AHIP (Health Plan Finance and Risk Management) 4

Question 1

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?

Accepted Answer

Balance sheet

Answer

The balance sheet (statement of financial position) shows a plan's assets, liabilities, and net worth at a single date.

Question 2

A health plan uses 'trend factors' in its actuarial rate setting primarily to account for:

Accepted Answer

Expected increases in healthcare costs and utilization over the rating period

Answer

Trend factors project how medical costs and utilization will change over time due to inflation, new technologies, and shifting patterns of care.

Question 3

A health plan's 'operating margin' is best defined as:

Accepted Answer

Operating income divided by total revenue

Answer

Operating margin equals operating income (revenue minus operating expenses) divided by total revenue, measuring profitability from core operations.

Question 4

Under the ACA's 3Rs (risk adjustment, reinsurance, risk corridors), which program was permanent and which were temporary?

Accepted Answer

Risk adjustment is permanent; reinsurance and risk corridors were temporary transitional programs

Answer

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).

Question 5

When a health plan calculates its 'completion factors,' what is the purpose?

Accepted Answer

To estimate the ultimate cost of claims by accounting for reporting lags

Answer

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.

AHIP - America's Health Insurance Plans Practice Test

AHIP - America's Health Insurance Plans Practice Test

AHIP (Health Plan Finance and Risk Management) 4