Consider the following data and make your best analysis of (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: (table is attached)
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 Your assignment should be addressed in an 7-page document.
