1. You are CEO of Mission Medical Center and have been providing inpatient care to MoneyCare Medical Plan for the last year under a per diem payment contract that expires in 90 days. MoneyCare has expressed some concern that patient length of stay at your facility has gotten too long based on the incentive with per diems to keep a patient an extra day. Their utilization experts say that length of stay at your facility is 10% too high, and they are now negotiating for a flat rate per discharge based on a 10% reduction in length of stay. If you collected $16,812,812 from MoneyCare for 1,825 discharges, encompassing 10,038 patient days last year, what per discharge rate would you need to get to keep the same collected revenues as last year?

a) $9,213 per discharge

b) $10,134 per discharge

c) $8,291 per discharge

d) $10,038 per discharge

2. You are CEO of Hillside Medical Group, which provides primary care services to the community of Rocky Top, California. The group has been approached by BigGreen Health Plan to provide capitated primary care services to 5,000 BigGreen members currently served by Hillside on a fee-for-service basis. You gather past utilization data for those 5,000 patients and have the following data to use in a capitated rate proposal. For those 5,000 patients, the collected revenues over the past 12 months were $1,099,621, and your expenses to care for those patients amounted to $897,653.

- BigGreen would like all services provided in the last 12 months to be covered under the capitated contract next year and has proposed a capitation rate of $16.00 PMPM for the next year. Your expenses are expected to increase by 3% between now and when that contract goes into effect. Should you accept their proposal?

a) No, the proposed capitation rate does not generate any profit margin.

b) Yes, the proposed capitation rate is greater than expenses, even allowing for inflation.

- BigGreen would like all services provided in the last 12 months to be covered under the capitated contract next year. What is the PMPM capitation rate you would need to get the same total collected revenue for those 5,000 patients next year (assuming no inflation)?

a) $14.96 PMPM

b) $20.16 PMPM

c) $15.58 PMPM

d) $18.32 PMPM