Free AHM-520 Exam Braindumps

- (Topic 1)
Under the alternative funding method used by the Trilogy Company, the insurer charges Trilogy an initial premium that is based on the assumption that claims will be 93% of the expected claims for the year. If claims exceed 93% of expected claims, then Trilogy must reimburse the insurer for any additional claims paid, up to 112% of expected claims. The insurer bears the responsibility for paying claims in excess of 112% of expected claims.
From the following answer choices, choose the name of the alternative funding method
described.

1. A. Retrospective-rating arrangement
2. B. Premium-delay arrangement
3. C. Reserve-reduction arrangement
4. D. Minimum-premium plan

Correct Answer: A

- (Topic 1)
The Caribou health plan is a for-profit organization. The financial statements that Caribou prepares include balance sheets, income statements, and cash flow statements. To prepare its cash flow statement, Caribou begins with the net income figure as reported on its income statement and then reconciles this amount to operating cash flows through a series of adjustments. Changes in Caribou's cash flow occur as a result of the health plan's operating activities, investing activities, and financing activities.
Caribou is engaged in an operating activity when it

1. A. Purchases or sells assets of the health plan
2. B. Disposes of a subsidiary
3. C. Repays funds loaned by its creditors
4. D. Pays expenses associated with the healthcare services provided to its members

Correct Answer: D

- (Topic 1)
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

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

Correct Answer: B

- (Topic 1)
If Grace Wilson is eligible for benefits under both the Medicare and Medicaid programs, then

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

Correct Answer: A

- (Topic 1)
The Zane health plan uses a base of accounting known as accrual-basis accounting. With regard to this base of accounting, it can correctly be stated that accrual-basis accounting

1. A. Enables an interested party to view the consequences of obligations incurred by Zane, but only if the health plan ultimately completes the business transaction
2. B. Is not suitable for measuring Zane's profitability
3. C. Requires Zane to record revenues when they are earned and expenses when they are incurred, even if cash has not actually changed hands
4. D. Prohibits Zane from making adjusting entries to its accounting records at the end of each accounting year

Correct Answer: C