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AHIP AHM-520 - Health Plan Finance and Risk Management

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Total 215 questions

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.

A.

increases / increases

B.

increases / reduces

C.

reduces / increases

D.

reduces / reduces

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

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

The Acorn Health Plan uses a resource-based relative value scale (RBRVS) to help determine the reimbursement amounts that Acorn should make to providers who are compensated under an FFS system. With regard to the advantages and disadvantages to Acorn of using RBRVS, it can correctly be stated that

A.

An advantage of using RBRVS is that it can assist Acorn in developing reimbursement schedules for various types of providers in a comprehensive healthcare plan

B.

An advantage of using RBRVS is that it puts providers who render more medical services than necessary at financial risk for this overutilization

C.

A disadvantage of using RBRVS is that it will be difficult for Acorn to track treatment rates for the health plan's quality and cost management functions

D.

A disadvantage of using RBRVS is that it rewards procedural healthcare services more than cognitive healthcare services

The following statements are about the financial risks for health plans in Medicare and Medicaid markets. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

A.

One reason that health plans in the Medicare and Medicaid markets experience financial risk is that government regulations determine which services must be provided to Medicare and Medicaid enrollees.

B.

Effective use of hospital utilization is the single most likely factor to contribute to the success of a Medicare-contracting health plan.

C.

If a Medicare-contracting health plan is a provider-sponsored organization (PSO), it is prohibited from sharing financial risk with its providers.

D.

Typically, providers are more reluctant to accept financial risk in connection with providing services to the Medicaid population than with providing services to the Medicare population.

The accounting department of the Enterprise health plan adheres to the following policies:

    Policy A—Report gains only after they actually occur

    Policy B—Report losses immediately

    Policy C—Record expenses only when they are certain

    Policy D—Record revenues only when they are certain

Of these Enterprise policies, the ones that are consistent with the accounting principle of conservatism are Policies

A.

A, B, C, and D

B.

A, B, and D only

C.

A and B only

D.

C and D only

For each of its products, the Wisteria Health Plan monitors the provider reimbursement trend and the residual trend. One true statement about these trends is that

A.

The provider reimbursement trend probably is more difficult for Wisteria to quantify than is the residual trend

B.

Wisteria's residual trend is the difference between the total trend and the portion of the total trend caused by changes in Wisteria's provider reimbursement levels

C.

The residual trend most likely has more impact on Wisteria's total trend than does the provider reimbursement trend

D.

An example of a residual trend would be a 5% increase in the capitation rate paid to a PCP by Wisteria

This concept, which is an extension of the going-concern concept, holds that the value of an asset that a company reports in its accounting records should be the asset's historical cost, not its current market value. Although this concept offers objectivity and reliability, it may lack relevance, particularly for assets held for a long period of time.

From the following answer choices, choose the name of the accounting concept that matches the description.

A.

Measuring-unit concept

B.

Full-disclosure concept

C.

Cost concept

D.

Time-period concept

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

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

When pricing its product, the Panda Health Plan assumes a 4% interest rate on its investments. Panda also assumes a crediting interest rate of 4%.

The actual interest rate earned by Panda on the assets supporting its product is 6%. The following statements can correctly be made about the investment margin and interest margin for Panda's products.

A.

Panda most likely built the crediting interest rate of 4% into the investment margin of its product.

B.

Panda's investment margin is the difference between its actual benefit costs and the benefit costs that it assumes in its pricing.

C.

The interest margin for this product is 2%.

D.

All of these statements are correct.