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Medical cost plus administration expenses

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Reference no: EM132444726

Bay Pines Medical Center estimates that a capitated population of 50,000 would have the following base utilization and the total cost characteristics: Inpatient Days Average Cost Service Category per 1,000 Enrollees per Day General 150 $1,500 Surgical 125 1,800 Psychiatric 70 700 Alcohol/Drug abuse 38 500 Maternity 42 1,500 Total 425 $1,367 In addition to medical costs, Bay Pines allocates 10 percent of total premium for administration/reserves.

a. What is the PMPM rate that Bay Pines must set to cover medical cost plus administration expenses?

b. What would be the rate if a utilization management program would reduce utilization within each patient service category by 10%/ By 20%?

c. Return to the initial case utilization assumption. What rate would be set if the average cost on each service were reduced by 10%? d. Assume that both utilization and cost reductions were made. What would be premium be?

Reference no: EM132444726

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