AHIP Exam AHM-520 Topic 6 Question 93 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 93
Topic #: 6

The following statements are about a health plan's pricing of a preferred provider organization (PPO) plan. Three of the statements are true, and one statement is false. Select the answer choice containing the FALSE statement.

ATypically, the first step in pricing a PPO is to develop a base indemnity claims cost, which results from adjusting the indemnity plan as though the entire eligible group of employees is enrolled in the indemnity plan.

BTo develop the expected claims costs for the in-network PPO plan, the health plan's actuaries adjust the base indemnity claims costs to reflect pertinent characteristics of the plan, including the specific network plan design and provider discount arrangements.

COne difficulty in pricing a PPO is that the health plan's actuaries have no method of estimating which employees would be likely to select which provider groups.

DAfter the health plan's actuaries use risk adjustment factors to adjust the existing claims costs for selection issues, the actuaries weight the in network and out-of-network costs to arrive at a composite claims cost for the PPO plan.

Show Suggested Answer

Suggested Answer: C

by Cathrine at Jul 18, 2024, 07:15 PM

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Raina

8 months ago

That's correct, so Proposal B would be selected.

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Merilyn

8 months ago

But doesn't a PI less than 1 indicate a negative NPV?

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Gilma

8 months ago

I agree with Raina, Proposal A has a PI greater than 1.

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Von

8 months ago

Haha, this question is a real mind-bender! But I agree with Kris, D seems like the best choice here.

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Lenna

7 months ago

So, Proposal B would most likely be selected by Jade Health Plan.

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Tracey

7 months ago

Definitely, the PI indicates that the net present value for Proposal B is greater than zero.

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Eun

7 months ago

Yeah, Proposal B with a PI of 1.05 seems like the better option.

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Melissia

7 months ago

I think D is the correct choice too.

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Kris

8 months ago

I'm torn between B and D, but I'm leaning towards D. Proposal B has a higher PI, so the NPV must be greater than zero.

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Veronika

8 months ago

Woah, hold up! The question says the PI indicates the NPV, not that the PI is greater than 1. I think option D is the way to go.

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Audra

6 months ago

Definitely, Proposal B seems like the most likely selection based on the information provided.

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Tiera

6 months ago

Yeah, I think the PI indicating that the NPV is greater than zero points to Proposal B.

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Stephanie

7 months ago

I agree with you, option D seems to be the correct choice.

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German

7 months ago

So, Proposal B would most likely be selected by Jade Health Plan.

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Solange

8 months ago

Yeah, the PI is just a ratio that indicates the NPV, not necessarily that it has to be greater than 1.

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Anthony

8 months ago

I agree with you, option D seems to be the correct choice.

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Raina

8 months ago

I think the answer is B.

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Leslie

8 months ago

Hmm, this seems straightforward. If the PI for Proposal B is greater than 1, then the NPV must be positive, right?

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Cora

8 months ago

B) Proposal A, and the PI indicates that the net present value (NPV) for this project is greater than zero

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Lyla

8 months ago

A) Proposal A, and the PI indicates that the net present value (NPV) for this project is less than zero

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