The Up To The Immediate Present Guide To AHM-520 Exam Question

NEW QUESTION 1

The following statements are about the capital budgeting technique known as the payback method. Select the answer choice containing the correct statement:

• A. The main benefit of the payback method is that it is simple to use.
• B. The payback method measures the profitability of a given capital project.
• C. The payback method considers the time value of money.
• D. The payback method states a proposed project’s cash flow in terms of present value for the life of the entire project.

Answer: A

NEW QUESTION 2

The following statements are about a health plan's underwriting of small groups. Select the answer choice containing the correct statement.

• A. Almost all states prohibit health plan s from rejecting a small group because of the nature of the business in which the small business is engaged.
• B. Most states prohibit health plans from setting participation levels as a requirement for coverage, even when coverage is otherwise guaranteed issue.
• C. In underwriting small groups, a health plan's underwriters typically consider both the characteristics of the group members and of the employer.
• D. Generally, a health plan's underwriters require small employers to contribute at least 80% of the cost of the healthcare coverage.

Answer: C

NEW QUESTION 3

The Brookhaven Company is the parent company of two subsidiaries: an HMO and an insurance company. The headings on Brookhaven's financial statements read "Consolidated Financial Statements of Brookhaven Company." From the following answer choices, select the response that correctly indicates, under the entity concept, whether the HMO and the insurance company are accounted for as separate entities and whether the subsidiaries' financial results would be included in Brookhaven's consolidated financial statements.

• A. Accounted for as Separate Entities? = yes Results Included in Brookhaven's Statements? = yes
• B. Accounted for as Separate Entities? = yes Results Included in Brookhaven's Statements? = no
• C. Accounted for as Separate Entities? = noResults Included in Brookhaven's Statements? = yes
• D. Accounted for as Separate Entities? = no Results Included in Brookhaven's Statements? = no

Answer: A

NEW QUESTION 4

The following statements are about pure risk and speculative risk—two kinds of risk that both businesses and individuals experience. Select the answer choice containing the correct statement.

• A. Healthcare coverage is designed to help plan members avoid pure risk, not speculative risk.
• B. Only pure risk involves the possibility of gain.
• C. An example of speculative risk is the possibility that an individual will contract a serious illness.
• D. Only speculative risk contains an element of uncertainty.

Answer: A

NEW QUESTION 5

The Eagle health plan wants to limit the possibility that it will be held vicariously liable for the negligent acts of providers. Dr. Michael Chan is a member of an independent practice association (IPA) that has contracted with Eagle. One step that Eagle could take in order to limit its exposure under the theory of vicarious liability is to

• A. Supply D
• B. Chan with office space
• C. Employ nurses, laboratory technicians, and therapists to support Dr.Chan
• D. Be responsible for keeping D
• E. Chan's medical records updated
• F. Ensure that documents provided to D
• G. Chan's patients describe him as an independent practitioner

Answer: D

NEW QUESTION 6

In order to determine a health plan's quick liquidity ratio, a financial analyst would divide the health plan's

• A. Total assets not invested in affiliates by its total liabilities
• B. Liquid assets by its total liabilities
• C. Liquid assets by its contractual reserves
• D. Total assets by its contractual reserves

Answer: C

NEW QUESTION 7

Variance analysis is the study of the difference between expected results and actual results. Variances can be positive or negative. A positive variance is typically considered:

• A. favorable for both expenses and revenues
• B. favorable for expenses, but unfavorable for revenues
• C. favorable for revenues, but unfavorable for expenses
• D. unfavorable for both expenses and revenues

Answer: C

NEW QUESTION 8

The following statements are about a health plan's evaluation of its responsibility centers. Select the answer choice containing the correct statement.

• A. When analyzing budget variances, a health plan's management should pay attention to unfavorable variances only.
• B. A health plan can reduce the problem of unattainable goals by involving responsibility managers in the preparation of their centers' budgets.
• C. One reason that a health plan would use cost-based transfer prices to evaluate the performance of its profit centers and investment centers is because, under this method of setting transfer prices, the selling center has maximum incentive to operate effectively and control costs.
• D. In responsibility accounting, all employees who have any influence over a health plan's department are held equally accountable for the operations and financial outcomes of that department.

Answer: B

NEW QUESTION 9

One typical characteristic of zero-based budgeting (ZBB) is that this budgeting approach

• A. Treats each activity as though it is a new project under consideration
• B. Applies only to income budgets
• C. Is the least time-consuming of all of the budgeting approaches
• D. Requires the input of top-level employees only

Answer: A

NEW QUESTION 10

The Kayak Company self funds the health plan for its employees. This plan is an example of a type of self-funded plan known as a general asset plan.
Because Kayak's plan is a general asset plan, the funds that Kayak sets aside for the health plan are

• A. subject to the claims of Kayak's creditors
• B. available to Kayak solely for the purpose of paying for the healthcare expenses of Kayak's covered employees
• C. placed in a trust fund established by Kayak to pay for the health plan
• D. considered separate from Kayak's current operating funds

Answer: A

NEW QUESTION 11

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:

• A. Is highly effective in preventing excessive services that take the form of churning, unbundling, and upcoding
• 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
• C. Is relatively easy to initiate, especially in markets where managed care penetration is low
• D. Guards against the practice of defensive medicine

Answer: B

NEW QUESTION 12

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.

• A. 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.
• B. Effective use of hospital utilization is the single most likely factor to contribute to the success of a Medicare-contracting health plan.
• C. If a Medicare-contracting health plan is a provider-sponsored organization (PSO), it is prohibited from sharing financial risk with its providers.
• D. 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: C

NEW QUESTION 13

The Violin Company offers its employees a triple option of health plans: an HMO, an HMO with a point of service (POS) option, and an indemnity plan.
Premiums are lowest for the HMO option and highest for the indemnity plan. Violin employees who anticipate that they will be individual low utilizes of healthcare services are most likely to enroll in the

• A. HMO and are least likely to enroll in the HMO with the POS option
• B. HMO and are least likely to enroll in the indemnity plan
• C. Indemnity plan and are least likely to enroll in the HMO
• D. Indemnity plan and are least likely to enroll in the HMO with the POS option

Answer: B

NEW QUESTION 14

Under the doctrine of corporate negligence, a health plan and its physician administrators may be held directly liable to patients or providers for failing to investigate adequately the competence of healthcare providers whom it employs or with whom it contracts, particularly where the health plan actually provides healthcare services or restricts the patient's/enrollee's choice of physician.

• A. True
• B. False

Answer: A

NEW QUESTION 15

One true statement about a health plan's underwriting margin is that

• 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
• B. a larger assumed underwriting margin will reduce the price of the health plan's product and will make the plan more competitive
• 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
• 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

Answer: D

NEW QUESTION 16

The Danube Health Plan's planning activities include tactical planning, which is primarily concerned with

• A. Establishing standards of performance for Danube's cost centers
• B. Forecasting Danube's premium income
• C. Planning for the short-term, day-to-day activities of Danube
• D. Identifying the markets in which Danube should concentrate its marketing efforts

Answer: C

NEW QUESTION 17
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