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Exam Governance and Regulation
Number AHM-510
File Name AHIP.AHM-510.TestInside.2019-03-15.45q.vcex
Size 37 KB
Posted Mar 15, 2019
Download AHIP.AHM-510.TestInside.2019-03-15.45q.vcex

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Demo Questions

Question 1

The Sawgrass Health Center is an institution that trains healthcare professionals and performs various clinical and other types of healthcare-related research. Because Sawgrass receives government funding, it is required to provide medical care for the poor. Of the following types of health plans, Sawgrass can best be described as:


  1. A medical foundation
  2. An academic medical center (AMC)
  3. A healthcare cooperative
  4. A community health center (CHC)
Correct answer: B



Question 2

Regulatory and legislative bodies are among the important environmental forces in the health plan industry. The following statements are about such regulation and legislation. Select the answer choice that contains the correct statement.


  1. Federal guidelines exist to direct health plans on compliance issues when a health plan encounters conflicting state laws in a given service area.
  2. Administrative rules and regulations do not carry the force of law.
  3. As stakeholders in the health plan industry, federal and state governments exert tremendous influence over a health plan's formation and operations.
  4. In recent years, the number of health plan bills in the state and the federal legislatures has decreased.
Correct answer: C



Question 3

The Surrey Medical Supply Company was formed as a limited partnership. In this partnership, Victoria Lewin is one of the limited partners and Oscar Gould is a general partner. This information indicates that, with respect to the typical characteristics of limited partnerships,


  1. Ms. Lewin has more freedom to opt out of the partnership than does Mr. Gould
  2. Ms. Lewin has more liability for the debts of Surrey than does Mr. Gould
  3. both Ms. Lewin and Mr. Gould participate in the day-to-day management of Surrey
  4. the partnership will continue upon the death of Mr. Gould, whereas it will end with the death of Ms. Lewin
Correct answer: A



Question 4

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. With regard to the state in which Tidewater is domiciled, it is correct to say that, from the perspective of both Ontario and Manitoba, Tidewater is considered to be the type of corporation 
known as:


  1. A foreign corporation
  2. An alien corporation
  3. A sister corporation
  4. A domestic corporation
Correct answer: B



Question 5

Some health plans qualify as tax-exempt organizations under Sections 501(c)(3) and 501(c)(4) of the Internal Revenue Code. One true statement regarding a health plan that qualifies as a 501(c)(4) social welfare organization, in comparison to a health plan that qualifies as a 501(c)(3) charitable organization, is that a


  1. 501(c)(4) social welfare organization is allowed to distribute profits for the benefit of individuals, whereas a 501(c)(3) charitable organization can use surplus only for the benefit of the organization, the community, or a charity
  2. 501(c)(4) social welfare organization can raise operating funds through the sale of tax-exempt bonds, whereas a 501(c)(3) charitable organization does not have this advantage
  3. 501(c)(4) social welfare organization has less flexibility in determining use of funds for social or political activities than does a 501(c)(3) charitable organization
  4. 501(c)(4) exemption is easier to obtain than a 501(c)(3) exemption, because 501(c)(4) social welfare organizations are allowed to benefit a comparatively smaller group of individuals
Correct answer: D



Question 6

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. 
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. Tidewater's participating policy owners have the right to


  1. Elect the board of directors on the basis of one vote per policy owner
  2. Elect the board of directors on the basis of one vote for each policy a person owns
  3. Participate in developing a corporate mission statement and strategic plans
  4. Receive stock dividends for each policy they own
Correct answer: A



Question 7

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and 
continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. In creating Diversified, Tidewater formed the type of company known as


  1. A mutual holding company
  2. A spin-off company
  3. An upstream holding company
  4. A downstream holding company
Correct answer: D



Question 8

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. 
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. In order to become the type of company that is owned by people who purchase shares of the company's stock, Tidewater must undergo a process known as


  1. management buy-out
  2. piercing the corporate veil
  3. demutualization
  4. mutualization
Correct answer: C



Question 9

In the course of doing business, health plans conduct basic corporate transactions. For example, when a health plan engages in the corporate transaction known as aggressive sourcing, the health plan


  1. Chooses to contract with vendors who provide specific functions that would otherwise be performed in-house, such as paying claims
  2. Seeks to obtain the best deals from various vendors for equipment, supplies, and services such as telephones, overnight mail, computer hardware and software, and copy machines
  3. Merges with one or more companies to form an entirely new company
  4. Joins with one or more companies, but retains its autonomy and relies on the other companies to perform specific functions 6
Correct answer: B



Question 10

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. 
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. 
By combining under Diversified a group of businesses that produce unrelated products and by consolidating the management of the businesses, Tidewater has achieved the type(s) of integration known as


  1. Conglomerate integration and operational integration
  2. Horizontal integration and operational integration
  3. Horizontal integration and virtual integration
  4. Conglomerate integration only
Correct answer: A



Question 11

The Sawgrass Health Center is an institution that trains healthcare professionals and performs various clinical and other types of healthcare-related research. Because Sawgrass receives government funding, it is required to provide medical care for the poor. Of the following types of health plans, Sawgrass can best be described as:


  1. A medical foundation
  2. An academic medical center (AMC)
  3. A healthcare cooperative
  4. A community health center (CHC)
Correct answer: B



Question 12

Regulatory and legislative bodies are among the important environmental forces in the health plan industry. The following statements are about such regulation and legislation. Select the answer choice that contains the correct statement.


