Health PLan Premium. If a health plan covers 150,000 lives expects 25 myocardial infarctions to occur each year within the covered lives, expects a length of stay of 4.5 days for each MI, and has to pay an average of $950 per day each day the MI patient is in the hospital, what is the PMPM cost to the health plan? What would have to be charged to the patient or employer if the health plan has administrative cost equaling 10 percent of its cost and it wants a profit margin of 9 percent?

What if the employer or patient refuses to pay the new premium? What could the health plan offer to pay the hospital for an inpatient day? (Hint: try lowering the per diem rate until the PMPM charge with a 9 percent profit margin equals teh PMPM charge with the 7 percent in question 11.)