AHIP Exam AHM-520 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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1 months ago

I think the correct answer is D. The premium rates should cover Fiesta's costs and provide a fair profit, but not exceed that level.

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Johnathon

23 days ago

I agree, the premium rates should cover costs and provide a fair profit.

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Sarah

2 months ago

But what about option B? Shouldn't Fiesta also consider balancing profit with market share?

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Whitley

2 months ago

I agree with Sheridan. Fiesta should not charge more than what they need to cover costs and make a profit.

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Sheridan

2 months ago

I think the answer is D.

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