AHIP AHM-250 Exam Dumps & Practice Test Questions

Question 1:

Quest HMO has formed an exclusive partnership with a single, multi-specialty physician group. In this setup, the physicians are salaried employees of the group, hold equity ownership, and deliver services solely under this agreement.

What type of HMO structure does this represent?

A. A captive group in a staff model
B. A captive group in a network model
C. An independent group in a network model
D. An independent group in a staff model

Correct Answer: A

Explanation:

This scenario aligns with a staff model HMO that operates with a captive physician group. In a staff model HMO, healthcare providers—such as doctors—are directly employed by the HMO or a specific medical group affiliated with it. These providers work exclusively for the HMO, often within a centralized facility or network. The defining characteristic of a captive group is that its members are committed solely to one HMO or medical group, which is evident in this question where the physicians provide services only under Quest HMO’s arrangement.

Furthermore, the mention that these physicians hold equity in the group practice reinforces the captive model nature, as they are financially invested and aligned with the goals of the organization. This ownership structure often encourages collaboration, quality care, and cost control.

Let’s analyze why the other choices are incorrect:

• B. A captive group in a network model: This would involve a group committed to the HMO but operating within a network model, which typically contracts with multiple independent physician groups—contrary to the exclusivity described here.

• C. An independent group in a network model: This would involve a non-exclusive relationship where independent physician groups contract with multiple HMOs. However, the scenario specifies exclusivity.

• D. An independent group in a staff model: This option is contradictory. The staff model requires physicians to be employed or fully aligned with the HMO, so an independent group would not fit.

Thus, the setup clearly represents a captive group in a staff model, making A the correct answer.

Question 2:

Which type of Health Maintenance Organization (HMO) is legally restricted from using medical underwriting for any group, including small businesses?

A. State
B. Not-for-profit
C. For-profit
D. Federally qualified

Correct Answer: A

Explanation:

State-regulated HMOs are subject to strict insurance laws that prohibit the use of medical underwriting for determining eligibility or premiums for any group, including small employers. Medical underwriting is the process of assessing an applicant’s health status or medical history before issuing coverage. It allows insurers to deny coverage or charge higher premiums based on perceived risk. However, many state laws, especially under the Affordable Care Act (ACA) and HIPAA regulations, outlaw this practice for group health plans to ensure fairness and access.

Under these protections, State HMOs must offer coverage regardless of an individual’s medical history. This includes removing barriers for people with pre-existing conditions, such as diabetes, cancer, or heart disease. As a result, small businesses and individuals benefit from broader coverage options and more equitable premium rates. State-level mandates promote a more inclusive insurance landscape, aiming to extend healthcare access without discrimination based on health risk.

Why the other choices are incorrect:

• B. Not-for-profit: While not-for-profit HMOs often aim for community service, their underwriting practices depend on local regulations and aren't universally restricted from underwriting.

• C. For-profit: These HMOs operate for shareholder profit and often have greater freedom in their underwriting practices, subject to federal or state regulation.

• D. Federally qualified: These HMOs meet specific federal standards and may still engage in some form of underwriting unless state laws say otherwise.

In summary, only State HMOs are consistently governed by regulations that prohibit medical underwriting for all groups, including small ones. This approach supports healthcare equity, prevents risk-based pricing discrimination, and ensures small employers can afford to offer health benefits without penalties for workforce health conditions. Hence, the correct choice is A.

Question 3:

Which statement best reflects a core trait of a Group Practice Without Walls (GPWW), a commonly used integration model among physician-only practices?

A. GPWW brings several independent physician offices together under one centralized management organization.
B. GPWW models tend to be less integrated than Independent Practice Associations (IPAs).
C. Physicians who are part of a GPWW are not allowed to hold ownership in the practice.
D. Physicians in a GPWW are responsible for independently managing all their business operations.

Correct Answer: A

Explanation:

A Group Practice Without Walls (GPWW) is a healthcare integration model where multiple independent physician practices operate under a single administrative structure while preserving their individual ownership and clinical autonomy. The term “without walls” refers to the fact that while these physicians are linked administratively, they do not physically consolidate into a single location. Instead, each physician or practice continues operating at their original site but benefits from shared services such as billing, purchasing, IT support, or human resources.

Option A is correct because it accurately describes this core feature: the GPWW model allows multiple independent physician groups to operate under one organizational umbrella for administrative efficiency, without merging their physical offices or clinical identities.

