Certified Financial Consultant (CFC) Practice Exam

Which type of group rating do the BCBS organization use as a factor in developing rates?

1. Community rating

2. Adjusted community rating

3. Experience rating

4. Modified community rating

The correct answer is: Experience rating

The Blue Cross Blue Shield (BCBS) organization uses adjusted community rating as a basis for developing rates. This method incorporates elements of community rating while also allowing for certain adjustments based on factors such as age, geographic location, and the size of the group. This ensures that premiums reflect the anticipated cost of care for different groups while still promoting accessibility and affordability. In contrast to community rating, which sets the same premium for everyone within a specific area regardless of health status, adjusted community rating factors in specific characteristics of the population. Experience rating, which is more focused on claims history and utilization patterns of a specific group, is less common in BCBS rate determinations. Modified community rating is a variation that allows some factors to adjust rates but is typically more restricted in its application than adjusted community rating.