Bay Pines Medical Center estimates that a capitated population of


Question Description:

25

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?

Answer

25