AHM-520 Premium Practice Questions

The following statements illustrate the use of different rating methods by health plans: • The Dover health plan established rates for small groups by using a rating method which requires that the average premium in each group cannot be more than 120% of the average premium for any other group. Under this method, all members of each group pay the same premium, which is based on the experience of the group. • Under the rating method used by the Rolling Hills health plan, the health plan calculates the ratio of a group's experience to the group's historical manual rate. Rolling Hills then multiplies this ratio by the group's future manual rate. Rolling Hills cannot consider the group's experience in determining premium rates. From the following answer choices, select the response that correctly indicates the rating methods used by Dover and Rolling Hills.

• AA. Dover = modified community rating Rolling Hills = factored rating
• BB. Dover = modified community rating Rolling Hills = adjusted community rating (ACR)
• CC. Dover = community rating by class (CRC) Rolling Hills = factored rating
• DD. Dover = community rating by class (CRC) Rolling Hills = adjusted community rating (ACR)

One true statement about a type of capitation known as a percent-of-premium arrangement is that this arrangement

• AA. Is the most common type of capitation
• BB. Is less attractive to providers when the arrangement sets provisions to limit risk
• CC. Sets provider reimbursement at a specific dollar amount per plan member
• DD. Transfers some of the risk associated with underwriting and rating from a health plan to a provider