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AHIP AHM-520 Exam - Topic 1 Question 78 Discussion

The following information was presented on one of the financial statements prepared by the Rouge health plan as of December 31, 1998:When calculating its cash-to-claims payable ratio, Rouge would correctly divide its:
B) Cash by its reported claims and its incurred but not reported claims (IBNR)
A) Cash by its reported claims only
C) Reported claims by its cash
D) Reported claims and its incurred but not reported claims (IBNR) by its cash

AHIP AHM-520 Exam - Topic 1 Question 78 Discussion

Actual exam question for AHIP's AHM-520 exam
Question #: 78
Topic #: 1
[All AHM-520 Questions]

The following information was presented on one of the financial statements prepared by the Rouge health plan as of December 31, 1998:

When calculating its cash-to-claims payable ratio, Rouge would correctly divide its:

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Suggested Answer: B

by Sharika at Dec 11, 2023, 05:26 PM

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Gabriele
7 months ago
Cash-to-claims ratio = Cash / (Reported claims + IBNR).
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Nelida
7 months ago
Totally with you, Lindsey! B makes the most sense.
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Lashaun
7 months ago
Wait, are we really sure about including IBNR? Seems off.
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Billy
7 months ago
I think A is the right choice, just reported claims matter.
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Lindsey
8 months ago
Definitely B, you need to include IBNR for accuracy.
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Wilburn
8 months ago
I'm really torn between options B and D. I feel like IBNR is important, but I'm not sure how to apply it in this context.
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Darrin
8 months ago
If I recall correctly, the cash-to-claims ratio is supposed to give a complete picture, so I think it makes sense to include both reported claims and IBNR.
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Virgie
8 months ago
I think we practiced a similar question where we had to decide if IBNR should be included. I feel like it should be part of the calculation.
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Eleonore
8 months ago
I remember we discussed the cash-to-claims payable ratio in class, but I'm not sure if it includes IBNR claims or just reported claims.
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Dyan
8 months ago
Okay, I think I've got it now. The cash-to-claims payable ratio is asking me to divide the cash by the total claims, so that includes the reported claims and the IBNR. I'm feeling more confident about this now.
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Roosevelt
8 months ago
Based on the information given, I believe the correct answer is B. We need to divide the cash by the total claims, which includes both the reported claims and the IBNR. That will give us the true cash-to-claims payable ratio.
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Brinda
8 months ago
I'm a little confused about the IBNR component. Do I need to include that in the denominator, or just the reported claims? I want to make sure I get this right.
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Aliza
8 months ago
Hmm, this seems like a straightforward ratio calculation, but I want to make sure I understand the components correctly. I'll need to carefully review the information provided.
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Alysa
9 months ago
Okay, the key here is to figure out what the "cash-to-claims payable ratio" is asking for. I think it's asking me to divide the cash by the total claims, which would include the reported claims and the IBNR.
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Dorothy
9 months ago
The key here is to focus on the terms "current" and "fixed" in the answer choices. That should help me identify the correct definition of net working capital.
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Simona
9 months ago
Hmm, I'm not entirely sure about this one. I know we covered CDBs and PDBs in class, but I'm having trouble applying that knowledge to this specific scenario. I'll have to think it through carefully.
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