Per Member Per Month (PMPM) Rates
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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:
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Service Category |
Inpatient Days |
Average Cost |
|
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?
- The paper must be 8 to 10 pages in length and be in APA 7th edition format
