AHM-520

AHM-520 practice questions, page 5 of 9, with answer review and explanations.

Question 21

Under GAAP, three approaches to expense recognition are generally allowed: associating cause and effect, systematic and rational allocation, and immediate recognition. A health plan most likely would use the approach of systematic and rational allocation in order to:

  1. Report the payment of the health plan's utility bills
  2. Spread the payment of sales force commissions over the premium paying period of healthcare coverage
  3. Report the fees paid by the health plan to attorneys and consultants
  4. Depreciate the cost of a new computer system over the useful life of the system

Question 22

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

Question 23

The following statements are about various reimbursement arrangements that health plans have with hospitals. Select the answer choice containing the correct statement.

  1. A sliding scale per-diem charges arrangement differs from a sliding scale discount on charges arrangement in that only a sliding scale per-diem charges arrangement is based on total volume of admissions and outpatient procedures.
  2. Under a typical reimbursement arrangement that is based on diagnosis related groups (DRGs), if the payment amount is fixed on the basis of diagnosis, then any reduction in costs resulting from a reduction in days will go to the health plan rather than to the hospital.
  3. A negotiated straight per-diem charge requires payment of a single charge for a day in the hospital, regardless of any actual charges or costs incurred during the hospital stay.
  4. A straight discount on charges arrangement is the most common reimbursement method in markets with high levels of health plans.

Question 24

A key factor that distinguishes the various types of health plans is the type and amount of risk that a health plan assumes with respect to the delivery and financing of healthcare benefits. An example of a type of health plan that typically assumes the financial risk of delivering and financing healthcare benefits is a:

  1. Third party administrator (TPA)
  2. Utilization review organization (URO)
  3. Preferred provider organization (PPO)
  4. Pharmacy benefit management (PBM) plan

Question 25

One difference between the internal and external analysis of a health plan's financial information is that:

  1. Internal analysis of the health plan can be more detailed and more specific than can external analysis
  2. Internal analysts are more likely than external analysts to want comparative financial data about the health plan
  3. Only internal analysts use trend analysis to analyze the health plan's financial statements
  4. Only internal analysts typically conduct the financial analysis of the health plan themselves