The Regenerate Guide To AHM-520 Actual Test

NEW QUESTION 1

If Grace Wilson is eligible for benefits under both the Medicare and Medicaid programs, then

• A. Medicare is M
• B. Wilson's primary insurer
• C. A Medicare- or Medicaid-contracting health plan is allowed to lock-in M
• D. Wilson's enrollment for a maximum period of 24 months
• E. The BBA requires the state to guarantee M
• F. Wilson's eligibility for a minimum of 18 months once she enrolls in a health plan network
• G. M
• H. Wilson can only receive Medicare- or Medicaid-covered services from a provider who participates in a health plan network

Answer: A

NEW QUESTION 2

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.
According to regulations, Fiesta's premium rates are reasonable if they

• A. vary only on the factors that affect Fiesta's costs
• B. are at a level that balances Fiesta's need to generate a profit against its need to obtain or retain a specified share of the market in which it conducts business
• C. are high enough to ensure that Fiesta has enough money on hand to pay operating expenses as they come due
• D. do not exceed what Fiesta needs to cover its costs and provide the plan with a fair profit

Answer: D

NEW QUESTION 3

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

• A. Xavier, Youngblood, and Zebulon
• B. Xavier and Youngblood only
• C. Xavier only
• D. None of these companies

Answer: A

NEW QUESTION 4

One way that the Medicare and Medicaid programs differ is that under Medicare, a smaller proportion of provider reimbursement goes to the primary care providers and a greater proportion of the reimbursement goes to hospitals and specialists.

• A. True
• B. False

Answer: A

NEW QUESTION 5

With regard to alternative funding arrangements, the part of a health plan premium that is intended to contribute to the claims reserve that a health plan maintains to pay for unusually high utilization is known as the:

• A. Interest charge
• B. Retention charge
• C. Risk charge
• D. Surplus

Answer: C

NEW QUESTION 6

The theory of vicarious liability or ostensible agency can expose a health plan to the risk that it could be held liable for the acts of independent contractors. Factors that may give rise to the assumption that an agency relationship exists between a health plan and its independent contractors include:

• A. Requiring the providers to supply their own office space
• B. Employing nurses and other healthcare professionals to support the physician providers
• C. Requiring providers to maintain their own medical records
• D. All of the above

Answer: B

NEW QUESTION 7

The goals of Diane Tsai, the manager of the Oval Health Plan's accounting department, and the goals of Oval are mutually supportive. Oval's accounting department is able to establish and achieve the appropriate objectives, but the department's costs of operation are too high. The following statement(s) can correctly be made about this situation:

• A. M
• B. Tsai most likely is the manager of a profit center.
• C. The business goals of Oval are congruent with M
• D. Tsai's goals.
• E. Oval's accounting department is efficient but not effective.
• F. All of these statements are correct.

Answer: B

NEW QUESTION 8

Most organizations that obtain group healthcare coverage can be classified as one of three types of groups: employer-employee groups, multiple employer groups, and professional associations. One true statement about these types of groups is that

• A. Anti selection risk is higher for both multiple-employer groups and professional associations than it is for an employer-employee group
• B. Private employers typically present a higher underwriting risk to health plans than do public employers
• C. Individual members of a multiple-employer group or a professional association typically are required to obtain healthcare coverage through the group or association
• D. I health plan is prohibited, when evaluating the risks represented by a professional association, from considering the industry experience of the agent or broker that sells a group plan to the association

Answer: A

NEW QUESTION 9

Many clinicians are concerned about the development of practice guidelines that seek to define appropriate healthcare services that should be provided to a patient who has been diagnosed with a specific condition. To avoid the risk associated with using such guidelines, health plans should advise clinicians that the existence of such a guideline:
* 1. Establishes standards of care to be routinely utilized with all patients presenting a specific condition
* 2. Preempts a physician’s judgment when assessing the specific factors related to a patient’s condition

• A. Both 1 and 2
• B. 1 only
• C. 2 only
• D. Neither 1 nor 2

Answer: D

NEW QUESTION 10

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

• A. Independent auditors, the plan members, the providers, and the
• B. Competitors only
• C. Independent auditors, the controller, and the providers only
• D. Controller and the competitors only
• E. Plan members and the providers only

Answer: D

NEW QUESTION 11

The following statement(s) can correctly be made about a health plan's underwriting of small groups:

• A. Typically, a health plan medically underwrites both the employees of a small group and their dependents, even though small group reform laws prohibit health plans from singling out individuals for rejection or substandard rate-ups.
• B. In the absence of laws mandating otherwise, a health plan's underwriting standardsgrow stricter as group size gets smaller.
• C. Both A and B
• D. A only
• E. B only
• F. Neither A nor B

Answer: A

NEW QUESTION 12

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 13

The Health Maintenance Organization (HMO) Model Act, developed by the National Association of Insurance Commissioners (NAIC), represents one approach to developing solvency standards. One drawback to this type of solvency regulation is that it

• A. Uses estimates of future expenditures and premium income to estimate future risk
• B. Fails to adjust the solvency requirement to account for the size of an HMO's premiums and expenditures
• C. Assumes that the amount of premiums an HMO charges always directly corresponds to the level of the risk that the HMO faces
• D. Fails to mandate a minimum level of capital and surplus that an HMO must maintain

Answer: C

NEW QUESTION 14

One true statement about variance analysis is that

• A. A price variance is the difference between the budgeted quantities to be sold and theactual quantities sold, multiplied by the budgeted amount
• B. Variance analysis suggests solutions to a particular problem
• C. Positive variances generally are favorable, from a health plan's point of view, for the plan's expenses but unfavorable for the plan's revenues
• D. An effective variance system typically focuses on matters that require management's attention

Answer: D

NEW QUESTION 15

The Column health plan is in the process of developing a strategic plan.
The following statements are about this strategic plan. Three of the statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

• A. Human resources most likely will be a critical component of Column's strategic plan because, in health plan markets, the size and the quality of a health plan's provider network is often more important to customers than are the details of a product's benefit design.
• B. Column's strategic plan should only address how the health plan will differentiate its products, rather than where and how it will sell these products.
• C. Column most likely will need to develop contingency plans to address the need to make adjustments to its original strategic plan.
• D. Column's information technology (IT) strategy most likely will be a critical element in successfully implementing the health plan's strategic plan.

Answer: B

NEW QUESTION 16

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

• A. State laws and regulations in the United States govern the implementation of GAAP, but not the implementation of SAP
• B. Health plans must prepare their financial statements for their external users according to applicable laws, regulations, and accounting principles, particularly GAAP
• C. GAAP specifically focuses on the requirements of insurance regulators and policyholderinterests
• D. The Financial Accounting Standards Board (FASB) is a private organization whose purpose is to establish and promote SAP in the United States

Answer: B

NEW QUESTION 17

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

• A. Health plan will require that contributory healthcare plans have a participation level of between 50% and 70%
• B. Health plan will decline to cover a group that has been formed for the sole purpose of obtaining healthcare coverage
• C. Health plan's underwriters will not examine the age spread of the entire group being underwritten
• D. 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

Answer: B

NEW QUESTION 18
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