Bay pines medical center estimates that a capitated population of 50,000 would have the following base case utilization and costs.
Category In patient days per enrollees Average cost per day
Gen. 150 $1500
Surgical 125 1800
Psychiatric 70 700
Sub/abuse 38 500
Maternity 42 1500
1. In addition to medical costs, Bay pines allocates 10 percent of the total premium for admin and reserves.
What is the per member per month rates they must set to cover cost plus admin fees?
2. What would be the best rate if a utilization management program would reduce utilization by 10%? By 20?
3. Return to the base case utilization. What rate would be set if the average cost on each service were reduced by 10%
4. Assume that both utilization and cost reductions were made. What would the premiums be?