AHIP AHM-520 FAHM Exam Questions Instant Access

Question 1

The Savanna health plan used a risk analysis technique which defines the key assumptions of Savanna's strategic financial plan in terms of mathematical formulas that can be correlated to each other or analyzed independently. This technique allowed Savanna to simulate probable future events on a computer and produce a distribution of possible outcomes. This risk analysis technique, which can be used to predict Savanna's distribution of expected claims, is known as

AA hurdle rate simulation

BOptimistic, most likely, pessimistic scenario modeling

CA Monte Carlo simulation

DDebt covenant modeling

Answer : C

Question 2

Users of the Fulcrum Health Plan financial information include:

The independent auditors who review Fulcrum's financial statements

Fulcrum's controller (comptroller)

Fulcrum's plan members

The providers that deliver healthcare services to Fulcrum plan members

Fulcrum's competitors

Of these users, the ones that most likely can correctly be classified as external users with a direct financial interest in Fulcrum are the

AIndependent auditors, the plan members, the providers, and the

BCompetitors only

CIndependent auditors, the controller, and the providers only

DController and the competitors only

EPlan members and the providers only

Answer : D

Question 3

The following statements are about a health plan's capital budgeting process. Select the answer choice containing the correct statement.

AUnder sensitivity analysis, a health plan ranks all capital project proposals according to expected rates of return and accepts only those proposals with the highest rankings.

BA project that has a profitability index of 0.0 has an NPV of zero.

CAn underlying assumption of capital budgeting is that a health plan should keep its investing decisions separate from its financing decisions.

DUnder the internal rate of return (IRR) method, if a project's IRR is less than a health plan's weighted average cost of capital (WACC), then the project's benefits should exceed its costs and the health plan should accept the project.

Answer : C

Question 4

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%.

The following statements are about Puma's evaluation of these investment centers. Select the answer choice containing the correct statement.

AInvestment Center Y's RI is greater than Investment Center X's RI.

BThe ROI for Investment Center X is 16.7%, and the ROI for Investment Center Y is 20.0%.

CBecause Investment Centers X and Y are different sizes, Puma should not use ROI to compare these investment centers.

DAccording to the evaluation of ROI, Investment Center Y achieves a higher return on its available resources than does Investment Center X.

Answer : D

Question 5

A health plan can use segment margins to evaluate the profitability of its profit centers. One characteristic of a segment margin is that this margin

AIs the portion of the contribution margin that remains after a segment has covered its direct fixed costs

BIncorporates only the costs attributable to a segment, but it does not incorporate revenues

CConsiders only a segment's costs that fluctuate in direct proportion to changes in the segment's level of operating activity

DEvaluates the profit center's effective use of assets employed to earn a profit

Answer : A

Question 6

The following statements are about carve-out programs. Three of these statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

AIn the type of carve-out in which entire categories of care are administered by independent organizations, a health plan typically reimburses these organizations under an FFS contract.

BTypically, a health plan will offer carved-out services to its enrollees, but will manage these services separately.

CCarve-outs are services that are excluded from a capitation payment, a risk pool, or a health benefit plan.

DThe most rapidly growing area related to carve-outs is disease management (DM).

Answer : A

Question 7

With regard to capitation arrangements for hospitals, it can correctly be Back to Top stated that

AThe most common reimbursement method for hospitals is professional services capitation

BMost jurisdictions prohibit hospitals and physicians from joining together to receive global capitations that cover institutional services provided by the hospitals

CA health plan typically can capitate a hospital for outpatient laboratory and X-ray services only if the health plan also capitates the hospital for inpatient care

DMany hospitals have formed physician hospital organizations (PHOs), hospital systems, or integrated delivery systems (IDSs) that can accept global capitation payments from health plans

Answer : D

AHIP Health Plan Finance and Risk Management AHM-520 FAHM Exam Questions