IHC Health Plans, Inc. - Page 16

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               Petitioner entered into some form of written agreement with            
          all enrollees specifying the premium charge and the medical                 
          services to which the enrollee would be entitled.  Petitioner               
          entered into master group contracts with all employers offering             
          its health plans.  Thereafter, during annual open enrollment                
          periods, employees were permitted to enroll in the health plan              
          and select the benefit package of his or her choice.                        
               Although petitioner did not limit its enrollment based upon            
          pre-existing medical conditions, certain plans excluded some pre-           
          existing conditions from full coverage during the first 12 months           
          of membership.                                                              
               Petitioner applied an adjusted community rating methodology            
          to determine premiums for individual and small employer group               
          enrollees, adjusting its rates for risk factors such as age and             
          gender.5  Petitioner relied upon past claims experience to                  
          determine premiums for large employer group enrollees.                      
               B. Physician Services                                                  
               Petitioner did not employ a significant number of                      
          physicians.6  Petitioner fulfilled its obligation to arrange for            
          its enrollees to receive physician services by contracting with a           

          5    See 42 C.F.R. sec. 417.104(b) (1995), which sets forth the             
          requirements for acceptable community rating systems for                    
          federally qualified HMOs.                                                   
          6    Petitioner never employed more than five physicians at a               
          time, and these physicians were hired for the limited purpose of            
          conducting health fairs for enrollees.                                      

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Last modified: May 25, 2011