Calculating the Adjusted PMPM Cost

You are going to create the three scenarios now by calculating the Adjusted PMPM Cost (column H) and Inflation Adjusted PMPM Cost (column I) for each item. You will do this by inputting the copay adjustment factors (columns F and G) presented in the case, based on various assumptions. HINT: For all scenarios, you might find it easier to go through Exhibit 5.2 in the case and mark ‘high’, ‘moderate’ and ‘low’ copay amounts. This should make it easier to find the adjustment factors when it comes time to fill in the relevant cells.

In the first worksheet, create the ‘moderate premium’ scenario. These will be the rates most likely to be put forward to the business consortium.

Use the following assumptions:

Mental Health Coverage limited to 60 days.
Copays are as follows:

Acute Inpatient Care $150/admission
Mental Health Inpatient Care $150/admission
Inpatient Surgical Services $100/procedure
Emergency Care $ 25/visit
Primary Physician Care $ 15/visit
Specialist Physician Care $ 10/visit (at $10 PCP copay level)

In the first duplicate worksheet, create a ‘high premium’ scenario using the following assumptions:

Mental Health Coverage limited to 90 days.
There are no copays with this plan.

In the last worksheet, create a ‘low premium’ scenario using the following assumptions:

Mental Health Coverage limited to 30 days.
Copays are as follows:

Acute Inpatient Care $250/admission
Mental Health Inpatient Care $250/admission
Inpatient Surgical Services $250/procedure
Emergency Care $ 50/visit
Primary Physician Care $ 25/visit
Specialist Physician Care $ 15/visit (at $20 PCP copay level)

At this point, you should have two premium rates – single and family – for each of the three scenarios. When done, please answer the following questions in a separate document or within each worksheet:

1. Calculate the total amount that will be received from the consortium in each scenario, given 75,000 members.

2. Assume that the consortium wants employees to pay one half of the final premium. Furthermore, the consortium wants to limit the family coverage premium to twice that of the individual coverage premium. What are the resulting costs to employees under individual and family coverage? Do the calculations for each scenario.

HINTS: You will have to drag out some (very simple) algebra for this one! Also, remember that there are 12,000 employees who have single coverage, and 18,000 employees who have family coverage.

3. Which plan(s) should Blue Pointe Healthcare offer to the buyer consortium? Why? Think sales strategy