Problem:
Dixie Medical Center estimates that a cpitated population of 50,000 would utilize 450 inpatient days per 1000 enrollees at an average cost of $1,200 per day. Assume that in addition to medical costs Dixie allocates 10% of the total premium for administrative and reserve cost.
Required:
Question: What is the PMPM rate that Dixie must set to cover all medical/administrative/reserve cost?
A. $45
B.$49.50
C.$40
D. $55
Note: Show all workings.