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Petitioner relied upon an adjusted community rating
methodology to determine IHC Care premiums.7 Petitioner’s rating
methodology included adjustments for actual enrollee utilization
rates during the preceding year and a projection of the cost of
services expected to be provided during the coverage period.
Petitioner’s premium formula also took into account the following
factors: Age and sex, family size, industry, group effective
date, and benefit variations among different employer groups.
Petitioner generally compensated independent primary care
and specialist physicians on a discounted fee-for-service basis.
The fee for each service was equal to the lesser of the
physician’s current prevailing fee or a maximum allowable fee
schedule. Petitioner developed the maximum allowable fee
schedule based on its own studies of usual and customary charges
and an analysis of available market data.
Petitioner compensated Health Services for the services of
its primary care and specialist physicians using various
methodologies including capitation and discounted fee-for-
service. Under its capitation methodology, petitioner paid
Health Services a fixed monthly fee for each enrollee under the
care of Health Services’ physicians.
7 See 42 C.F.R. sec. 417.104(b) (1991), which sets forth the
requirements for acceptable HMO community rating systems.
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