Health Plan Finance and Risk Management
Question No. 1
The following statements illustrate the use of different rating methods by health plans:
The Dover health plan established rates for small groups by using a rating method which
requires that the average premium in each group cannot be more than 120% of the average
premium for any other group. Under this method, all members of each group pay the same
premium, which is based on the experience of the group.
Under the rating method used by the Rolling Hills health plan, the health plan calculates the ratio
of a group's experience to the group's historical manual rate. Rolling Hills then multiplies this
ratio by the group's future manual rate. Rolling Hills cannot consider the group's experience in
determining premium rates.
From the following answer choices, select the response that correctly indicates the rating methods
used by Dover and Rolling Hills.
Choose the correct option from the given list.
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