the product margin should be

more that competition acts to force prices down, the wider the product margins tend to become

greater the demand for the product, the thinner the margin for this product tends to become

longer the premium rates are guaranteed to a group, the wider the health plan's margin should be

Question 14

- (Topic 2)
The Puma health plan uses return on investment (ROI) and residual income (RI) to measure the performance of its investment centers. Two of these investment centers are identified as X and Y. Investment Center X earns $10,000,000 in operating income on controllable investments of $50,000,000, and it has total revenues of $60,000,000. Investment Center Y earns $2,000,000 in operating income on controllable investments of $8,000,000, and it has total revenues of $10,000,000. Both centers have a minimum required rate of return of 15%.
The following statements are about Puma's evaluation of these investment centers. Select the answer choice containing the correct statement.

Investment Center Y's RI is greater than Investment Center X's RI.

The ROI for Investment Center X is 16.7%, and the ROI for Investment Center Y is 20.0%.

Because Investment Centers X and Y are different sizes, Puma should not use ROI to compare these investment centers.

According to the evaluation of ROI, Investment Center Y achieves a higher return on its available resources than does Investment Center X.

Question 15

- (Topic 2)
In order to determine a health plan's quick liquidity ratio, a financial analyst would divide the health plan's

Total assets not invested in affiliates by its total liabilities

Liquid assets by its total liabilities

Liquid assets by its contractual reserves

Total assets by its contractual reserves

Question 16

- (Topic 2)
Advantages to a company that elects to self-fund and to administer all aspects of its healthcare benefit plan include:

Eliminating state premium taxes

Avoiding state-mandated benefit requirements

Improving its cash flow position

All of the above

Question 17

- (Topic 1)
For this question, select the answer choice containing the terms that correctly complete blanks A and B in the paragraph below. The FASB mandates that accounting information must exhibit certain qualitative characteristics. One of these characteristics is ______ A _______, which means that a company's financial statements use the same accounting policies and procedures from one accounting period to the next, unless there is a sound reason for changing a policy or procedure. Another characteristic is ______ B _______, which requires a company to disclose in its financial statements all significant financial information about the company.

A = reliability B = comparability

A = reliability B = materiality

A = consistency B = comparability

A = consistency B = materiality

Question 18

- (Topic 1)
The Harp Company self-funds the health plan for its employees. The plan is administered under a typical administrative-services-only (ASO) arrangement. One true statement about this ASO arrangement is that

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

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Total 215 questions Full Exam Access