A health insurer has determined that the "reasonable and customary" fee for a certain medical procedure is $1200. They suspect that the average fee charged by one particular clinic for this procedure is higher than $1200. The insurer wants to perform a hypothesis test to determine whether their suspicion is correct. The mean fee charged by the clinic for a random sample of 65 patients receiving this procedure was $1280. Do the data provide sufficient evidence to conclude that the mean fee charged by this particular clinic is higher than $1200? Perform the appropriate hypothesis test using a significance level of 0.01. Assume that ? = $220.
A) The z-score of 2.93 provides sufficient evidence to conclude that the mean fee charged by this clinic for the medical procedure is greater than $1200.
B) The z-score of 0.363 does not provide sufficient evidence to conclude that the mean fee charged by this clinic for the medical procedure is greater than $1200.
C) The P-value of .363 does not provide sufficient evidence to conclude that the mean fee charged by this clinic for the medical procedure is greater than $1200.
D) The P-value of .045 provides sufficient evidence to conclude that the mean fee charged by this clinic for the medical procedure is greater than $1200.

Question

Quizplus · Accepted Answer

The z-score is calculated as (1280 - 1200) / (220/√65) = 2.93. With a significance level of 0.01, the critical z-value is approximately 2.33. Since 2.93 > 2.33, there is sufficient evidence to conclude that the mean fee is greater than $1200.

A Health Insurer Has Determined That the "Reasonable and Customary