Health Plan Finance and Risk Management (AHM-520) Free Practice Test

Question 1

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 4

B. Event 1

C. Event 3

D. Event 2

Correct Answer: A

Question 2

Health plans have access to a variety of funding sources depending on whether they are operated as for-profit or not-for-profit organizations. The Verde Health Plan is a for-profit
health plan and the Noir Health Plan is a not-for-profit health plan. From the answer choices below, select the response that correctly identifies whether funds from debt markets and equity markets are available to Verde and Noir:

A. Funds from Debt Markets: available to Noir only Funds from Equity Markets: available to Verde only

B. Funds from Debt Markets: available to Verde and Noir Funds from Equity Markets: available to Verde only

C. Funds from Debt Markets: available to Verde and Noir Funds from Equity Markets: available to Verde and Noir

D. Funds from Debt Markets: available to Verde only Funds from Equity Markets: available to Noir only

Correct Answer: B

Question 3

Three general strategies that health plans use for controlling types of risk are risk avoidance, risk transfer, and risk acceptance. The following statements are about these strategies. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

A. Generally, the smaller the likely benefits of accepting a risk, and the lower the costs of avoiding that risk, the greater the likelihood that a health plan will elect to avoid the risk.

B. A health plan would most likely transfer some or all of its utilization risk if it pays a provider a rate that is based on the number of plan enrollees that choose the provider as their primary care provider (PCP).

C. If a risk is a pure risk from the point of view of a health plan, then the health plan most likely will attempt to avoid the risk.

D. A health plan is seldom able to transfer any of the risk that utilization rates will be higher than expected and that its cost of providing healthcare will exceed the revenues it receives.

Correct Answer: D

Question 4

Health plans seeking to provide comprehensive healthcare plans must contract with a variety of providers for ancillary services. One characteristic of ancillary services is that

A. Physician behavior typically does not impact the utilization rates for these services

B. These services include physical therapy, behavior therapy, and home healthcare, but not diagnostic services such as laboratory tests

C. Package pricing is the preferred reimbursement method for ancillary service providers

D. Few plan members seek these services without first being referred to the ancillary provider by a physician

Correct Answer: D

Question 5

Users of the Fulcrum Health Plan financial information include:
The independent auditors who review Fulcrum's financial statements Fulcrum's controller (comptroller) Fulcrum's plan members The providers that deliver healthcare services to Fulcrum plan members Fulcrum's competitors
Of these users, the ones that most likely can correctly be classified as external users with a direct financial interest in Fulcrum are the
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A. Controller and the competitors only

B. Independent auditors, the controller, and the providers only

C. Plan members and the providers only

D. Independent auditors, the plan members, the providers, and the

E. Competitors only

Correct Answer: A

Question 6

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The following information relates to the Hardcastle Health Plan for the month of June:
Incurred claims (paid and IBNR) equal $100,000
Earned premiums equal $120,000
Paid claims, excluding IBNR, equal $80,000
Total health plan expenses equal $300,000
This information indicates that Hardcastle's medical loss ratio (MLR) for the month of June was approximately equal to:

A. 83%

B. 40%

C. 67%

D. 120%

Correct Answer: A

Question 7

The traditional financial ratios that analysts use to study a health plan's GAAP-based financial statements include liquidity ratios, activity ratios, leverage ratios, and profitability ratios. Of these categories of ratios, analysts are most likely to use

A. Leverage ratios to measure how quickly a health plan converts specified financial statement items into premium income or cash

B. Activity ratios relate the returns of a health plan to its sales, total revenues, assets, stockholders' equity, capital, surplus, or stock share price

C. Profitability ratios to measure the effect that fixed costs have on magnifying a health plan's risk and return

D. Liquidity ratios to measure a health plan's ability to meet its current liabilities

Correct Answer: D

Question 8

The provider contract that Dr. Zachery Cogan, an internist, has with the Neptune Health Plan calls for Neptune to reimburse him under a typical PCP capitation arrangement. Dr. Cogan serves as the PCP for Evelyn Pfeiffer, a Neptune plan member. After hospitalizing Ms. Pfeiffer and ordering several expensive diagnostic tests to determine her condition, Dr. Cogan referred her to a specialist for further treatment. In this situation, the compensation that Dr. Cogan receives under the PCP capitation arrangement most likely includes Neptune's payment for

A. All of the diagnostic tests that he ordered on Ms. Pfeiffer

B. The cost of the services that the specialist performed for Ms. Pfeiffer

C. All of the above

D. His visits to Ms. Pfeiffer while she was hospitalized

Correct Answer: D

Question 9

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

A. 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

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

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

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

Correct Answer: B

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AHIP Health Plan Finance and Risk Management (AHM-520) Free Practice Test