Reference no: EM132399270

Mechanisms for Controlling Costs

Suppose that a health plan has 200 enrollees. 150 of these enrollees make a total of 250 office visits to PCPs over one year, and each visit costs the physician $100.  

1 Calculate the total cost paid by the health plan under the traditional fee-for-service method of payment?

2 If physicians reimbursed on a capitation basis, wherein the PCP will receive $75 per enrollee, what is the total cost paid by the health plan under this method?

3 If the method of payment is capitation, is it possible to increase the PCP's reimbursement from the health plan by having more office visits, charging higher premiums for each office visit, or increasing the number of enrollees?