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

Limited Time Offer

25%

Off

Get Premium AHM-520 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Paola

1 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.

upvoted 0 times

Tijuana

6 days ago

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

upvoted 0 times

...

Raelene

29 days ago

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

upvoted 0 times

...

Argelia

1 months ago

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

upvoted 0 times

...

Viki

1 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.

upvoted 0 times

...