Question No. 1

Health plans with risk-based Medicare contracts are required to calculate and submit to CMS a Medicare adjusted community rate (Medicare ACR). Medicare ACR can be defined as the:

AEstimated cost of providing services to a beneficiary under Medicare FFS, adjusted for factors such as age and gender

BHealth plan's estimate of the premium it would charge Medicare enrollees in the absence of Medicare payments to the health plan

CAverage amount the health plan expects to receive from CMS per beneficiary covered

DHealth plan's actual costs of providing benefits to Medicare enrollees in a given year

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Correct Answer: B

Question No. 2

The types of financial risks and costs to which a health plan is subject depends on whether the health plan provides services to the Medicare and/or Medicaid populations or to the commercial population. One distinction between providing services to the Medicare and Medicaid populations and to the commercial population is that Medicare and Medicaid enrollees typically:

AAre locked into a plan for a 12-month period, whereas enrollees from the commercial population may disenroll from a plan on a monthly basis

BRequire less enrollee education than do enrollees from the commercial population

CHave higher incidences of chronic illness than do enrollees from the commercial population

DAre enrolled in a health plan through a group situation, whereas the commercial population typically enrolls in a health plan on an individual basis

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Correct Answer: C

Question No. 3

Analysts will use the capital asset pricing model (CAPM) to determine the cost of equity for the Maxim health plan, a for-profit plan. According to the CAPM, Maxim's cost of equity is equal to

AThe average interest rate that Maxim is paying to debt holders, adjusted for a tax shield

BMaxim's risk-free rate minus its beta

CMaxim's risk-free rate plus an adjustment that considers the market rate, at a given level of systematic (non diversifiable) risk

DMaxim's risk-free rate plus an adjustment that considers the market rate, at a given level of nonsystematic (diversifiable) risk

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Correct Answer: C

Question No. 4

The following transactions occurred at the Lane Health Plan:

Transaction 1 --- Lane recorded a $25,000 premium prior to receiving the payment

Transaction 2 --- Lane purchased $500 in office expenses on account, but did not record the expense until it received the bill a month later

Transaction 3 --- Fire destroyed one of Lane's facilities; Lane waited until the facility was rebuilt before assessing and recording the amount of loss

Transaction 4 --- Lane sold an investment on which it realized a $14,000 gain; Lane recorded the gain only after the sale was completed.

Of these transactions, the one that is consistent with the accounting principle of conservatism is:

ATransaction 1

BTransaction 2

CTransaction 3

DTransaction 4

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Correct Answer: D

Question No. 5

Correct statements about the financial risks associated with benefits that health plans provide to the Medicare and Medicaid markets include:

AThat, because the government sets the payments received by health plans, the health plans cannot easily obtain an increase in those payments even in the face of rising costs

BThat regulators determine which services must be provided under Medicare and Medicaid and which persons are eligible to enroll in a plan

CThat there is typically more provider reluctance to accept risk in connection with providing services to the Medicaid population than with providing services to the Medicare population

DAll of the above

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Correct Answer: D

Free AHIP AHM-520 Exam Actual Questions

The questions for AHM-520 were last updated On Dec 16, 2024