(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 financial statements provides a snapshot of a health plan's assets, liabilities, and net worth at a specific point in time?
Answer: Balance sheet
The balance sheet (statement of financial position) shows a plan's assets, liabilities, and net worth at a single date.
A health plan uses 'trend factors' in its actuarial rate setting primarily to account for:
Answer: Expected increases in healthcare costs and utilization over the rating period
Trend factors project how medical costs and utilization will change over time due to inflation, new technologies, and shifting patterns of care.
A health plan's 'operating margin' is best defined as:
Answer: Operating income divided by total revenue
Operating margin equals operating income (revenue minus operating expenses) divided by total revenue, measuring profitability from core operations.
Under the ACA's 3Rs (risk adjustment, reinsurance, risk corridors), which program was permanent and which were temporary?
Answer: Risk adjustment is permanent; reinsurance and risk corridors were temporary transitional programs
Risk adjustment is a permanent program, while the transitional reinsurance and risk corridor programs were designed for the first three years of ACA marketplace operation (2014–2016).
When a health plan calculates its 'completion factors,' what is the purpose?
Answer: To estimate the ultimate cost of claims by accounting for reporting lags
Completion factors adjust paid claims data to estimate the total (ultimate) cost, accounting for the fact that not all incurred claims have been received and processed yet.
A health plan's 'days cash on hand' metric measures:
Answer: How many days the plan can cover operating expenses with available liquid assets
Days cash on hand equals liquid assets divided by average daily operating expenses, indicating short-term financial resilience and liquidity.
Which of the following risk management strategies involves a health plan sharing financial risk directly with providers through a performance-based payment arrangement?
Answer: Shared savings or shared risk contracts
Shared savings/risk contracts align provider incentives with cost efficiency by giving providers a portion of savings—or requiring them to share in losses—relative to a target spend.