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Free AHM-520 Exam Braindumps (page: 3)

Page 2 of 55
PDF with 215 Questions

The following statements are about pure risk and speculative risk--two kinds of risk that both businesses and individuals experience. Select the answer choice containing the correct statement.

  1. Healthcare coverage is designed to help plan members avoid pure risk, not speculative risk.
  2. Only pure risk involves the possibility of gain.
  3. An example of speculative risk is the possibility that an individual will contract a serious illness.
  4. Only speculative risk contains an element of uncertainty.

Answer(s): A



The following paragraph contains an incomplete statement. Select the answer choice containing the term that correctly completes the statement. Health plans face four contingency risks (C-risks): asset risk (C-1), pricing risk (C-2), interest-rate risk (C-3), and general management risk (C-4). Of these risks, ________________ is typically the most important risk that health plans face. This is true because a sizable portion of the total expenses and liabilities faced by a health plan come from contractual obligations to pay for future medical costs, and the exact amount of these costs is not known when the healthcare coverage is priced.

  1. Asset risk (C-1)
  2. Pricing risk (C-2)
  3. Interest-rate risk (C-3)
  4. General management risk (C-4)

Answer(s): B



The Health Maintenance Organization (HMO) Model Act, developed by the National Association of Insurance Commissioners (NAIC), represents one approach to developing solvency standards. One drawback to this type of solvency regulation is that it

  1. Uses estimates of future expenditures and premium income to estimate future risk
  2. Fails to adjust the solvency requirement to account for the size of an HMO's premiums and expenditures
  3. Assumes that the amount of premiums an HMO charges always directly corresponds to the level of the risk that the HMO faces
  4. Fails to mandate a minimum level of capital and surplus that an HMO must maintain

Answer(s): C



The NAIC has developed a risk-based capital (RBC) formula for all health plans that accept risk. One true statement about the RBC formula for health plans is that it

  1. is a set of calculations, based on information in a health plan's annual financial report, that yields a target capital requirement for the organization
  2. fails to take into account a health plan's underwriting risk, which is the risk that the premiums the health plan receives will be insufficient to pay for the healthcare services it provides to its plan members
  3. applies to all health plans in the United States
  4. fails to assess the specific level of risk faced by each health plan

Answer(s): A






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