  1. Federal guidelines exist to direct health plans on compliance issues when a health plan encounters conflicting state laws in a given service area.
  2. Administrative rules and regulations do not carry the force of law.
  3. As stakeholders in the health plan industry, federal and state governments exert tremendous influence over a health plan's formation and operations.
  4. In recent years, the number of health plan bills in the state and the federal legislatures has decreased.
Correct answer: C



Question 13

The Surrey Medical Supply Company was formed as a limited partnership. In this partnership, Victoria Lewin is one of the limited partners and Oscar Gould is a general partner. This information indicates that, with respect to the typical characteristics of limited partnerships,


  1. Ms. Lewin has more freedom to opt out of the partnership than does Mr. Gould
  2. Ms. Lewin has more liability for the debts of Surrey than does Mr. Gould
  3. both Ms. Lewin and Mr. Gould participate in the day-to-day management of Surrey
  4. the partnership will continue upon the death of Mr. Gould, whereas it will end with the death of Ms. Lewin
Correct answer: A



Question 14

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. With regard to the state in which Tidewater is domiciled, it is correct to say that, from the perspective of both Ontario and Manitoba, Tidewater is considered to be the type of corporation 
known as:


  1. A foreign corporation
  2. An alien corporation
  3. A sister corporation
  4. A domestic corporation
Correct answer: B



Question 15

Some health plans qualify as tax-exempt organizations under Sections 501(c)(3) and 501(c)(4) of the Internal Revenue Code. One true statement regarding a health plan that qualifies as a 501(c)(4) social welfare organization, in comparison to a health plan that qualifies as a 501(c)(3) charitable organization, is that a


  1. 501(c)(4) social welfare organization is allowed to distribute profits for the benefit of individuals, whereas a 501(c)(3) charitable organization can use surplus only for the benefit of the organization, the community, or a charity
  2. 501(c)(4) social welfare organization can raise operating funds through the sale of tax-exempt bonds, whereas a 501(c)(3) charitable organization does not have this advantage
  3. 501(c)(4) social welfare organization has less flexibility in determining use of funds for social or political activities than does a 501(c)(3) charitable organization
  4. 501(c)(4) exemption is easier to obtain than a 501(c)(3) exemption, because 501(c)(4) social welfare organizations are allowed to benefit a comparatively smaller group of individuals
Correct answer: D



Question 16

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. 
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. Tidewater's participating policy owners have the right to


  1. Elect the board of directors on the basis of one vote per policy owner
  2. Elect the board of directors on the basis of one vote for each policy a person owns
  3. Participate in developing a corporate mission statement and strategic plans
  4. Receive stock dividends for each policy they own
Correct answer: A



Question 17

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and 
continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. In creating Diversified, Tidewater formed the type of company known as


  1. A mutual holding company
  2. A spin-off company
  3. An upstream holding company
  4. A downstream holding company
Correct answer: D



Question 18

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. 
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. In order to become the type of company that is owned by people who purchase shares of the company's stock, Tidewater must undergo a process known as


  1. management buy-out
  2. piercing the corporate veil
  3. demutualization
  4. mutualization
Correct answer: C



Question 19

In the course of doing business, health plans conduct basic corporate transactions. For example, when a health plan engages in the corporate transaction known as aggressive sourcing, the health plan


  1. Chooses to contract with vendors who provide specific functions that would otherwise be performed in-house, such as paying claims
  2. Seeks to obtain the best deals from various vendors for equipment, supplies, and services such as telephones, overnight mail, computer hardware and software, and copy machines
  3. Merges with one or more companies to form an entirely new company
  4. Joins with one or more companies, but retains its autonomy and relies on the other companies to perform specific functions 6
Correct answer: B



Question 20

The Tidewater Life and Health Insurance Company is owned by its policy owners, who are entitled to certain rights as owners of the company, and it issues both participating and nonparticipating insurance policies. Tidewater is considering converting to the type of company that is owned by individuals who purchase shares of the company's stock. Tidewater is incorporated under the laws of Illinois, but it conducts business in the Canadian provinces of Ontario and Manitoba. 
Tidewater established the Diversified Corporation, which then acquired various subsidiary firms that produce unrelated products and services. Tidewater remains an independent corporation and continues to own Diversified and the subsidiaries. In order to create and maintain a common vision and goals among the subsidiaries, the management of Diversified makes decisions about strategic planning and budgeting for each of the businesses. 
By combining under Diversified a group of businesses that produce unrelated products and by consolidating the management of the businesses, Tidewater has achieved the type(s) of integration known as


  1. Conglomerate integration and operational integration
  2. Horizontal integration and operational integration
  3. Horizontal integration and virtual integration
  4. Conglomerate integration only
Correct answer: A









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