(Health Plan Finance and Risk Management) Flashcards
7 cards from real AHIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 (Health Plan Finance and Risk Management) flashcards as text
Which of the following best describes 'stop-loss insurance' purchased by a self-funded employer plan?
Answer: Insurance that protects the employer from catastrophic claims above a specified level
Stop-loss insurance protects self-funded employers by capping their liability for individual claims (specific stop-loss) or aggregate annual claims (aggregate stop-loss).
A health plan's 'risk-based capital' (RBC) ratio is used by state regulators primarily to:
Answer: Assess whether a plan holds sufficient capital relative to its risk exposure
RBC ratios help regulators identify financially vulnerable health plans by comparing actual capital to the minimum capital required given the plan's risk profile.
Under experience rating, a large employer group's renewal premium is based primarily on:
Answer: The specific group's own historical claims experience
For large, credible groups, experience rating uses the group's own claims history as the primary basis for setting renewal premiums.
A health plan reports a 'premium deficiency reserve' (PDR). What does this indicate?
Answer: The plan expects future losses on existing contracts and must reserve for anticipated shortfalls
A PDR is recorded when a plan's projected future costs (claims plus expenses) exceed the unearned premiums for a block of business, signaling anticipated future losses.
Which of the following is an example of a 'prospective' payment methodology?
Answer: Payment set in advance per diagnosis-related group (DRG) regardless of actual costs
Prospective payment, such as DRG-based hospital payment, sets rates in advance, creating incentives for efficiency since the provider bears the risk of excess costs.
A health plan's 'administrative expense ratio' is calculated as:
Answer: Administrative expenses divided by total earned premiums
The administrative expense ratio equals administrative expenses divided by earned premiums, indicating what share of premium dollars goes to non-medical costs.
In community rating, premiums are set based on:
Answer: The average expected cost for the entire community or pool, not individual risk
Community rating sets the same (or adjusted) premium for all members in a pool regardless of individual health status, spreading risk across the community.