Free AHM-520 Exam Braindumps

- (Topic 2)
A cost for which a benefit is forfeited in choosing one decision alternative over another alternative is known as

1. A. A marginal unit cost
2. B. An opportunity cost
3. C. An incremental cost
4. D. A differential cost

Correct Answer: B

- (Topic 1)
One true statement about a health plan's underwriting margin is that

1. A. the only way that the health plan can effectively reduce its exposure to underwriting risk, and therefore adjust its underwriting margin, is to control anti selection
2. B. a larger assumed underwriting margin will reduce the price of the health plan's product and will make the plan more competitive
3. C. the health plan's purchase of stop-loss insurance has no effect on its underwriting margin because stop-loss insurance can help the health plan control its expenses but not its underwriting risk
4. D. both the level of underwriting risk that the health plan assumes in providing benefits and the market competition it encounters most likely directly affect the size of its assumed underwriting margin

Correct Answer: D

- (Topic 2)
One way that a health plan can protect itself against case stripping is by requiring:

1. A. Employees covered by a small group plan to contribute 100% of the cost of the healthcare coverage
2. B. The small group to have no more than 10 members
3. C. A minimum level of participation in order for a small group to be eligible for healthcare coverage
4. D. Its underwriters to consider the characteristics of the employer, but not of the group members, when underwriting the group

Correct Answer: C

- (Topic 2)
Contingency risks, or C-risks, are general categories of risk that have a direct bearing on both the cash flow and solvency of a health plan. One of these C-risks, pricing risk (C-2 risk), is typically the most important risk a health plan faces. Pricing risk is crucial to a health plan’s solvency because:

1. A. A sizable portion of any health plan’s assets are held in long-term investments and anyshift in interest rates can significantly impact a health plan’s ability to pay medical benefits
2. B. A health plan relies heavily on the sound judgment of its management, and poor management decisions can result in financial losses for the health plan
3. C. A situation in which actual expenses exceed the amounts budgeted for those expenses may result in the health plan failing to retain assets sufficient to cover current obligations
4. D. A sizable portion of the total expenses and liabilities faced by a health plan come from contractual obligations to pay future medical costs, and the exact amounts of those costs are not known at the time a product’s premium is established

Correct Answer: D

- (Topic 1)
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

1. A. Independent auditors, the plan members, the providers, and the
2. B. Competitors only
3. C. Independent auditors, the controller, and the providers only
4. D. Controller and the competitors only
5. E. Plan members and the providers only

Correct Answer: D