AHIP (Health Plan Finance and Risk Management) 2

Question 1

A health plan's medical loss ratio (MLR) is calculated by dividing which of the following by earned premiums?

Accepted Answer

Incurred claims plus quality improvement expenses

Answer

MLR equals incurred claims plus quality improvement expenses divided by earned premiums, and must meet minimum thresholds under the ACA.

Question 2

Which of the following best describes 'reinsurance' as used by health plans?

Accepted Answer

A method for spreading risk by ceding a portion of liabilities to another insurer

Answer

Reinsurance allows a health plan to transfer a portion of its risk to another insurer (reinsurer) in exchange for a premium, protecting against catastrophic losses.

Question 3

Under the ACA's risk adjustment program, which plans receive payments and which plans make payments?

Accepted Answer

Plans with sicker-than-average enrollees receive payments; plans with healthier enrollees make payments

Answer

ACA risk adjustment transfers funds from plans with lower-risk enrollees to plans with higher-risk enrollees to discourage cherry-picking.

Question 4

What is the primary purpose of an IBNR (Incurred But Not Reported) reserve?

Accepted Answer

To account for claims that have occurred but have not yet been submitted to the plan

Answer

IBNR reserves represent an estimate of claims that members have already incurred but providers have not yet billed to the health plan.

Question 5

A health plan's 'days in claims payable' (DCP) metric is used primarily to measure:

Accepted Answer

The number of days' worth of claims represented by the plan's claims payable balance

Answer

DCP measures how many days of claims expense the outstanding claims payable liability represents, serving as an indicator of reserve adequacy.

AHIP - America's Health Insurance Plans Practice Test

AHIP - America's Health Insurance Plans Practice Test

AHIP (Health Plan Finance and Risk Management) 2