Option B is incorrect. While both GPWWs and IPAs (Independent Practice Associations) involve networks of independent physicians, a GPWW generally offers a higher level of integration, particularly in terms of shared infrastructure and services.

Option C is inaccurate. One of the defining aspects of a GPWW is that participating physicians typically retain ownership of their practices. This contrasts with fully integrated models where physicians may become employees of a larger healthcare system.

Option D is also incorrect because although physicians maintain clinical independence, GPWWs typically centralize many business functions. This shared operational support reduces the burden on individual physicians to manage all aspects of business administration on their own.

In summary, GPWWs provide a hybrid structure where physicians keep their autonomy while gaining the advantages of collective resources, making Option A the most accurate description.

Question 4:

What is the correct definition of standard (pure) community rating in the context of setting health insurance premiums?

A. It’s mainly used for large employer groups since it offers the most competitive premium rates.
B. It sets a single premium amount for all group sponsors offering the same health plan, regardless of demographic or risk factors.
C. It calculates premiums by incorporating each group’s actual healthcare usage or claims history.
D. CMS regulations disallow the use of adjusted community rating for Medicare plans involving risk-sharing.

Correct Answer:  B

Explanation:

Community rating refers to a method insurers use to set health insurance premiums where demographic or health-related factors are either limited or not considered. Specifically, standard (or pure) community rating means that every policyholder or group, regardless of their age, gender, location, or health history, is charged the exact same premium for a given plan. This approach promotes fairness and accessibility but can result in cross-subsidization where healthier individuals indirectly cover the costs of higher-risk enrollees.

Option B is correct because it clearly defines standard community rating: all employers or group sponsors are charged the same fixed premium amount for a specific benefit plan, without adjusting for factors such as age or prior claims history.

Option A is incorrect because large groups typically prefer experience rating, which tailors premiums based on a group’s actual claims experience. Pure community rating can make premiums less competitive for large, low-risk groups, which often expect pricing reflective of their favorable risk profiles.

Option C inaccurately describes adjusted or experience rating, not standard community rating. Under adjusted community rating (ACR), insurers can adjust premiums based on some demographic factors—like age or geography—but not on actual claims experience.

Option D is also incorrect. The Centers for Medicare and Medicaid Services (CMS) does not bar the use of adjusted community rating for Medicare-related plans. In fact, under the Affordable Care Act, ACR is permitted and commonly applied in the individual and small group markets, including certain Medicare Advantage plans.

In summary, standard community rating offers uniform premiums for everyone within a given plan level, making Option B the correct answer. This system ensures broader access but may not reflect an individual or group’s true risk level.

Question 5

Which of the following statements best explains how geographic location influences a health plan’s ability to build a strong provider network?

A. Health plans usually find it easier to contract with providers who belong to a single organization rather than with those affiliated with multiple entities.
B. Health plans typically have more flexibility in contracting with providers in urban areas compared to rural areas.
C. In areas with minimal health plan penetration, consumers tend to favor HMOs over more loosely managed options like PPOs.
D. Large corporations usually take more time than small businesses to implement new health plans.

Correct Answer: B

Explanation:

A health plan's success in developing a robust provider network is strongly affected by the demographics and structure of its proposed service area. One of the most influential factors is whether the area is urban or rural. Urban areas typically have a higher density of healthcare providers, including hospitals, clinics, and specialists. This greater provider availability allows health plans to negotiate more favorable and diverse contracts, ultimately offering better access and care options to members.

Conversely, rural areas often suffer from provider shortages and may have only a few hospitals or practices to choose from. This scarcity limits health plans’ ability to negotiate flexible contracts and may force them to accept less favorable terms. In some cases, they may even have to contract with all available providers just to meet basic network adequacy requirements.

Looking at the other options:

Option A is misleading. While providers in a single entity may streamline contracting, those affiliated with multiple networks can actually enhance flexibility and reach, allowing health plans to cover broader patient populations.

Option C incorrectly assumes that consumers in underdeveloped insurance markets prefer HMOs. However, PPOs usually attract more interest due to less restrictive care access, including no need for referrals and broader provider choice.

Option D is also inaccurate. Large employers often adopt health plans faster because they have dedicated HR teams, larger budgets, and more strategic planning resources compared to small companies.

In conclusion, urban settings give health plans greater leverage and contracting flexibility due to a higher concentration and variety of healthcare providers, making option B the most accurate statement.

Question 6:

In 2006, what was the minimum deductible amount required for a High Deductible Health Plan (HDHP) with self-only coverage?

