Bay Pines Medical Center Estimates That A Capitated Population Of 50,000

Bay Pines Medical Center estimates that a capitated population of 50,000 would have the following base utilization and the total cost characteristics: Inpatient Days Average CostService Category per 1,000 Enrollees per DayGeneral 150 $1,500Surgical 125 1,800Psychiatric 70 700Alcohol/Drug abuse 38 500Maternity 42 1,500Total 425 $1,367In addition to medical costs, Bay Pines allocates 10 percent of total premium for administration/reserves. a. What is the PMPM rate that Bay Pines must set to cover medical cost plus administration expenses?b. What would be the rate if a utilization management program would reduce utilization within each patient service category by 10%/ By 20%?c. Return to the initial case utilization assumption. What rate would be set if the average cost on each service were reduced by 10%?d. Assume that both utilization and cost reductions were made. What would be premium be?

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