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remaining 25 percent of the physician panel comprised physicians
employed by Health Services.
As a closed panel HMO, petitioner required its enrollees to
agree to coordinate all of their medical care through a primary
care physician (PCP) or so-called gatekeeper. In cases in which
the PCP determined that an enrollee should be seen by a medical
specialist, the PCP generally was expected to refer the enrollee
to a specialist within the PCP’s medical group.
Petitioner relied upon an adjusted community rating
methodology to determine the amount of SelectMed 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 compensated all physicians by paying them the
greater of a capitation fee8 or approximately 85 percent of the
physician’s usual and customary billed charges. In some cases,
6(...continued)
administrative staff;
(iv) Establish an arrangement whereby a
member’s enrollment status is not known to the
health professional who provides health services
to the member.
7 See 42 C.F.R. sec. 417.104(b) (1991), which sets forth the
requirements for acceptable HMO community rating systems.
8 A capitation fee represents a fixed payment for each
enrollee/patient under a physician’s care.
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