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Homework answers / question archive / The Citizen Hines HMO uses primary care provider (PCP) contracts that set the PCP capitation rate at $15 per member per month (PMPM)
The Citizen Hines HMO uses primary care provider (PCP) contracts that set the PCP capitation rate at $15 per member per month (PMPM). Citizen Hines also contributes $45 PMPM to an institutional inpatient services risk pool and $30 PMPM to a specialist services risk pool. In addition, the contract includes a provision requiring a 20% withhold.
Suppose the amount of Physician B's compensation withheld is $20,000. Then, suppose that Physician B's specialty services budget was $400,000 and Physician B incurred $412,000 in actual specialty expenses. If the distribution from the risk pool is based on individual behavior, what was her return from the risk pool at the end of the period?
a) $2,000
b) $12,000
c) $8,000
d) $0
Computation of the return from the risk pool at the end of period:-
Budgeted deficit = Actual service cost - Budgeted cost
= $412,000 - $400,000
= $12,000
Net balance in risk pool = Compensation - Budgeted deficit
= $20,000 - $12,000
= $8,000
Return = Net balance in risk pool * % of shares
= $8,000 * 100%
= $8,000
Hence, the correct option is c) $8,000
