Free AHM-520 Exam Braindumps

- (Topic 2)
In order to analyze costs for internal management purposes, the Banner health plan uses functional cost analysis. One characteristic of this method of cost analysis is that it

1. A. Enables Banner's top management to analyze costs as they apply to workflow rather than to organizational structures
2. B. Assumes that activities, not products, generate costs
3. C. Cannot be used when Banner makes pricing and staffing decisions
4. D. Identifies units of activity, calculates the costs of performing each unit of activity, and then assigns the cost of each unit of activity to Banner's products or lines of business

Correct Answer: A

- (Topic 1)
An actuary for the Noble Health Plan observed that the plan's actual morbidity was lower than its assumed morbidity and that the plan's actual administrative expenses were higher than its assumed administrative expenses. In this situation, Noble's actual underwriting margin was

1. A. larger than its assumed underwriting margin, and the plan's actual expense margin was higher than its assumed expense margin
2. B. larger than its assumed underwriting margin, but the plan's actual expense margin was lower than its assumed expense margin
3. C. smaller than its assumed underwriting margin, but the plan's actual expense margin was higher than its assumed expense margin
4. D. smaller than its assumed underwriting margin, and the plan's actual expense margin was lower than its assumed expense margin

Correct Answer: B

- (Topic 2)
For a given healthcare product, the Magnolia Health Plan has a premium of $80 PMPM and a unit variable cost of $30 PMPM. Fixed costs for this product are $30,000 per month. Magnolia can correctly calculate the break-even point for this product to be:

1. A. 274 members
2. B. 375 members
3. C. 600 members
4. D. 1,000 members

Correct Answer: C

- (Topic 2)
The Puma health plan uses return on investment (ROI) and residual income (RI) to measure the performance of its investment centers. Two of these investment centers are identified as X and Y. Investment Center X earns $10,000,000 in operating income on controllable investments of $50,000,000, and it has total revenues of $60,000,000. Investment Center Y earns $2,000,000 in operating income on controllable investments of $8,000,000, and it has total revenues of $10,000,000. Both centers have a minimum required rate of return of 15%.
One difference between the RI method and the ROI method is that

1. A. The RI method demands greater goal congruence from Puma's managers than does the ROI method
2. B. The RI method favors Puma's small investment centers more than does the ROI method
3. C. Only RI can lead to decisions that improve Puma's short-term profits at the expense of its long-term objectives
4. D. Only RI is useful to Puma for comparing investment centers of different sizes

Correct Answer: A

- (Topic 1)
A key factor that distinguishes the various types of health plans is the type and amount of risk that a health plan assumes with respect to the delivery and financing of healthcare benefits. An example of a type of health plan that typically assumes the financial risk of delivering and financing healthcare benefits is a

1. A. Third party administrator (TPA)
2. B. Utilization review organization (URO)
3. C. Preferred provider organization (PPO)
4. D. Pharmacy benefit management (PBM) plan

Correct Answer: C