AHIP (Health Plan Finance and Risk Management) 3

Question 1

Which of the following best describes 'stop-loss insurance' purchased by a self-funded employer plan?

Accepted Answer

Insurance that protects the employer from catastrophic claims above a specified level

Answer

Stop-loss insurance protects self-funded employers by capping their liability for individual claims (specific stop-loss) or aggregate annual claims (aggregate stop-loss).

Question 2

A health plan's 'risk-based capital' (RBC) ratio is used by state regulators primarily to:

Accepted Answer

Assess whether a plan holds sufficient capital relative to its risk exposure

Answer

RBC ratios help regulators identify financially vulnerable health plans by comparing actual capital to the minimum capital required given the plan's risk profile.

Question 3

Under experience rating, a large employer group's renewal premium is based primarily on:

Accepted Answer

The specific group's own historical claims experience

Answer

For large, credible groups, experience rating uses the group's own claims history as the primary basis for setting renewal premiums.

Question 4

A health plan reports a 'premium deficiency reserve' (PDR). What does this indicate?

Accepted Answer

The plan expects future losses on existing contracts and must reserve for anticipated shortfalls

Answer

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.

Question 5

Which of the following is an example of a 'prospective' payment methodology?

Accepted Answer

Payment set in advance per diagnosis-related group (DRG) regardless of actual costs

Answer

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.

AHIP - America's Health Insurance Plans Practice Test

AHIP - America's Health Insurance Plans Practice Test

AHIP (Health Plan Finance and Risk Management) 3