Free AHM-520 Exam Dumps

Question 36

- (Topic 1)
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.
According to regulations, Fiesta's premium rates are reasonable if they

A. vary only on the factors that affect Fiesta's costs
B. are at a level that balances Fiesta's need to generate a profit against its need to obtain or retain a specified share of the market in which it conducts business
C. are high enough to ensure that Fiesta has enough money on hand to pay operating expenses as they come due
D. do not exceed what Fiesta needs to cover its costs and provide the plan with a fair profit

Correct Answer:D

Question 37

- (Topic 2)
The Danner Bank loaned money to the CareWell Health Plan to fund an expansion of a healthcare facility. With respect to the type of financial information user Danner represents to CareWell, it is correct to say that Danner is an:

A. Internal user with a direct financial interest
B. Internal user with an indirect financial interest
C. External user with a direct financial interest
D. Case-mix adjustment

Correct Answer:C

Question 38

- (Topic 1)
The sentence below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have chosen. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan’s affiliate risk.

A. increases / increases
B. increases / reduces
C. reduces / increases
D. reduces / reduces

Correct Answer:C

Question 39

- (Topic 1)
Provider reimbursement methods that transfer some utilization risk from a health plan to providers affect the health plan's RBC formula. A health plan's use of these reimbursement methods is likely to result in

A. An increase the health plan's underwriting risk
B. A decrease the health plan's credit risk
C. A decrease the health plan's net worth requirement
D. All of the above

Correct Answer:C

Question 40

- (Topic 1)
When pricing its product, the Panda Health Plan assumes a 4% interest rate on its investments. Panda also assumes a crediting interest rate of 4%.
The actual interest rate earned by Panda on the assets supporting its product is 6%. The following statements can correctly be made about the investment margin and interest margin for Panda's products.

A. Panda most likely built the crediting interest rate of 4% into the investment margin of its product.
B. Panda's investment margin is the difference between its actual benefit costs and the benefit costs that it assumes in its pricing.
C. The interest margin for this product is 2%.
D. All of these statements are correct.

Correct Answer:C