This case illustrates the development of a premium rate by a managed care plan for submission of a bid to furnish healthcare services to employees of a buyer consortium. The historical cost input data for facilities services is the per diem reimbursement rate for inpatient acute care, the daily cost for skilled nursing facility care, the daily cost for inpatient mental health care, the per case cost for hospital-based surgery, and the per visit cost for emergency room services. The historical utilization input data for facilities services is days per member for acute care, nursing home care, and inpatient mental health care; cases per member for inpatient surgery; and visits per member for emergency room care. The model consists of a complete base case analysis--no changes need to be made to the existing MODEL-GENERATED DATA section. However, values in the INPUT DATA section of the student spreadsheet have been replaced by zeros. Students must select appropriate input values and enter them into the cells with values colored red. After this is done, any error cells will be corrected and the base case solution will appear. The KEY OUTPUT section includes the most important output from the MODEL-GENERATED DATA section. INPUT DATA: KEY OUTPUT: Inflation adjustment 0.0% PMPM bid $31.08 Administrative expense percent0.0% Premium rates: Profit/reserves percent 0.0% Single $ - Family $ - OTHER INPUT AND MODEL-GENERATED DATA: PMPM Calculation: Historical Base Copay Adjustment FactorsAdjustedInflation Adjusted Cost Data Utilization PMPM Cost Cost Utilization PMPM Cost PMPM CostI. Medical Expenses Facility Services: Inpatient: Acute $ - 0.0000 $ - 0.0000 0.0000 $ - Skilled nursing - 0.0000 - 0.0000 0.0000 - Mental health - 0.0000 - 0.0000 0.0000 - Substance abuse 0.41 1.0000 1.0000 0.41 Surgical procedures - 0.0000 - 0.0000 0.0000 - Emergency room - 0.0000 - 0.0000 0.0000 - Outpatient procedures 3.43 1.0000 1.0000 3.43 Total facility services PMPM amount $ 3.84 $ 3.84 $ 3.84 Physician Services: Primary care $ - 0.0000 0.0000 $ - Specialist care Office visits - 0.0000 0.0000 - Surgical services 9.00 0.9544 1.0000 8.59 All other services 23.67 0.8659 0.9100 18.65 Total physician services PMPM amount $27.24 $ 27.24 Total facility and physician services PMPM amount $ 31.08 II. Other Expenses Administrative $ - Reserves - Total other expenses $ - $ - Total PMPM amount $ 31.08 III. Premium Rates Single Family Rate factor 0.000 0.000 Monthly premium rate$0.00 $0.00

1. To calculate the base rate the co pays are as follows: Mental health coverage is limited to 60 days. Copays are as follows: Acute inpatient care $150 per admission Mental health inpatient care $150 per admission Inpatient surgical services $150 per procedure Emergency care $ 25 per visit Primary physician care $ 15 per visit Specialist physician care $ 10 per visit plus $10 PCP copay 2. For High Cost Premium Plan: Mental health coverage is limited to 90 days. There are no copays with this plan 3. For Low Cost Premium Plan Mental health coverage is limited to 30 days. Copays are as follows: Acute inpatient care $250 per admission Mental health inpatient care $250 per admission Inpatient surgical services $250 per procedure Emergency care $ 50 per visit Primary physician care $ 25 per visit Specialist physician care $ 20 per visit plus $20 PCP copay