The Ionic Group, a provider group with 10,000 plan members, purchased for its hospital risk pool aggregate stop-loss insurance with a threshold of 110% of projected costs and a 10% coinsurance provision. Ionic funds the hospital risk pool at $40 per member per month (PMPM). If Ionic's actual hospital costs are $5,580,000 for the year, then, under the aggregate stop-loss agreement, the stop-loss insurer is responsible for reimbursing Ionic in the amount of
A) $30,000
B) $270,000
C) $300,000
D) $702,000

Question

Quizplus · Accepted Answer

The projected costs are $40 PMPM * 10,000 members * 12 months = $4,800,000. The threshold is 110% of $4,800,000, which is $5,280,000. Actual costs are $5,580,000, which exceeds the threshold by $300,000. With a 10% coinsurance, the insurer reimburses 90% of the excess: 0.9 * $300,000 = $270,000.

The Ionic Group, a Provider Group with 10,000 Plan Members