Chapter 13 Assignment i Saved Required information The following information applies to the questions displayed below) 0.31 points VIP-MD is a health maintenance organization (HMO) located in North Carolina. Unlike the traditional fee-for-service model hat determines the payment according to the actual services used or costs incurred, VIP-MD receives a fixed, prepaid amount from subscribers. The per member, per month rate (PMPM) is determined by estimating the health care cost per enrollee within a geographic location. The average health care coverage in North Carolina costs $360 per month, which is the same amount irrespective of the subscriber's age. Because individuals are demanding quality care at reasonable rates, VIP-MD must contain its costs to remain competitive. A major competitor, National Physicians, entered the North Carolina market early in the current year with a monthly premium of $317. VIP-MD wants to maintain its current market penetration and hopes to increase its enrollees in the current year. The latest data on the number of enrollees and the associated costs follow: eBook Projected Enrollment Average Monthly Cost in Current Enrollment in Current Year age 1-4 5-14 15 19 20-24 25 34 35 -44 45-54 55-64 65-74 75-84 Year $ 11,147,072 44,888 81,656 95,073 65,446 132, 696 166,076 84,696 9B,424 155,488 67,095 22, 599 ,014,237 4B,177 83,863 95,087 67,082 131,754 174,546 90,089 101,123 160,759 71,665 26,049 ,050,294 10,058, 832 8,436,024 9,538, 624 26,431,408 38,B81,308 22,741,136 28,690,912 49,517,344 33,431,960 24 285,675 years and older $263,160,295 Required: 1. Calculate the target cost required for VIP-MD to maintain its current market share and profit per enrollee in the current year. 2. Costs in the health care industry applicable to VIP-MD and National Physicians are expected to increase by 7% in the coming year. VIP-MD is planning for the year ahead and is expecting all providers, including VIP-MD and National Physicians, to increase their rates by $25 to $342. Calculate the new target cost assuming again that VIP-MD wants to maintain the same profit per enrollee as in the current year (For all requirements, do not round intermediate calculations and round your answers to 2 decimal places.) 1. Required target cost 2. New target cost $ 216.47