Formulate your answer based on the information below. The intensity of care delivered dropped from a budgeted case mix of $0\mathrm{.}90$ to an actual case mix of $0\mathrm{.}85.$ What dollar effect did this have on actual costs?

You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Use the following data to calculate the variances.

Budget

Actual

Inpatient Costs

$$12,568,500$

$$16,618,350$

Members

$42,000$

$42,000$

Admission Rate

$0\mathrm{.}070$

$0\mathrm{.}095$

Case Mix Index

$0\mathrm{.}90$

$0\mathrm{.}85$

Cost per Case $($CMI $=1\mathrm{.}0)$

$$4,750$

$$4,900$