TRUE MASTER PLAN True Master Plan IT MF I { { managed care company that provides and thances health care Services for EMPLOYEES at DaiTech Madie , Inc . Approximately 5, and Employe es at Digitech Media are currently* Enrolled in THE's health insurance plan . The number at Enrollees has increased over the past `E' $3\\ Digi Tech Media continued to Expand its workforce, and more and more DigiTachi HEE's Employees have Elected to receive this benefit .` Digi Tech Hadis currently Pays THE the Mul cost of Health insurance for its Employees . This insurance provides comprehensive coverage for inpatient and outpatient hurst tal care , Surgical services , physician attics " sits , and other" services leg_. {`taral. The mall;" Lost to Employees is a $15 addamment for each physician office visit Frank GEn is the Director at Strategic Planning and Forecasting & True Master Plan . His Ke; Junction is to direct the overall development and analyz's at all strategic financial planning initiatives relating to THE's Managed care programs . His stall is involved in many' activities , including preparing periodic redONE of the costs incurred under the Digitech Had` account . Every time & Dig Tech Hadie Enclave` USES Health care services , information about the TIME It Service and the relevant casts are recorded in a database . "_ Gon recently cracked his stall to Fartami & financial analysts at the current utilization and Lasts incurred under the Digitechi Had` account . Jane Paul personally delivered her summary of utilization on the Digi Tech Hadis account to Mr . Glen `SEE Exhibit 1 1 . The date , he noted indicated & sharp increase in number at physic an office visits over The Last month . HE remarked ." THE Digitech, MEEs Employees" LISE at outpatient FA`` Can SERVICES. HE` LEEn going up for the past six months What's going on?" HE asked ME. Fail to provide him with the Enrollment numbers to see it the increase in utilization at physician Services was primarily due to the change in the number of Employees Enrolled in the health plan_ NO Problem ," She replied . I have already But the last {{ mantle" weekly statistics into a spreadsheet. Alt . Glen was concerned about THIF & profitability'_ Last year. THE negotiated with Digitech, Media to cheque & fixed premium at { ZEJ NET EMPLOYEE Per month . The total premium revenue is allocated as Callme` S`` to Hospital and Surgical SERVICES, GOT` to Physician HERE , and 15%` for Other BERIDZE .` administration , and profit. These allegations are Used to Establish budgets in the different departments all THE . THE Digitech, Medic contract would expire next month , at which the THIF would need to PETTEdState the terms of its contract with Digitech Hada . MMe. Ellen feared that THIF would have to request a sharp rate increase to remain profitable . THE's monthly cast at administering the Health Filan was fixed , but the increases in the USE of health care services were trading THE'S Profits . He suspected that Other Health plans WERE planning to INCREASE PREMIUMS LY 5- 10 percent, which was reasonable given the recent statistics on national health Expand lures . A report from Zon`, the most recent he could find . indicated that fatal national health expenditures Fuse ! { PERCENT from COLD IS BUOY -_ OVE three times THE rate of inflation . Mr. Glen caled in the rest of his stall to assist him in devising & strategy for renegotiating the Digitech HEdis account . It possible . I would like to figure out how we can continue providing this service for the rate we Established last year . I'm she'd it' we attempt to increase the FIEF member premium , EdiTech` HEdis will contract ``` another health insurer . What ather Options do'WE HAVE ?` NEIL Gordon , who works in Membership Marketing , reported that he recently conducted a survey of cust control mechanisms used by' other health plans . His analysis revealed that THE'S Competitors are* increasing their use at these mechanism , which include Lapayments , wailing parade . Freauthorization requirements , and ExclusionTTE on certain health Care SERVICES.Exhibit 1 Monthly Report of Health Care Utilization Total Costs Incurred - Digitech Media , Inc. Category of SERVICE* July ZONE August ZONE Hospital SERVICES - Innat Ent 103 . 