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AHM-520
Health Plan Finance and Risk Management Questions and Answers

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Viewing questions 21-30 out of questions

Questions # 21:

With regard to the financial statements prepared by health plans, it can correctly be stated that

Options:

both for-profit, publicly owned health plans and not-for-profit health plans are required by law to provide all interested parties with an annual report

a health plan's annual report typically includes an independent auditor's report and notes to the financial statements

any health plan that owns more than 20% of the stock of a subsidiary company must compile the financial statements for the health plan's annual report on a consolidated basis

a health plan typically must prepare the financial statements included in its annual report according to SAP

Answer

Questions # 22:

Reconciliation is the process by which a health plan assesses providers' performance relative to contractual terms and reimbursement.

With regard to this process, it can correctly be stated that

Options:

Areconciliation typically includes payment to the providers of any withholds or bonuses due to them

Ahealth plan typically should conduct a reconciliation immediately after the evaluation period has ended

Most agreements between health plans and providers require reconciliations to be performed quarterly

Ahealth plan typically should not conduct reconciliation for a provider until the plan has received all claims or other documentation of services that the physician provided during the evaluation period

Answer

Questions # 23:

If the Ascot health plan's accountants follow the going-concern concept under GAAP, then these accountants most likely

Options:

Assume that Ascot will pay its liabilities immediately or in full during the current accounting period

Defer certain costs that Ascot has incurred, unless these costs contribute to the health plan's future earnings

Assume that Ascot is not about to be liquidated, unless there is evidence to the contrary

Value Ascot's assets more conservatively than they would under SAP

Answer

Questions # 24:

Experience rating methods can be either prospective or retrospective. With regard to these types of experience rating methods, it can correctly be stated that

Options:

A health plan typically can expect much higher profit levels from using retrospective experience rating rather than prospective experience rating a health plan using prospective experience rating is more likely than a

Health plan using retrospective experience rating to have to pay an experience rating dividend if a group's experience has been better than expected during the rating period

The premium determined under retrospective experience rating is usually higher than the premium under prospective experience rating

Most states require HMOs to use retrospective experience rating rather than prospective experience rating

Answer

Questions # 25:

The following statements are about the financial risks for health plans in Medicare and Medicaid markets. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

Options:

One reason that health plans in the Medicare and Medicaid markets experience financial risk is that government regulations determine which services must be provided to Medicare and Medicaid enrollees.

Effective use of hospital utilization is the single most likely factor to contribute to the success of a Medicare-contracting health plan.

If a Medicare-contracting health plan is a provider-sponsored organization (PSO), it is prohibited from sharing financial risk with its providers.

Typically, providers are more reluctant to accept financial risk in connection with providing services to the Medicaid population than with providing services to the Medicare population.

Answer

Questions # 26:

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. Fiesta would correctly calculate that its blended rate PMPM for Murdock should be Fiesta's retention charge plus

Options:

$152

$188

$192

$228

Answer

Questions # 27:

The Poplar Company and a Blue Cross/Blue Shield organization have contracted to provide a typical fully funded health plan for Poplar's employees. One true statement about this health plan for Poplar's employees is that

Options:

Poplar bears the entire financial risk if, during a given period, the dollar amount of services rendered to Poplar plan members exceeds the dollar amount of premiums collected for this health plan

Poplar and the Blue Cross/Blue Shield organization share the financial risk of paying for claims under Poplar's health plan

The Blue Cross/Blue Shield organization, upon acceptance of a premium, becomes the group plan sponsor for Poplar's health plan

The Blue Cross/Blue Shield organization, upon acceptance of a premium, bears the entire financial risk of paying for the administrative expenses associated with health plan operations

Answer

Questions # 28:

The methods of alternative funding for health coverage can be divided into the following general categories:

Category A—Those methods that primarily modify traditional fully insured group insurance contracts

Category B—Those methods that have either partial or total self funding

Typically, small employers are able to use some of the alternative funding methods in

Options:

Both Category A and Category B

Category A only

Category B only

Neither Category A nor Category B

Answer

Questions # 29:

With regard to the major risk factors associated with group underwriting, it can correctly be stated that, typically,

Options:

The age and gender of group plan members are not predictors of utilization of health services by group members

A health plan's product design or delivery system has an impact on member selection of the health plan, unless the members are in an environment in which employees have at least two benefit options or health plans from which to choose

A health plan should track demographic factors of groups only if the plan specifically adjusts for demographic factors on a group basis

A large group is more likely to exhibit a consistent claims pattern, level of healthcare cost, or utilization of services than is a small group

Answer

Questions # 30:

For this question, select the answer choice containing the terms that correctly complete blanks A and B in the paragraph below. The FASB mandates that accounting information must exhibit certain qualitative characteristics. One of these characteristics is ________A________, which means that a company's financial statements use the same accounting policies and procedures from one accounting period to the next, unless there is a sound reason for changing a policy or procedure. Another characteristic is _________B________, which requires a company to disclose in its financial statements all significant financial information about the company.