AHIP AHM-520 Exam - Topic 5 Question 109 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 109
Topic #: 5

The Fiesta Health Plan prices its products in such a way that the rates for its products are reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor of 0.6 to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that Murdock's experience rate is $180 PMPM.

According to regulations, Fiesta's premium rates are reasonable if they

Avary only on the factors that affect Fiesta's costs

Bare at a level that balances Fiesta's need to generate a profit against its need to obtain or retain a specified share of the market in which it conducts business

Care high enough to ensure that Fiesta has enough money on hand to pay operating expenses as they come due

Ddo not exceed what Fiesta needs to cover its costs and provide the plan with a fair profit

Show Suggested Answer

Suggested Answer: A

by Jacqueline at Mar 23, 2025, 11:34 AM

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Polly

2 months ago

Wait, they actually assigned a 0.6 credibility factor? That's low!

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Tracey

2 months ago

A is too narrow; costs aren't the only factor.

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Martina

2 months ago

Not sure if $180 PMPM is enough for Murdock's experience rate.

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Nathalie

3 months ago

I think D makes the most sense for reasonable rates.

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Glen

3 months ago

The manual rate is $200 PMPM, that's pretty standard.

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Dortha

3 months ago

I'm a bit confused about the credibility factor and how it plays into determining reasonable rates. I hope that doesn't affect my choice here!

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Donte

3 months ago

I remember we discussed how premium rates should be reasonable, but I'm not sure which option best captures that.

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Isabella

3 months ago

I feel pretty confident about this one. The question is clearly asking about the regulatory definition of "reasonable" rates, and based on the information provided, I think option D is the best answer.

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Jerrod

4 months ago

I think option D sounds familiar because it mentions covering costs and providing a fair profit, which seems important for sustainability.

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Janae

4 months ago

I feel like we practiced a question similar to this, and I remember that balancing profit and market share was a key point. Maybe it's option B?

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Aja

4 months ago

This is a tricky one. I'm not totally sure about the difference between the factors that affect Fiesta's costs versus the need to balance profit and market share. I'll have to review those concepts before answering.

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Franchesca

4 months ago

Okay, I've got this. The question is asking about the regulatory requirements for Fiesta's rates to be considered reasonable. I think the answer is D - the rates can't exceed what Fiesta needs to cover costs and provide a fair profit.

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Xuan

4 months ago

Hmm, I'm a bit confused by the different factors they're considering - credibility, manual rate, experience rate. I'll need to think through how those all fit together to determine the "reasonable" criteria.

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Camellia

5 months ago

This seems like a straightforward question about pricing regulations. I think the key is understanding the concept of "reasonable" rates and how that's defined.

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Paola

5 months ago

This is a tricky one. I'm not super familiar with the insurance industry regulations, so I'll need to rely on my general understanding of pricing principles to try to work through this.

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Jeannetta

5 months ago

Ah, I see. The question is asking about the specific regulatory requirements for Fiesta's rates to be considered reasonable. I'll need to carefully read through the answer choices to determine which one best fits the criteria described.

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Walton

5 months ago

Okay, let me think this through step-by-step. Fiesta needs to price its products reasonably, which means the rates can't be too high or too low. I think the key is finding the right balance between covering costs and providing a fair profit.

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Emiko

5 months ago

Hmm, I'm a little unsure about the details of blended rating and credibility factors. I'll need to review those concepts before I can confidently answer this.

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Francoise

6 months ago

This seems like a straightforward question about insurance pricing regulations. I think I can handle this one.

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Paola

11 months ago

Ha! Fiesta must be feeling Fiesta-ve about their pricing if they're using blended rating. Maybe they should try a different approach, like a 'Siesta Health Plan' instead.

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Tijuana

9 months ago

A: Maybe a 'Siesta Health Plan' would be more relaxing for them!

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Raelene

10 months ago

B: I think they're just trying to find the right balance between costs and profits.

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Argelia

10 months ago

A: I agree, Fiesta seems to be confident in their pricing strategy.

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Viki

11 months ago

Hmm, I'm a bit confused. Isn't the point of blended rating to balance the manual and experience rates? I'm not sure if A, B, or D is the best answer here.

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