Premium Proration Rules

Until now, the system used the service quantity rule named PR attached to the HCPREMPS rate schedule to calculate the proration factor for the membership premium. Now, Oracle Revenue Management and Billing enables you to prorate the membership premium using the proration rules defined on the fully-insured group policy plan. A proration rule indicates how you want to prorate the membership premium on various events, such as enrollment, termination, etc. In a proration rule, you need to specify the following:

• Effective Date - Used to specify the date from when the proration rule is effective. However, the system considers the latest proration rule and not the effective proration rule while prorating the membership premium.

• Proration Event Type - Used to indicate the event when the membership premium should be prorated. The valid values are:

  • Enrollment - Used to indicate that you want to prorate the membership premium on enrollment based on the specified proration type.

  • Termination - Used to indicate that you want to prorate the membership premium on termination based on the specified proration type.

  • New Born - Used to indicate that you want to prorate the membership premium on new born enrollment based on the specified proration type.

  • Same Month Enrollment and Termination - Used to indicate that you want to prorate the membership premium when the member person enrolls and terminates in the same month based on the specified proration type.

• Proration Type - Used to indicate how you want to prorate the membership premium. The valid values are:

  • Daily - Used to indicate that you want to prorate the membership premium from the day the proration event has occurred.

  • Mid-Month - Used to indicate that you want to prorate the membership premium based on the proration date. The system calculates the proration date using the following formula: Bill Period Start Date - Specified Number of Days. For example, if the bill period start date is 1^st of every month and number of days is 15, then the proration date would be 15^th of every month. If a member person is enrolled to the membership on or before the proration date, the system will charge the premium for the member person. However, if a member person is enrolled to the membership after the proration date, the system will not charge the premium for the member person. And, if a member person is terminated from the membership on or after the proration date, the system will charge the premium for the member person. However, if a member person is terminated from the membership before the proration date, the system will not charge the premium for the member person.

  • Full Month - Used to indicate that the premium for a member person should be charged when the member person is enrolled or terminated on the coverage start date or coverage end date, respectively. If a member person is enrolled or terminated within the coverage period, the system will not charge the premium for the member person.

  • Waiver - Used to indicate that the premium for a member person should be waived off completely for the month when the member person is enrolled or terminated from the membership.

  • Coverage Days- Used to indicate that you want to prorate the premium for a member person based on the coverage days. If a member person is covered in the membership for a period less than the specified number of days, the system will not charge the premium for the member person. However, if a member person is covered in the membership for a period equal to or more than the specified number of days, the system will charge the premium for the member person. You can use this proration type when the proration event is set to Same Month Enrollment and Termination.

  • Enrollment - Used to indicate that you want to prorate the premium for a member person using the proration type of the enrollment event. You can use this proration type only when the proration event is set to Same Month Enrollment and Termination.

  • Termination - Used to indicate that you want to prorate the premium for a member person using the proration type of the termination event. You can use this proration type only when the proration event is set to Same Month Enrollment and Termination.

• Number of Days - Used to specify the number of days to determine the cutoff date when the proration type is set to Mid-Month or Coverage Days.

The following table indicates the proration types which are applicable for a particular proration event:

Note that if the proration rule is not defined for the New Born event, the system uses the proration rule of the Enrollment event. The system enables you to define and edit the proration rules for a policy plan from the user interface or through a health care inbound message.

Once the membership premium is calculated either using an age based or tier based pricing rule, the system checks whether the proration rules are defined for the respective policy plan. If so, the system sets the base amount of the corresponding record in the CI_​PRCE_​CALC_​LN table to the calculated premium amount. However, if the proration rules are not defined for the respective policy plan, the system sets the base amount of the corresponding record in the CI_​PRCE_​CALC_​LN table to the calculated premium amount and proration factor is set to 1.

The system then executes the C1-AGEPRFC or C1-TIERPRFC algorithm attached to the Pricing Rule Proration Amount Calculation system event in the respective age based or tier based pricing rule type. The system invokes these algorithms in the C1-REPC2 batch. These algorithms derive the proration event for a bill period timeline and accordingly updates the proration factor of the bill period timeline to 1 or 0 for all proration types except Daily. The proration factor is set to 1 when the premium for eligible member person (in case of age based pricing) and the premium for the membership (in case of tier based pricing) should be charged for the bill period timeline. And, proration factor is set to 0 when the premium for eligible member person (in case of age based pricing) and the premium for the membership (in case of tier based pricing) should not be charged for the bill period timeline. In case of the Daily proration type, the proration factor is calculated using the following formula: Number of Days Covered in the Coverage Period/Coverage Period

In case of tier based pricing, the system uses the subscription tier characteristic of the membership to determine the proration event.