Question: Problem 1. Formulate your answer based on the below information. The intensity of care delivered dropped from a budgeted case mix of 0.90 to an

Problem 1. Formulate your answer based on the below information. The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. 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.

Actual Budget

Impatient costs $12,568,500 $16,618,350

Members $42,000 $42,000

Admission rate 0.070 0.095

Case Mix Index 0.90 0.85

Cost per Case(CMI= 1.0) $4,750 $4,900

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