TaskYour task this week is to calculate reimbursement for a primary care clinic under both the Per diagnosis$/$Per procedure reimbursementmethod and a capitated reimbursement method, and identify incentives for success under each method.You are the administrator of Family Healthcare, an adult internal medicine practice in a large metropolitan area. Much of your businesscomes from Rapid River Health Plan, a $250,000$ member health plan in your state. In the past year, your practice has seen $3,500$ membersof this health plan and provided $10,000$ procedures to those patients during the year.CPT Codes # procedures procedure$992039920499205992119214921981000$Ss$0259055$G$0438$GOs$49$TOTALl$00$amount$300$s$005001,500400$S$00$so$040020040110,000$Costs PMPMNumber of patientsCosts PMPMCharge perRevenue per patient per yearMonths per yearProfits PMPMTotal next Year Cost$7.$ Describe at least$175$Number of patients$22525$Cost per patient per yearMonths per year$50$Total Next Year Annual Net Revenue$00300250200$Capitation revenue rate PMPM requiredAllowable per$*$Total Charges procedure$1.$ In the data table above, calculate the total charges and total allowable columns, marked by a $(\text{'}).$ Describe the relationship betweenRapid River's Allowable Amounts and Family Healthcare's charges Per diagnosis$/$Per procedure reimbursement method.Ranid River$2.$ Family Healthcare does not have a cost accounting system, therefore, their accountant must use an alternative formula to determinethe costs per procedure. She uses the formula $($Total annual practice expenses$/$total annual practice charges$)$ to calculate a Ratio ofCost to Charges $309\%$ for the entire practice. This percentage can then be applied at the procedure level to calculate costs perprocedure and total costs. In the data table above, complete these two columns, marked by a $(*).$ How are Rapid River's AllowableAmounts when compared to Family Healthcare's costs$-$ are there any problems that you see here?$3.$ Under the current Per diagnosis$/$Per procedure reimbursement method, how are Family Healthcare's physicians incentivized to treatthe Rapid River patients?a$.$ Rapid River Health Plan has contacted you about moving to a capitation reimbursement method tor next year tor primary care s$0$ation rate to keep your total net revenue at the same amountas it would be under the current Per diagnosis$/$Per procedure methodology$\mathrm{.}100$Capitation revenue rate PMPM required$-$ at $95\%0$L Profit for next year under this modelL$40102090$Total ANNUAL Profit for next year under this modelTotal$5.$ Assuming that your costs will also increase $2\%,$ use the following template to calculate the capitation rate to break even with youranticipated costs for next year.Allowable$30\%$ ofchargeseto tacu$*$TotalcOsts$6.$ Rapid River Health Plan would like to move to a capitation reimbursement method in an attempt to: $1)$ decrease overall claims paidexpenses in order to maintain the current premiums that they charge their member patients and $2)$ to stabilize their future claimsexpenses by utilizinga PMPM amount and shifting risk to the physician group. They tell you that they must reduce yourreimbursement PMPM to $95\%$ of the amount you calculated in #$4.$ Update your calculations:nt contract calls tor a $2\%$ intlation rate to the allowablehat Family Healthcare could take to maintain the c t year profitabilitynder this new $95\%$ capitatedmodel for these $3500$ patients $..$ je$..$ how are Family Healthcare's physicians incentivized to treat the Rapid River patients?re servicese e $00$ patens atributed to your clinic.