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Under comprehensive, the costs of basic medical services,
basic hospital services, and major medical services were all
covered.
As a hospital plan corporation, the health insurance
premiums charged by petitioner were regulated by the Pennsylvania
Insurance Department (PID). Petitioner was required annually to
submit for approval to the PID its proposed health insurance
premium rates.
As of January 1, 1987, total annual premiums charged by
petitioner with respect to each group contract were based on one
of three premium rating methods.
Community-Rated Group Contracts
Premiums relating to groups consisting of fewer than 100
individual members (representing approximately 90 percent of all
of petitioner’s group contracts) were “community-rated”, meaning
that annual premiums for each community-rated group were based on
the cumulative claims history or claims experience of all of
petitioner’s community-rated group contracts with the same
benefit type (i.e., individual, single parent with dependents, or
family) and with the same coverage type (i.e., basic medical,
basic hospital, major medical, or comprehensive). Claims
experience (or claims submitted to petitioner) for the current
year relating to all community-rated group contracts with the
same benefit and coverage type would be reviewed by petitioner
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