considering reductions in utilization or pricing

User Generated

pevfgnywrjry

Business Finance

South University-Savannah

Description

Consider the following data and make your best analysis of per member per month (PMPM) rates, considering reductions in utilization or pricing. Bay Pines Medical Center estimates that a capitated population of 50,000 would have the following base case utilization and total cost characteristics:

Service Category

Inpatient Days
per 1,000 Enrollees

Average Cost
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 the total premium for administration/reserves.

On the basis of your data analysis, respond to the following:

  • What is the PMPM rate that Bay Pines must set to cover medical costs plus administrative expenses?
  • What would be the rate if a utilization management program were to reduce utilization within each patient service category by 10 percent? And by 20 percent?
  • Consider the initial base case utilization assumption. What rate would be set if the average cost on each service were reduced by 10 percent?
  • Assume that both utilization and cost reductions were made. What would the premium be?

To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format.. Bay Pines Medical Center estimates that a capitated population of 50,000 would have the following base case utilization and total cost characteristics:

Service Category

Inpatient Days
per 1,000 Enrollees

Average Cost
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 the total premium for administration/reserves.

On the basis of your data analysis, respond to the following:

  • What is the PMPM rate that Bay Pines must set to cover medical costs plus administrative expenses?
  • What would be the rate if a utilization management program were to reduce utilization within each patient service category by 10 percent? And by 20 percent?
  • Consider the initial base case utilization assumption. What rate would be set if the average cost on each service were reduced by 10 percent?
  • Assume that both utilization and cost reductions were made. What would the premium be?

To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format.

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Running Head: REDUCTION IN UTILIZATION/PRICING

Considering Reductions in Utilization or Pricing
Student’s Name
Institution Affiliation
Date

1

REDUCTION IN UTILIZATION/PRICING

2

What is the PMPM rate that Bay Pines must set to cover medical costs plus administrative
expenses?
PMPM (Per member mer month) rate
Annual

Average

Capitation

usage per

medical

Admin

Total

rate

Category

member

cost

exp

rate

PMPM

General

0.15

1,500

166.67

1,666.67 20.83

Surgical

0.13

1,800

200

Psychiatric 0.07

700

Alcohol

0.04

Maternity

0.04

2,000

20.83

77.78

777.78

4.54

500

55.56

555.56

1.76

1,500

166.67

1,666.67 5.83

Part a)

PMPM...


Anonymous
I was having a hard time with this subject, and this was a great help.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Related Tags