Bay pines medical center estimates that a capitated


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?

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Financial Accounting: Bay pines medical center estimates that a capitated
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