AHIP AHM-520 Exam - Topic 3 Question 134 Discussion

Question

The risk-based capital formula for health plans defines a number of risks that can impact a health plan's solvency. These categories reflect the fact that the level of risk faced by health plans is significantly impacted by provider reimbursement methods that shift utilization risk to providers. The following statements are about the effect of a health plan transferring utilization risk to providers. Select the answer choice containing the correct statement:

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C) 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.

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

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B) 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.

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