A health plan may use one of several types of community rating methods to set premiums for a health plan. The following statements are about community rating. Select the answer choice containing the correct statement.

Question

Quizplus · Accepted Answer

Standard (pure) community rating is a method of setting premiums for a health plan in which the plan charges all employers or other group sponsors the same dollar amount for a given level of medical benefits or health plan, without adjusting for factors such as age, gender, or experience. This is typically used for small groups, rather than large groups. Adjusted community rating (ACR) takes into account the actual experience of a group and adjusts premiums accordingly. The Centers for Medicare and Medicaid Services (CMS) does not prohibit health plans that assume Medicare risk from using ACR, but does require them to use a modified ACR method.

A Health Plan May Use One of Several Types of Community