AHIP AHM-520 FAHM Exam Practice Test Instant Access

Question 1

The purest form of a self-funded benefit plan is one in which the employer pays benefits from current revenue, administers all aspects of the plan, and bears the risk that actual benefit payments will exceed the expected amount of payments. A decision to use this kind of self-funding is generally considered most desirable when certain conditions are present. These conditions most likely include that the benefit plan

AIs a contributory plan

BIs subject to collective bargaining

CIs unable to secure discounts from the physicians who provide medical services to the plan members

DHas a relatively high frequency of low severity claims

Answer : D

Question 2

Health plans have access to a variety of funding sources depending on whether they are operated as for-profit or not-for-profit organizations. The Verde Health Plan is a for-profit health plan and the Noir Health Plan is a not-for-profit health plan. From the answer choices below, select the response that correctly identifies whether funds from debt markets and equity markets are available to Verde and Noir:

AFunds from Debt Markets: available to Verde and Noir
Funds from Equity Markets: available to Verde and Noir

BFunds from Debt Markets: available to Verde and Noir
Funds from Equity Markets: available to Verde only

CFunds from Debt Markets: available to Verde only
Funds from Equity Markets: available to Noir only

DFunds from Debt Markets: available to Noir only
Funds from Equity Markets: available to Verde only

Answer : B

Question 3

Companies typically produce three types of budgets: operational budgets, cash budgets, and capital budgets. The following statements are about operational budgets. Select the answer choice containing the correct statement.

AExpense budgets, a type of operational budget, typically describe fixed expenses rather than variable expenses.

BOperational budgets can only show information by department or by line of business.

COperational budgets begin with a forecast of sales revenue and investment income.

DRevenue budgets, a type of operational budget, indicate the amount of income from operations that a company received from the previous budget period

Answer : C

Question 4

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

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

BA 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

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

DA 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 : D

Question 5

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.

The main purpose of Caribou's balance sheet is to

AReveal how Caribou obtained particular assets or liabilities

BShow how much money Caribou has realized from its operations during an accounting period

CMeasure the owners' wealth

DReconcile the cash that Caribou has on hand at the beginning and at the end of an accounting period

Answer : C

Question 6

The following statements are about the new methodology authorized under the Balanced Budget Act of 1997 (BBA) for payments by the Centers for Medicaid & Medicare Services (CMS) to Medicare-contracting health plans.

Select the answer choice containing the correct statement.

AUnder this new methodology, Medicare-contracting health plans are paid the lower of (a) a floor payment amount per enrollee covered or (b) the health plan's payment rate increased by 2% from the previous year.

BThe new methodology has decreased the rate of growth in payments from CMS to Medicare-contracting health plans.

CUnder this new methodology, Medicare-contracting health plans are paid 90% of the adjusted average per capita cost (AAPCC) of providing a service to a beneficiary.

DUnder the principal inpatient diagnostic cost group (PIP-DCG), a new risk adjustment methodology, Medicare-contracting health plans will no longer be required to calculate and submit to CMS a Medicare adjusted community rate (ACR).

Answer : B

Question 7

The goals of Diane Tsai, the manager of the Oval Health Plan's accounting department, and the goals of Oval are mutually supportive. Oval's accounting department is able to establish and achieve the appropriate objectives, but the department's costs of operation are too high. The following statement(s) can correctly be made about this situation:

AMs. Tsai most likely is the manager of a profit center.

BThe business goals of Oval are congruent with Ms. Tsai's goals.

COval's accounting department is efficient but not effective.

DAll of these statements are correct.

Answer : B

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