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Free AHM-520 Exam Braindumps
Health Plan Finance and Risk Management Questions 46–50 (page: 11)

Updated On: 10-Feb-2026
Page 11 of 44
PDF with 215 Questions

The Harp Company self-funds the health plan for its employees. The plan is administered under a typical administrative-services-only (ASO) arrangement. One true statement about this ASO

arrangement is that

  1. This arrangement prevents Harp from purchasing stop-loss coverage for its health plan
  2. The amount that Harp pays the administrator to provide the ASO services is not subject to state premium taxes
  3. The administrator is responsible for paying claims from its own assets if Harp's account is insufficient
  4. The charges for the ASO services must be stated as a percentage of the amount of claims paid for medical expenses incurred by Harp's covered employees and their dependents

Answer(s): B



The Jasmine Company, which self funds the health plan for its 200 employees, has established a 501(c)(9) trust as a means of addressing possible claims fluctuations under the health plan. This plan is not a part of a collective bargaining process. A potential disadvantage to Jasmine of using a 501(c)(9) trust is that

  1. The cost of maintaining the trust may be prohibitive to Jasmine
  2. The trust must always maintain enough assets to pay the health plan's claims that have been incurred but not yet paid
  3. Jasmine is prohibited from earning any return on the trust assets
  4. The contributions to this trust are not deductible for federal income tax purposes

Answer(s): A



The following statements are about the new methodology authorized under the Balanced Budget Act of 1997 (BBA) for payments by the Centers for Medicaid & Medicare Services (CMS) to Medicare- contracting health plans.

Select the answer choice containing the correct statement.

  1. Under this new methodology, Medicare-contracting health plans are paid the lower of (a) a floor payment amount per enrollee covered or (b) the health plan's payment rate increased by 2% from the previous year.
  2. The new methodology has decreased the rate of growth in payments from CMS to Medicare- contracting health plans.
  3. Under this new methodology, Medicare-contracting health plans are paid 90% of the adjusted average per capita cost (AAPCC) of providing a service to a beneficiary.
  4. Under the principal inpatient diagnostic cost group (PIP-DCG), a new risk adjustment methodology, Medicare-contracting health plans will no longer be required to calculate and submit to CMS a Medicare adjusted community rate (ACR).

Answer(s): B



With regard to the Medicaid program in the United States, it can correctly be stated that

  1. The federal government provides none of the funding for state Medicaid programs
  2. Federal Medicaid law is different from Medicare law in that the federal government explicitly sets forth the methodology for payment of Medicaid-contracting plans but not Medicare-contracting plans
  3. A state's payment to health plans for providing Medicaid services cannot be more than it would have cost the state to provide the services under Medicaid fee-for-service (FFS)
  4. States are prohibited from carving out specific services from the capitation rate that health plans receive for providing Medicaid services

Answer(s): C



Providing services under Medicare or Medicaid can impose on health plans financial risks and costs that are greater than those related to providing services to the commercial population. Reasons that an health plan's financial risks and costs for providing services to Medicare and Medicaid enrollees tend to be higher include

  1. Most Medicare and Medicaid enrollees can disenroll from a health plan on a monthly basis
  2. The high incidences of chronic illness in both the Medicare and Medicaid populations results in higher costs related to coordinating care and case management
  3. Medicare and Medicaid enrollees tend to have a high level of costs in the first few months of enrollment as the health plan educates them about the health plan system and performs initial health screening to evaluate their health
  4. all of the above

Answer(s): D



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