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AHM-520 – Health Plan Finance and Risk Management

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Showing 1–3 of 15 questions

Question 1 (Volume B)

A health plan can use a SWOT (strengths, weaknesses, opportunities, and threats) analysis to analyze its relationships with the major providers in each market in which it conducts business.

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  • ○

    True
  • ○

    False
Question 2 (Volume B)

The risk-based capital formula for health plans defines a number of risks that can impact a health plan’s solvency. These categories reflect the fact that the level of risk faced by health plans is significantly impacted by provider reimbursement methods that shift utilization risk to providers. The following statements are about the effect of a health plan transferring utilization risk to providers. Select the answer choice containing the correct statement:

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  • ○

    The net effect of using provider reimbursement contracts to transfer risk is that the health plan’s net worth requirement increases.
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    Once the health plan has transferred utilization risk to its providers, it is relieved of the legal obligation to provide medical services to plan members in the event of the provider’s insolvency.
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    The greater the amount of risk the health plan transfers to providers, the larger the credit-risk factor becomes in the health plan’s RBC formula.
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    By decreasing its utilization risk, the health plan increases its underwriting risk.
Question 3 (Volume B)

In evaluating the claims experience during a given rating period of the Lucky Company, the Calaway Health Plan determined that the claims incurred by Lucky were lower than Calaway anticipated when it established Lucky’s premium rate for the rating period. Calaway, therefore, refunded a portion of Lucky’s premium to reflect the better-than-anticipated claims experience. This rating method is known as:

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  • ○

    durational rating
  • ○

    retrospective experience rating
  • ○

    blended rating
  • ○

    prospective experience rating