Medicaid sets the price for reimbursing intermediate-level nursing home care where the patient is a permanent resident and has no assets. According to the 2017 NIC Skilled Nursing Report, Medicaid reimburses skilled nursing care at an average national rate of $206, less than half the rate paid by Medicare and Managed Medicare, $503 and $433, respectively. For private pay patients, the reimbursement is approximately $257/day. A dual licensed skilled care facility has a payor mix of 20 percent Medicare/Managed Medicare, 10 percent private pay and 70 percent Medicaid. What is the marginal revenue for another Medicaid patient day at the nursing home? 

To answer this, discuss marginal revenue and what it does. What happens when marginal revenue falls below marginal costs? Which patient mix would be better to focus on if average operating costs per day were around $350? Does this fit within the 'administrator-as-agent' model?