AHM-520 Exam Dumps : Health Plan Finance and Risk Management

When analyzing budget variances, a health plan's management should pay attention to unfavorable variances only.

A health plan can reduce the problem of unattainable goals by involving responsibility managers in the preparation of their centers' budgets.

One reason that a health plan would use cost-based transfer prices to evaluate the performance of its profit centers and investment centers is because, under this method of setting transfer prices, the selling center has maximum incentive to operate effectively and control costs.

In responsibility accounting, all employees who have any influence over a health plan's department are held equally accountable for the operations and financial outcomes of that department.

The net effect of using provider reimbursement contracts to transfer risk is that the health plan’s net worth requirement increases.

Once the health plan has transferred utilization risk to its providers, it is relieved of the legal obligation to provide medical services to plan members in the event of the provider’s insolvency.

The greater the amount of risk the health plan transfers to providers, the larger the credit-risk factor becomes in the health plan’s RBC formula.

By decreasing its utilization risk, the health plan increases its underwriting risk.

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