AHIP AHM-520 : Health Plan Finance and Risk Management

One difference between the internal and external analysis of a health plan's financial information is that

• A. Only internal analysts typically conduct the financial analysis of the health plan themselves
• B. Internal analysis of the health plan can be more detailed and more specific than can external analysis
• C. Internal analysts are more likely than external analysts to want comparative financial data about the health plan
• D. Only internal analysts use trend analysis to analyze the health plan's financial statements

Assume that the Lambda, Mesa, and Novella health plans are equal in every way except that the health plans have obtained equal amounts of net cash inflows from different sources, as shown below:
HealthPlan Source
LambdaFinancing activities
MesaInvesting activities
NovellaOperating activities
From the following answer choices, select the response which indicates the health plan that would most likely be the most attractive to a potential plan sponsor, to a potential creditor, and to a potential investor.

• A. Potential Plan Sponsor = Lambda Potential Creditor = Mesa Potential Investor = Novella
• B. Potential Plan Sponsor = Novella Potential Creditor = Lambda Potential Investor = Mesa
• C. Potential Plan Sponsor = Novella Potential Creditor = Novella Potential Investor = Novella
• D. Potential Plan Sponsor = Lambda Potential Creditor = Novella Potential Investor = Mesa

In order to determine a health plan's quick liquidity ratio, a financial analyst would divide the health plan's

• A. Total assets not invested in affiliates by its total liabilities
• B. Liquid assets by its contractual reserves
• C. Total assets by its contractual reserves
• D. Liquid assets by its total liabilities

The Longview Hospital contracted with the Carlyle Health Plan to provide inpatient services to Carlyle's enrolled members. Carlyle provides Longview with a type of stop-loss coverage that protects, on a claims incurred and paid basis, against losses arising from significantly higher than anticipated utilization rates among Carlyle's covered population. The stop-loss coverage specifies an attachment point of 130% of Longview's projected $2,000,000 costs of treating Carlyle plan members and requires Longview to pay 15% of any costs above the attachment point. In a given plan year, Longview incurred covered costs totaling $3,000,000.
Carlyle most likely is responsible for paying Longview for the claims incurred before Longview has actually paid the medical expenses.

• A. False
• B. True

The sentence below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the statement. Then select the answer choice containing the two words that you have chosen. Purchasing stop-loss coverage most likely (increases / reduces) a health plan's underwriting risk and (increases / reduces) the health plan's affiliate risk.

• A. reduces / reduces
• B. increases / reduces
• C. reduces / increases
• D. increases / increases