Practice AHM-520 Exam Online

Question 1

A health plan's costs can be classified as committed costs or discretionary costs. An example of a discretionary cost for a health plan is the cost of its:

A : Facilities

B : Executive salaries

C : Employee training

D : Equipment

Answer: A

Question 2

Federal law addresses the relationship between Medicare- or Medicaid contracting health plans and providers who are at "substantial financial risk."

Under federal law, Medicare- or Medicaid-contracting health plans:

A : Place a provider at "substantial risk" whenever incentive arrangements put the provider at risk for amounts in excess of 10% of his or her total potential reimbursement for providing services to Medicare and Medicaid enrollees

B : Must provide stop-loss coverage to a provider who is placed at "substantial financial risk" for services that the provider does not directly provide to Medicare or Medicaid enrollees

C : Both A and B

D : A only

E : B only

F : Neither A nor B

Answer: C

Question 3

Companies typically produce three types of budgets: operational budgets, cash budgets, and capital budgets. The following statements are about operational budgets. Select the answer choice containing the correct statement.

A : Expense budgets, a type of operational budget, typically describe fixed expenses rather than variable expenses.

B : Operational budgets can only show information by department or by line of business.

C : Operational budgets begin with a forecast of sales revenue and investment income.

D : Revenue budgets, a type of operational budget, indicate the amount of income from operations that a company received from the previous budget period

Answer: C

Question 4

The following statements are about the Health Insurance Portability and Accountability Act (HIPAA) as it relates to the small group market. Three of these statements are true and one statement is false. Select the answer choice containing the FALSE statement.

A : A health plan that participates in the small group market is required to issue a contract to any employer that requests healthcare benefits, as long as the employer meets the statutory definition of a small group.

B : A small group must consist of more than 10 employees in order to be underwritten on a group, rather than an individual, basis.

C : A health plan is prohibited from canceling a small group’s healthcare coverage because of poor claims experience.

D : A health plan that participates in the small group market is limited in placing restrictions such as waiting periods and pre-existing conditions exclusions to individuals in high risk categories.

Answer: B

Question 5

In a fee-for-service (FFS) reimbursement method, providers are paid per treatment or per service that they provide.

One typical benefit of FFS reimbursement is that it:

A : Is highly effective in preventing excessive services that take the form of churning, unbundling, and upcoding

B : Provides physicians who attempt to control costs with a higher rate of compensation than is provided to physicians who make the effort to control costs

C : Is relatively easy to initiate, especially in markets where managed care penetration is low

D : Guards against the practice of defensive medicine

Answer: B

Name:	Health Plan Finance and Risk Management (AHM520)
Exam Code:	AHM-520
Certification:	AHIP Certification
Vendor:	AHIP
Total Questions:	215
Last Updated:	May 27, 2026

AHIP AHM-520 Answers