Examcollection offers free demo for AHM-520 exam. "Health Plan Finance and Risk Management", also known as AHM-520 exam, is a AHIP Certification. This set of posts, Passing the AHIP AHM-520 exam, will help you answer those questions. The AHM-520 Questions & Answers covers all the knowledge points of the real exam. 100% real AHIP AHM-520 exams and revised by experts!
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NEW QUESTION 1
Under the alternative funding method used by the Trilogy Company, the insurer charges Trilogy an initial premium that is based on the assumption that claims will be 93% of the expected claims for the year. If claims exceed 93% of expected claims, then Trilogy must reimburse the insurer for any additional claims paid, up to 112% of expected claims. The insurer bears the responsibility for paying claims in excess of 112% of expected claims.
From the following answer choices, choose the name of the alternative funding method
described.
- A. Retrospective-rating arrangement
- B. Premium-delay arrangement
- C. Reserve-reduction arrangement
- D. Minimum-premium plan
Answer: A
NEW QUESTION 2
An actuary for the Noble Health Plan observed that the plan's actual morbidity was lower than its assumed morbidity and that the plan's actual administrative expenses were higher than its assumed administrative expenses. In this situation, Noble's actual underwriting margin was
- A. larger than its assumed underwriting margin, and the plan's actual expense margin was higher than its assumed expense margin
- B. larger than its assumed underwriting margin, but the plan's actual expense margin was lower than its assumed expense margin
- C. smaller than its assumed underwriting margin, but the plan's actual expense margin was higher than its assumed expense margin
- D. smaller than its assumed underwriting margin, and the plan's actual expense margin was lower than its assumed expense margin
Answer: B
NEW QUESTION 3
A financial analyst wants to learn the following information about the Forest health plan for a given financial period:
- A. Forest's beginning-of-period cash balance
- B. Forest's minimum cash balance
- C. The cash needs of Forest during the period
- D. Forest's end-of-period cash balanceFrom Forest's cash budget, the analyst most likely can obtain information about
- E. A, B, C, and D
- F. A, B, and C only
- G. A and D only
- H. B and C only
Answer: A
NEW QUESTION 4
The Longview Hospital contracted with the Carlyle Health Plan to provide inpatient services to Carlyle’s enrolled members. Carlyle provides Longview with a type of stop-loss coverage that protects, on a claims incurred and paid basis, against losses arising from significantly higher than anticipated utilization rates among Carlyle’s covered population. The stop-loss coverage specifies an attachment point of 130% of Longview’s projected $2,000,000 costs of treating Carlyle plan members and requires Longview to pay 15% of any costs above the attachment point. In a given plan year, Longview incurred covered costs totaling $3,000,000.
For the year in which Longview’s incurred covered costs were $3,000,000, the amount for which Longview will be responsible is:
- A. $2,000,000
- B. $2,600,000
- C. $2,660,000
- D. $3,900,000
Answer: C
NEW QUESTION 5
The Jamal Health Plan operates in a state that mandates that a health plan either allow providers to become part of its network or reimburse those providers at the health plan’s negotiated-contract rate, so long as the non-contract provider is willing to perform the services at the contract rate. This type of law is known as:
- A. A fair procedure law
- B. A direct access law
- C. An any willing provider law
- D. A due process law
Answer: C
NEW QUESTION 6
The Wallaby Health Plan purchased an asset two years ago for $50,000. At the time of purchase, the asset had an appraised value of $52,000. The asset carries a value on Wallaby’s general ledger of $47,000, and its current market value is $80,000. According to the cost concept, Wallaby would report on its financial statements a value for this asset equal to:
- A. $47,000
- B. $50,000
- C. $52,000
- D. $80,000
Answer: B
NEW QUESTION 7
Residual trend is the difference between total trend and the portion of the total trend caused by changes in provider reimbursement levels.
Consider the following events that could affect an health plan’s provider reimbursement levels:
Event 1 — The disenrollment of a large group with unusually high utilization rates
Event 2 — The introduction of a new treatment for infertility
Event 3 — A serious flu epidemic
Event 4 — A shift in inpatient medical services from obstetrical care to neonatal intensive care
One cause of residual trend is change in intensity, which would be represented by:
- A. Event 1
- B. Event 2
- C. Event 3
- D. Event 4
Answer: D
NEW QUESTION 8
The Brookhaven Company is the parent company of two subsidiaries: an HMO and an insurance company. The headings on Brookhaven's financial statements read "Consolidated Financial Statements of Brookhaven Company." From the following answer choices, select the response that correctly indicates, under the entity concept, whether the HMO and the insurance company are accounted for as separate entities and whether the subsidiaries' financial results would be included in Brookhaven's consolidated financial statements.
- A. Accounted for as Separate Entities? = yes Results Included in Brookhaven's Statements? = yes
- B. Accounted for as Separate Entities? = yes Results Included in Brookhaven's Statements? = no
- C. Accounted for as Separate Entities? = noResults Included in Brookhaven's Statements? = yes
- D. Accounted for as Separate Entities? = no Results Included in Brookhaven's Statements? = no
Answer: A
NEW QUESTION 9
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 10
The Danner Bank loaned money to the CareWell Health Plan to fund an expansion of a healthcare facility. With respect to the type of financial information user Danner represents to CareWell, it is correct to say that Danner is an:
- A. Internal user with a direct financial interest
- B. Internal user with an indirect financial interest
- C. External user with a direct financial interest
- D. Case-mix adjustment
Answer: C
NEW QUESTION 11
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 12
In order to show the efficiency of a health plan's managers in using the health plan's investments to earn a return for stockholders, a financial analyst most likely would use a type of profitability ratio known as
- A. A net gain-to-total income ratio
- B. An insurance leverage ratio
- C. A statutory return on assets (ROA) ratio
- D. A gross profit ratio
Answer: C
NEW QUESTION 13
The Marble Health Plan sets aside a PMPM amount for each specialty.
When a PCP in Marble's provider network refers a Marble plan member to a specialist and
the specialist provides medical services to the member, the specialist begins to receive a share of those funds on a monthly basis. Marble determines the monthly payment for each specialist by dividing the number of active patients for that specialty by the total specialty pool for that month.
This form of payment, which is similar to a case rate, is known as
- A. Referral circle capitation
- B. Risk pod capitation
- C. Contact capitation
- D. Retrospective reimbursement capitation
Answer: C
NEW QUESTION 14
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 15
If the total asset turnover ratio for the Fjord health plan is 1.08 and the total asset turnover ratio for the Grove health plan is 1.35, then a financial analyst could correctly infer that Fjord has used its assets more effectively than has Grove.
- A. True
- B. False
Answer: B
NEW QUESTION 16
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