Free AHM-520 Exam Braindumps

- (Topic 2)
One true statement about capital and surplus ratios for health plans is that

1. A. This ratio is calculated by dividing a health plan's total liabilities by its capital and surplus
2. B. A health plan's capital and surplus position would be likely to weaken because of reserve valuation changes that reduce the health plan's reserves
3. C. The primary purpose of these ratios is to compare a health plan's obligations to its ability to meet those obligations
4. D. An increase in the value of a health plan's capital and surplus ratio most likely indicates that the health plan's financial position has strengthened

Correct Answer: D

- (Topic 2)
The following examples describe situations that expose an individual or a health plan to either pure risk or speculative risk:
Example 1 — A health plan invested in 1,000 shares of stock issued by a technology company.
Example 2 — An individual could contract a terminal illness.
Example 3 — A health plan purchased a new information system.
Example 4 — A health plan could be held liable for the negligent acts of an employee.
The examples that describe pure risk are

1. A. Examples 1 and 2
2. B. Examples 1 and 4
3. C. Examples 2 and 3
4. D. Examples 2 and 4

Correct Answer: A

- (Topic 2)
The Northwest Company offers its employees the option of choosing to receive their
healthcare benefits from an HMO or from a traditional indemnity plan. The premiums for the HMO are lower than for the traditional indemnity plan. In this situation, it is correct to assume that:
* 1.Individual low utilizers are more likely to enroll in the traditional indemnity plan 2.Individual high utilizers are more likely to enroll in the HMO

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

Correct Answer: D

- (Topic 2)
In a fee-for-service (FFS) reimbursement method, providers are paid per treatment or per service that they provide. One typical benefit of FFS reimbursement is that it:

1. A. Is highly effective in preventing excessive services that take the form of churning, unbundling, and upcoding
2. B. Provides physicians who attempt to control costs with a higher rate of compensation than is provided to physicians who make the effort to control costs
3. C. Is relatively easy to initiate, especially in markets where managed care penetration is low
4. D. Guards against the practice of defensive medicine

Correct Answer: B

- (Topic 2)
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

1. A. Unit contribution margin is $80
2. B. Unit contribution margin is $200
3. C. Break-even point is 500 members
4. D. Break-even point is 2,500 members

Correct Answer: D