You represent an IDS that is in negotiations with an HMO for a capitated rate to cover all hospital and physician services for a defined population. Utilization data is provided in the attached handout: Hospital and Physician Services Rates and Usage Rates, Table 6-7. This table details last years usage rates. You included your expected costs for selected services in this table. Using the data presented, calculate a required per member per month rate for this contract, assuming that you need a 15 retention factor to cover administrative costs.

Table 07 Hospital and Physician Services. Fates and Usage Rates