A hospital has contracted with an HMO to provide acute care inpatient services f

Question

A hospital has contracted with an HMO to provide acute care inpatient services for $1,000 per day, subject to a 10 percent withhold. The proposed budget for inpatient services is based upon expected utilization of 600 days per 1,000 members at $1,000 per day, or $600,000 per 1,000 members. The hospital risk pool will be split equally between the hospital and a primary care physician group. If only 450 days per 1,000 members were utilized in the first year, how much would the hospital be paid per 1,000 members?

Explanation / Answer

The answer is actually $502,500. Days used 450 * Payment per (1000*90%) 900 = Payment for services of $405,000. Budgeted - acutual $600,000-$405,000=$195,000. Which is then divided in two between hospital and primary care $195,000/2=$95,000. Then add the additional payment to the service payment $405,000 + $95,000 = $502,500.

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