A. $525
B. $1,050
C. $2,100
D. $5,250

Correct Answer: B

Explanation:

In 2006, the minimum deductible mandated by the IRS for a High Deductible Health Plan (HDHP) with self-only coverage was $1,050. This requirement is part of federal guidelines that define what qualifies as an HDHP, a type of health insurance plan often paired with a Health Savings Account (HSA).

The HDHP model is designed to encourage cost-conscious healthcare decisions by making the insured responsible for a higher portion of initial medical costs. Once the annual deductible is met, the plan begins covering a greater share of medical expenses. In exchange for this higher upfront cost, HDHPs generally offer lower monthly premiums, making them appealing—particularly to healthy individuals who don’t expect frequent medical visits.

The $1,050 minimum deductible applied to individuals with self-only coverage. For family coverage, the required minimum was significantly higher—$2,100 in 2006. These figures are established and periodically updated by the IRS, adjusting for inflation and healthcare cost trends.

This minimum deductible also serves as the eligibility threshold for contributing to an HSA. An HSA allows individuals to set aside pre-tax dollars to pay for qualified medical expenses. The triple tax advantages—tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses—make HSAs a powerful savings tool, especially when combined with an HDHP.

Let’s assess the incorrect options:

• Option A ($525): Too low to meet the HDHP requirement for that year.

• Option C ($2,100): This was the minimum for family coverage, not self-only.

• Option D ($5,250): Far exceeds the minimum and was not relevant for deductible thresholds.

Understanding these deductible requirements is critical for anyone evaluating HDHPs and HSAs, as they affect not only insurance eligibility but also tax benefits and personal healthcare spending. In 2006, the $1,050 threshold was central to ensuring compliance with IRS rules and maximizing the financial advantages of pairing an HDHP with an HSA.

Question 7:

Which action is essential for a medical foundation to preserve its not-for-profit designation?

A. Provide significant benefit to the community
B. Employ physicians directly rather than contracting them
C. Focus on operational efficiencies like facility consolidation
D. Avoid engaging in the corporate practice of medicine

Correct Answer:  A

Explanation:

For a medical foundation to maintain its not-for-profit status, it must fulfill certain obligations that align with the purpose of a nonprofit organization. Chief among these is demonstrating that it delivers a meaningful benefit to the community. This typically involves offering healthcare services that are accessible, affordable, and responsive to community needs, including underserved or vulnerable populations. Many not-for-profit medical organizations also provide public health education, preventive screenings, or subsidized care, all of which contribute to fulfilling their charitable mission.

The Internal Revenue Service (IRS) and other regulatory bodies scrutinize whether the organization primarily serves the public interest rather than private gain. If a foundation fails to provide community-oriented services or appears to operate like a for-profit business, it risks losing its not-for-profit designation and the accompanying tax exemptions.

Let’s evaluate the other options:

• B. Employ physicians directly rather than contracting them: While staffing decisions affect operations, this is not a determining factor for nonprofit status. Both employment and contractual relationships are permissible, as long as the overall goal remains community service, not profit.

• C. Focus on operational efficiencies like facility consolidation: Although improving efficiency can be advantageous, it is not a legal or regulatory requirement for nonprofit recognition. Operational efficiency supports sustainability, but it is not a substitute for providing community benefit.

• D. Avoid engaging in the corporate practice of medicine: This issue relates more to state-level regulatory rules about who can own or operate medical practices. It doesn’t directly affect a foundation’s not-for-profit status, which hinges on its mission and public service, not corporate structure.

In summary, the key requirement for retaining a nonprofit designation is proving that the organization serves the public good, making A the correct choice.

Question 8

In a health insurance plan that pays more for in-network services and requires preauthorization for certain procedures, what should be a central focus of claims review policies?

A. Automatically assume all required preauthorizations are in place
B. Check for inconsistencies between diagnosis and treatment codes before approving claims
C. Skip verifying provider network status before granting in-network payments
D. Avoid checking if the member has other insurance coverage for coordination

Correct Answer: B

Explanation:

In a health plan that differentiates between in-network and out-of-network services and requires preauthorization for certain procedures, claims enforcement policies must ensure that payments are made accurately and compliantly. One of the most critical aspects of this process is verifying that the diagnosis codes and treatment (or procedure) codes on the claim are logically and medically aligned.

