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AHM-520 – Health Plan Finance and Risk Management

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Showing 7–9 of 15 questions

Question 7 (Volume B)

The Longview Hospital contracted with the Carlyle Health Plan to provide inpatient services to Carlyle’s enrolled members. Carlyle provides Longview with a type of stop-loss coverage that protects, on a claims incurred and paid basis, against losses arising from significantly higher than anticipated utilization rates among Carlyle’s covered population. The stop-loss coverage specifies an attachment point of 130% of Longview’s projected $2,000,000 costs of treating Carlyle plan members and requires Longview to pay 15% of any costs above the attachment point. In a given plan year, Longview incurred covered costs totaling $3,000,000.

For the year in which Longview’s incurred covered costs were $3,000,000, the amount for which Longview will be responsible is:

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    $2,000,000
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    $2,600,000
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    $2,660,000
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    $3,900,000
Question 8 (Volume B)

In order to achieve its goal of improved customer service, the Evergreen Health Plan will add three new customer service representatives to its existing staff, install a new switching station, and install additional phone lines. In this situation, the cost that would be classified as a sunk cost, rather than a differential cost, is the expense associated with:

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    Adding new customer service representatives

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    Maintaining the existing staff

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    Installing a new switching station

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    Installing additional phone lines
Question 9 (Volume B)

A health plan most likely would use benchmarking in order to

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    Measure its performance and practices against those of other companies to help identify those practices that will lead to superior performance in a variety of financial and non-financial areas
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    Calculate the percentage changes in its financial statement items over several consecutive accounting periods
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    Determine both the direction and velocity of trends in its financial statements
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    Display only percentage relationships in its financial statements