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Question 1: The Fiesta Health Plan prices its products in such a way that the rates for its products are
reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a
premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor of
0.6 to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that
Murdock's experience rate is $180 PMPM. Fiesta would correctly calculate that its blended rate
PMPM for Murdock should be Fiesta's retention charge plus
A. $152
B. $188
C. $192
D. $228
Correct Answer: B
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