Complete AHM-520 AHIP Materials

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Question 20

The HMO Model Act sets certain requirements that an entity that wishes to operate as an HMO must meet. These requirements include:

Options:

Having an initial net worth of at least $5 million

Maintaining a net worth equal to at least 5% of premium revenues for the first $150 million in premium revenue

Using a prospective method to estimate future risk

Obtaining a certificate of authority (COA) before beginning operations

Question 21

The Norton Health Plan used blended rating to develop a premium rate for the Roswell Company, a large employer group. Norton assigned Roswell a credibility factor of 0.7 (or 70%). Norton calculated Roswell’s manual rate to be $200 and its experience claims cost as $180. Norton’s retention charge is $3. This information indicates that Roswell’s blended rate is:

Options:

$186

$189

$194

$197

Question 22

The medical loss ratio (MLR) for the Peacock health plan is 80%. Peacock's expense ratio is 16%.

One characteristic of Peacock's MLR is that it

Options:

Includes claims that have been paid but excludes claims that have not yet been reported

Cannot adjust for growth in the health plan's business

Is the percentage of Peacock's end-of-period surplus to its earned premiums

Measures Peacock's overall claims levels

Question 23

The goals of Diane Tsai, the manager of the Oval Health Plan's accounting department, and the goals of Oval are mutually supportive. Oval's accounting department is able to establish and achieve the appropriate objectives, but the department's costs of operation are too high. The following statement(s) can correctly be made about this situation: