- (Topic 1)
The ability of a health plan to effectively perform the rating and underwriting functions has become critical to the plan's success. In developing its pricing strategy, a health plan has to address the marketplace's ongoing trends and factors, which include

1. A. a decreased focus on small to mid-size employer groups
2. B. an improvement in the financial performance of health plans
3. C. a consolidation of the key players in the health plan industry
4. D. a decreased complexity of the products being offered.

Correct Answer: C

- (Topic 2)
The Titanium health plan's product has a unit price of $120 PMPM and a unit variable cost of $80 PMPM. Titanium has $100,000 in fixed costs per month. This information indicates that, for its product, Titanium's

1. A. Unit contribution margin is $80
2. B. Unit contribution margin is $200
3. C. Break-even point is 500 members
4. D. Break-even point is 2,500 members

Correct Answer: D

- (Topic 2)
The Puma health plan uses return on investment (ROI) and residual income (RI) to measure the performance of its investment centers. Two of these investment centers are identified as X and Y. Investment Center X earns $10,000,000 in operating income on controllable investments of $50,000,000, and it has total revenues of $60,000,000. Investment Center Y earns $2,000,000 in operating income on controllable investments of $8,000,000, and it has total revenues of $10,000,000. Both centers have a minimum required rate of return of 15%.
The following statements are about Puma's evaluation of these investment centers. Select the answer choice containing the correct statement.

1. A. Investment Center Y's RI is greater than Investment Center X's RI.
2. B. The ROI for Investment Center X is 16.7%, and the ROI for Investment Center Y is 20.0%.
3. C. Because Investment Centers X and Y are different sizes, Puma should not use ROI to compare these investment centers.
4. D. According to the evaluation of ROI, Investment Center Y achieves a higher return on its available resources than does Investment Center X.

Correct Answer: D

- (Topic 2)
The following statements are about the option for health plan funding known as a self- funded plan. Select the answer choice containing the correct response:

1. A. In a self-funded plan, an employer is relieved of all risk associated with paying for the healthcare costs of its employees.
2. B. Self-funded plans are subject to the same state laws and regulations that apply to health insurance policies.
3. C. Employers electing to self-fund a health plan are required to pay claims from a separate trust established for that purpose.
4. D. An employer electing to self-fund a health plan has the option of purchasing stop-loss insurance to transfer part of the financial risk to an insurer.

Correct Answer: D

- (Topic 2)
One way that the Medicare and Medicaid programs differ is that under Medicare, a smaller proportion of provider reimbursement goes to the primary care providers and a greater proportion of the reimbursement goes to hospitals and specialists.

1. A. True
2. B. False

Correct Answer: A