PMPM Calculation

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					    Calculating Per Member Per Month (PMPM)
Institutional Rates

Members                                  1,000
Inpatient days                             400
Out-of-area inpatient days                  45
Outpatient surgeries                        50
Emergency Room Visits                      125
Skilled nursing home days                    5

                              Annual Usage per Fee-for-Service   Capitation Rate
      Service Category            Member            Rate              PMPM
Inpatient days                              0.4        $1,200               $40.00
Out-of-area inpatient days               0.045          $1,495               $5.61
Outpatient surgeries                      0.05      $2,082.00                $8.68
Emergency room visits                    0.125         $238.00               $2.48
Skilled nursing home days                0.005         $350.00               $0.15
Total PMPM                                                                $56.91

Physician Rates

Primary Care Physician
(PCP) visits per member
per year                                     3
PCP Patient Load                         4,000
PCP Compensation                     $175,000
Specialist visits per
member per year                            2.4
Specialist Compensation              $284,000
FTE requirment for support
staff                                     5.70
Support Staff compensation            $45,000
Supplies (medical,
administrative, diagnostic)
per visit                              $10.00
Facilities costs per visit             $13.33
Outside referrals per
member per year                        0.9127

Primary Care                           $10.94
Specialist Care                        $14.20
Support Staff                          $28.86
Supplies                                $4.50
Facilities                              $6.00
Subtotal                               $64.49
Profit (10%)                            $6.45
In-area total                          $70.94
Outside referrals                       $5.40
Total PMPM                  $76.34

Total PMPM Costs

Hospital inpatient          $40.00
Other institutional          $16.91

Pharmacy and ME benefits    $107.00
Physician care              $76.34
Total medical care costs   $240.25

HMO costs
Administration              $23.92
Contribution to
reserves/profits            $11.96
Total HMO costs             $35.88

Total premium              $276.13
         Calculating Relative Value Unit (RVU)
Annual
Laboratory Costs        $250,000
Cost per RVU               $1.52
Profit Margin                25%
Charge per RVU             $1.89

                                     Number of Tests
Test               Number of RVUs   Performed Annually    Total RVUs
Urinalysis                      5                 5000          25000
Blood typing                   10                 4000          40000
Blood cell count               50                 1000          50000
Tissue analysis               200                  250          50000
                                                              165000

Test               Number of RVUs     Price per RVU       Test Price
Urinalysis                      5                 $1.89        $9.47
Blood typing                   10                 $1.89      $18.94
Blood cell count               50                 $1.89      $94.70
Tissue analysis               200                 $1.89     $378.79

				
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