What are APCs? Why were they developed? Why do HMOs use prevention and case management? How do HMOs determine their premiums?
If an HMO covered 150,000 lives, expected 25 myocardial infarctions (MI) to occur each year within the covered lives, would expect a length of stay of 4.5 days for each MI, and had to pay an average of $950 per day for each day the MI patient was in the hospital, what would the PMPM cost to the HMO be? What would have to be charged to the patient/employer if the HMO had administrative costs equaling 10 percent of its costs and it wanted a profit margin of 7 percent?
