(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
A health plan is evaluating a prospective provider network contract. Which financial metric most directly measures whether contracted rates will generate positive margin?
Answer: Cost per member per month (PMPM) relative to premium PMPM
Comparing medical cost PMPM (driven by contracted rates and utilization) to premium PMPM directly shows whether the plan will earn a positive margin on that block of business.
A health plan that enrolls a disproportionate share of high-cost, chronically ill members relative to its premium revenue is experiencing:
Answer: Adverse selection
Adverse selection occurs when a plan's enrolled population has higher-than-average health risk, leading to higher claims costs than the premium base supports.
Under the ACA's minimum value (MV) standard, employer-sponsored health plans must cover at least what percentage of the total allowed costs of benefits?
Answer: 60%
ACA minimum value requires employer plans to cover at least 60% of expected total costs, equivalent to a bronze-level plan on the marketplace.
Which of the following best describes 'capitation' as a provider payment method?
Answer: Providers receive a fixed monthly payment per enrolled member regardless of services used
Capitation pays providers a fixed per-member per-month (PMPM) amount in advance, transferring utilization risk from the payer to the provider.
A health plan's 'claims lag triangle' is used primarily to:
Answer: Analyze historical claim payment patterns to project IBNR liabilities
A claims lag triangle arranges historical paid claims data by incurral period and payment period, enabling actuaries to identify patterns and project unpaid claim liabilities.
When regulators review a health plan's 'statutory surplus,' they are assessing:
Answer: The financial cushion available to absorb unexpected losses under state insurance accounting rules
Statutory surplus represents net assets under state insurance (statutory) accounting and serves as the primary buffer protecting policyholders from insolvency.
A health plan discovers its medical cost trend is running 4 percentage points above what was assumed in its current year's premium rates. The most likely immediate financial impact is:
Answer: Erosion of the plan's operating margin and potential underwriting loss
When actual medical trend exceeds the trend assumed in premium rates, claims costs rise faster than revenue, compressing or eliminating operating margin.