Choosing B, which emphasizes investigating conflicts between diagnostic and procedural codes, is the correct approach. For example, if a patient is diagnosed with a mild condition but the treatment involves a major surgical procedure, this inconsistency should be flagged for review. Such a check helps prevent fraudulent claims, coding errors, and incorrect reimbursements, all of which can significantly impact a health plan's financial integrity and compliance posture.

Now let's assess the other choices:

• A. Automatically assume preauthorization was obtained: This is risky and non-compliant. Health plans must verify preauthorization for each service where it is required. Failure to do so could result in paying for services that should not have been approved, which could be financially and legally detrimental.

• C. Skip verifying provider network status: Doing this undermines the plan’s tiered benefit structure. The difference in reimbursement levels between in-network and out-of-network care is essential for managing costs and guiding member behavior. Incorrectly applying in-network rates could lead to overpayments.

• D. Avoid checking for other insurance coverage: Overlooking coordination of benefits (COB) can result in the primary plan paying for services that another insurer should have covered, leading to duplicate or incorrect payments.

Ultimately, focusing on code accuracy (diagnostic vs. treatment) ensures that the plan only pays for appropriate and medically necessary services. This safeguards resources and upholds plan integrity, making B the most effective and essential policy.

Question 9:

Which of the following accurately reflects a characteristic of a closed Physician-Hospital Organization (PHO)?

A. Specialists in the PHO are typically paid using capitation
B. Specialists in the PHO are generally reimbursed through capitation arrangements
C. The PHO typically restricts the number of specialists by each specialty
D. All eligible members of a hospital's medical staff may join
E. Only primary care physicians are allowed to participate in the PHO

Correct Answer: C

Explanation:

A Physician-Hospital Organization (PHO) is a formal alliance between a hospital and its affiliated physicians. Together, they contract with health plans to offer services and coordinate patient care more effectively. PHOs are generally categorized into two types: open and closed. The primary difference lies in how membership and participation are structured.

A closed PHO operates under selective membership criteria. It limits participation to certain physicians, typically based on the organization's strategic needs, performance metrics, or other criteria aligned with care quality and operational efficiency. One defining feature of a closed PHO is that it restricts the number of specialists within each medical specialty. This controlled admission allows the organization to closely manage service utilization, coordinate care more efficiently, and maintain high performance standards. This is why option C is the correct answer.

Now, considering the incorrect options:

• A and B both state that specialists are usually paid via capitation. While capitation (a set amount per patient) is a common reimbursement model in managed care settings, it is not exclusive to or necessarily defining of closed PHOs. Compensation models in closed PHOs can vary based on contractual arrangements and do not always follow capitation.

• D suggests that membership is open to all eligible hospital staff. This applies more to an open PHO, not a closed one. Closed PHOs selectively include only a subset of the medical staff.

• E claims membership is limited to primary care physicians (PCPs), which is inaccurate. Closed PHOs often include both PCPs and specialists, though the number of specialists is typically limited.

Thus, closed PHOs are designed to maintain a focused, high-performing network, and limiting specialist numbers by type is a core strategy, making C the most accurate answer.

Question 10:

How would a public employer, such as a local government or county agency, be classified in terms of group structure?

A. Employer-employee group
B. Multiple-employer group
C. Affinity group
D. Debtor-creditor group

Correct Answer: B

Explanation:

A public employer, such as a municipality, city council, or county government, is best categorized as a multiple-employer group. This term refers to a structure in which several distinct employers collaborate under a shared benefits or service arrangement. In the public sector, it is common for multiple governmental units—like city departments, school districts, or county agencies—to collectively participate in insurance pools, retirement systems, or health benefit plans.

The multiple-employer group designation reflects this collaborative approach, which offers efficiency, cost-sharing, and administrative benefits. Public entities often unite to enhance bargaining power with insurers or streamline employee benefits across jurisdictions. Therefore, option B is correct.

Looking at the other choices:

• A (Employer-employee group) generally describes a single employer and its employees, such as a private company offering group health insurance to its workforce. This model does not apply to the broader and more complex relationships between various governmental agencies.

• C (Affinity group) involves individuals connected by shared interests, memberships, or affiliations—such as alumni associations or professional clubs. While an affinity group can access group benefits, it lacks the formal employer-employee structure present in public sector organizations.

• D (Debtor-creditor group) refers to a financial relationship where one party owes money to another—common in lending or credit card agreements—but irrelevant to the structure of public employment or benefit systems.

In conclusion, multiple-employer groups effectively describe the interconnected nature of public sector employers working together on programs like healthcare and retirement, making B the most accurate and relevant classification.