425 212. 250 HOSPITAL SERVICES - Outpatient LEZ. 4{` SURGICAL SERVICES 101. 250 103, AND FIVEIran SINCE VISITS 15:1, 450 Administrative EXPENSES TOTAL $15. 015 Number of members , July 31 , 20010 : $120 Number of members , AUGUST 31, 2005: 413. Exhibit Z Data file An been provided on the course weagle* Exhibit ]. Sample Means for Annual Use at Health CARE SERVICES* COPayment Physician Visits LEVEL FIEF Capital $ 101 6 . 3 $15 5. 7 $25 5 . 4 5 . 1 $ 35 4 4 Source :' Demand for Health Care Services at [Herent COpayment LEVEL ! HEE``` Based on a Hat anal Study Of Health Insurance EnIng 205^WEEK Total Costs of Physician Visits # Visits # Employees 77322 40 1 4065 101TT 423 4065 74BBB 404 4062 7:3428 407 4063 74.535 404 406.9 7:5487 432 40TO 74222 430 4076 75489 452 76300 457 4083 160.3.3 459 408 1 78.832 $40 HOBB 1975.5 481 4087 3:0243 484 4095 78.993 484 $ 101 81227 4.91 409.9 16 8:4219 4103 17 BZITT 500 4712 $2456 450 41 15 $ 1 100 46.9 4126 8:421 1 498 4130 901.3.3 495 4129 95 120 500 4129 9.9865 520 4 129 97 752 505 4 136 987 1 3 517 $ 1.37[1 . 2. Create scatter plots to show the relationships between the number of Employees , number of VisitE per WEEK_ and total physician costE . Calculate Visits For Employee and the cost per visit for each week_ Calculate the mean and standard deviation for these measures for this six - month period _ Explain how theEE statistics are useful in understanding the trend in total outpatient physician casts fer LigiTECH MEd's EMPLOYEELine of the problems , in my `onion , is that the Digitech Madia Employ EEs have nearly full coverage for all their health care EEMVICES." remarked Gordon ."The LI TEEN MELEE Employees should Lazy SOME part of their heath care services out - of- Jacket Ed that they share an incentive to Stay healthy . THE only ChardBE & & I' DOPEYTHENL, but many other health insurance plans require that EnrolledE pay $20 - 26 for Each physician office well A higher copayment will help us reduce the USE of privE can BENice ." HE showEd them the results from & national Elud ," that showed a significant TE ationE hip between the amount Of & copayment and the number of vietE to a gavekian | GEE Exhibit ?) , and recommended that Mr. Glen COME JET Implementing a larger CORE, Tent for Each phy's ciEn vis t when the contract with LI Tech MediE IS REnegotiated . ROSE Gard a, Who works In Provider Relations , disagreed . "I don't think & higher copayment Is going to reduce the level of physician melts . The demand for health care services is & derivEs demand BECAUSE it DEFENCE On the demand for good health . People don't necessarily want to visit their physician , but they often have to in order to stay healthy . If we want to cut our costs , WE will have to figure out how to NEY the health care providers less ." THE currently pays for health care SERVICES on a fee-for-EEMEE basis . Most of the area hospitals and physicians participate In THE's health Insurance plan _ When Lig Tech Media EmployEEs Obtain health care Services from participating health care providers , the providers are RE MIbure Ed for their case directly by THE. Several factors have increased health CERE LOETE OVER TIME . including the growing availability of medical technology . Such BE magnetic resonance imaging | Mall and increased medical me practice litigation . ME . Garcia suggested that Mr. Elan cone der negotiating with FIVE LianE to lower the costs of the services provided _"I'VE heard that come managed care plans have cut deals with PINE diane to lower their* charges by 10 -26 Percent ," she said ."Physicians have accepted these deals because If they don't , the* could be cut out of the health Insurance plan and they could lose all their patients.* Mr. Gordon conceded that this might be possible , but Expressed his concern that if PENtic FEting physicians accepted & lower amount par Viz +. they might reduce the quality of CERE they provide to THE E MEMBERS. Mr. Glen I smissed his Staff . EEdEr to RESOLVE this isEVE , HE phoned Your consulting company' for ASE stance . THIFE executives would need a full report of the current situation and Evaluation of his staff { suggestion to Either lay increase the copayment , or I'll implement a reduction in charges for physician atTICE ME TE